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
- Commercial Umbrella
- Boiler & Machinery
- 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:
- Personal Auto
- Vacation Homes
- Investment Properties
- Rental Properties
- Vacant Properties
- Collections Insurance
- Umbrella Insurance
- Jet Skis
- Motor Homes
- Mobile Homes
- Snow Mobiles
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.
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.
This Friday, June 28th 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:
- 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
- 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.
- 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.
- 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.
- 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
- 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
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
- 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.