rental property – Avant-Garde Insurance Advisors

Do I need Other Structure coverage on my home insurance?

This is a common question which I often hear from my clients. This question often comes up when we are reviewing a policy to save money. This question may also occur when someone is buying their first home. While you may feel you don’t need the coverage it can be invaluable at the time of a claim.

In order to understand to important of this coverage it is worth looking at how we define what is the Dwelling and what is Other Structures.

A typical definition for dwelling is, “The dwelling on the “residence premises shown in the Declarations, including structures attached to the dwelling.”

The typical definition for Other Structures is, “We cover other structures on the “residence premises” set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection.”

Based on the above definitions, Other Structures could be a fence, garage, shed, pool, cabana, patio, etc.

You may feel you don’t have any structures on your property that meets the definition of Other Structures but here is the catch – Other Structures is automatic coverage on the policy and is already built into the price. It does not cost you additional money or added to the policy to bump up the cost.

The amount for Other Structures is based on a percentage of the Dwelling amount listed or primary structure value which may be 10%, 20% or 30% of the Dwelling amount listed based on the insurance company.

That being said you may want more coverage than is automatically provided. This is important to discuss if you have several Other Structures or Custom Structures on your property. This often is the case with farm properties which are no longer an active farm. Also, water front properties that have boat lifts, docks, boat houses, etc.

While you may feel you do not have anything that qualifies as Other Structures, you may in the future. You could build a pool, a garage, a fence that meets the definition of Other Structures. It is always best to have more coverage than you think you need than to not have enough coverage at the time of a claim. Other Structures is a valuable coverage which you should give careful consideration and be discussed with your insurance agent when reviewing your home insurance for adequate coverage.

What is Personal Insurance vs. Commercial Insurance?

Insurance is complicated as I have said before. There is sometimes confusion as to what type of policy you may need. There are a variety of policies out there and only a Insurance Agent can help you navigate to the right insurance program for you.

Typically a business has a few characteristics that leads to commercial policies. This includes a business name or entity, its purpose is to generate money or profits, they employ others, and have clients/customers/policyholders/members. If you tick any of these items then you will be looking at a variety of commercial policies such as the following:

General Liability
Workers Compensation
Product Liability
Business Property
Employment Practices
Errors & Omissions
Directors & Officers
Inland Marine
Business Auto

Cyber Liability
Crime
Bond
Commercial Umbrella
Boiler & Machinery
Pollution
Medical Malpractice
Builders Risk
Business Interruption

In the case of personal, assets are owned by an individual or a married couple. They do not have employees or clients. In some situations there may be a business entity but this will be scrutinized by the insurance company. There may also be a situation where a home owner rents out their home to others for money but this will also be reviewed by the insurance company for acceptability. Personal Insurance includes the following types of policies:

Homeowners
Personal Auto
Vacation Homes
Investment Properties
Rental Properties
Vacant Properties
Collections Insurance
Umbrella Insurance
Boats
Yachts

Jet Skis
Motor Homes
Mobile Homes
Trailers
Campers
ATVs
Motorcycles
Scooters
Snow Mobiles
Drones

Sometimes you will find cross over between personal and commercial policies but only an Insurance Agent can guide you to the right policy for what you are trying to accomplish. Take for example the individual that came to me in need of a home insurance policy for their home that also housed a reptile rescue sanctuary with employees. Apparently this did not come up in conversation with the prior agent and the insurance company was now cancelling the policy. This does not fit the typical profile of a home owners insurance policy and therefore was forced to purchase a commercial program. There is also the case of an individual purchasing a vehicle in the name of a LLC which they also use the for personal reasons. Based on the insurance companies review of the occupation of the driver and the business exposure it did not qualify for a personal auto policy and was instead covered by commercial auto insurance policy.

Insurance as a whole is not black and white. It is not one size fits all. Each situation is unique and policies are placed on a case by case basis. Sometimes the decision is the not Insurance Agent’s but the insurance company’s decision. Keep in mind your Insurance Agent is your front line person to place a policy that will respond the way you need it to at the time of a claim. Only they can help you find the best policy for your situation.

What you need to know about selecting a home deductible.

When looking at insurance quotes our eyes automatically drift to the bottom line premium quoted. But what about all the stuff above it? Not all home quotes and/or policies are created equal. One of the key parts of a home quote and/or policy is the deductible. Below is a list of things to keep in mind as you consider a home quote and/or policy.

Some deductibles are flat and some deductibles are percentages. Percentages are typically used in coastal areas where there is a higher probability of wind, hurricane, etc. A percentage deductible is based on the dwelling value listed in the policy. If the dwelling value increases the deductible increases as well.
Some deductibles are specific to a type of coverage; Water Back-Up, Water Damage, Hurricane, Tropical Cyclone, Named Storm, Wind/Hail, etc. You may also see the term All Other Peril which means where a specific deductible is not identified the All Other Peril deductible applies.
A home policy can have multiple deductibles which can be a problem if a claim triggers more than one deductible. Understanding how each deductible applies at the time of a claim is important.
Some deductibles are dictated or required by the insurance company. This decision can be based on where the home is located, such as coastal. One insurance company may require a higher deductible than another insurance company.
Some home policies waive the deductible for large claims or a total loss claim. Knowing when a deductible waiver applies is important. This can be beneficial in deciding on a high deductible.
Some companies offer a reducing deductible if you remain claim free.

It is important when you are reviewing a home quote that you be aware of the deductibles. While a high deductible will reduce the policy premium, a high deductible can be detrimental if you can not afford the deductible at the time of a claim or the losses that occur are below the deductible. An insurance agent can help you review all the deductibles applicable to a quote and/or policy. An agent can also help you select a deductible that fits your financial situation while providing you the most advantageous premium.

National Insurance Awareness Day, June 28th

This Friday, June 28^th is National Insurance Awareness. The day was created to encourage everyone across the nation to review their insurance policies.

Below are some tips to help you observe the day:

Home:

Review the home value. The value of the home should be based on current construction costs, not market value. You should review the home value every 3 to 5 years.
- Review the home credits. If you have installed an alarm or have turned your alarm service off you should update the home policy accordingly.
- Review the deductible. The higher the deductible the lower the premium. Also a higher deductible will discourage you from filing small claims which can impact your ability to obtain coverage in the future.
- Review the endorsements included in the policy. If you have switched insurance companies recently a coverage may have been dropped during the process.

Auto:

Review drivers listed on the policy. All licensed drivers residing in your home should be listed on the auto policy. Failure to do so could result in a denied claim for unlisted drivers.
- Review ownership of the vehicle. If the loan or lease agreement has been satisfied update the policy. This will prevent delays in payment at claim time. Any change in titled ownership should also be reflected on the policy or a new policy purchased for the vehicle.
- Review deductibles. Insurance companies continually increase the price breaks for higher deductibles. As with the home insurance a higher deductible will save you premium and discourage you from filing small claims.
- Review usage of each vehicle. Vehicles used for Uber or Lyft services do not have coverage while being used for this purpose. Vehicles used for business purposes may also not have coverage if used for business at the time of a claim.

Schedule:

Update items to be listed along with values. Appraisals should be completed every 3 to 5 years to keep up with market values. Use an inventory such as Collectify to manage your collection easily.

Umbrella:

Update properties, vehicles, drivers, recreational vehicles, boats, etc. at each renewal. Failure to update could result in no coverage under the umbrella.
Make sure the underlying insurance policies for each of the above meets the minimum liability requirements to avoid a coverage gap.
If you do not have coverage for the underlying insurance policy for each of the above obtain it at your earliest convenience.

With the help of a Trusted Insurance Advisors they can help you review your policies at any time, not just this Friday or at renewal. A Trusted Insurance Advisor is there to help you every step of the way. Call your agent today!

Insurance for Your Investment Property

Recently I had a client purchase a new investment property. He had valid concerns regarding the coverages for that investment property. Below are coverages to consider for maintaining the profitability of your investment property.

Contents – Many owners of investment properties forgo coverage for contents or personal property kept at the investment property. They assume the tenant will provide all coverage for the tenant’s contents. What if the property owner has to re-carpet the home or puts new appliances in the home? These types of items can be considered contents by the insurance company. What if the property owner uses the basement or attic for storage? These are considered contents. Contents coverage is not automatically included in all investment property policies. You must request it and indicate a limit needed to cover all contents of the property owner.
Fair Rental Value – If the property owner is unable to rent the property due to a covered loss the property owner will not be able to generate a profit from the property. Depending on what the cost of rent is will dictate the limit for Fair Rental Value. You should aim for 6 months of rent or more after a covered loss, which can also be impacted by time of year or location of the home.
Water Back-Up – This is a very hot topic when it comes to home insurance but many property owners overlook it when owning an investment property. An investment property has the same exposure to water back-up as a primary home; sump pump, back-up generators, toilets, tubs, sinks, etc. To make matters worse not all insurance companies offer water back-up on investment properties. Make sure to ask for it or your insurance agent may overlook it during the quoting process.
Ordnance or Law – In some cases especially with older homes there may be a need for additional money for updating an investment property to meet new codes or compliance requirements, such as sprinklers, smoke detectors, elevation, safety glass, etc. Not all policies are created equal. You may have 10% of the dwelling value which may or may not be enough depending on the property. An increase in the limit may be necessary for homes that are coastal, older, located in the city, etc.
Loss Assessment – Some investment properties are located in communities that have a Homeowners Association (HOA). As a home owner in the community the association has the right to assess fees back to home owners. Not all investment property policies provide Loss Assessment and if they do it may not be enough. It is best to understand what the HOA can assess for and how much they can assess. Once this information is known you can adjust the insurance policy accordingly.

Ultimately the plan for owning an investment property is to generate a profit or a return on your investment. Without the appropriate insurance you could lose money due to unexpected issues. A full assessment at the beginning of your endeavor reduces the chances of problems down the road. Talk to your independent insurance agent today about your investment property insurance needs.