What events does your Homeowners policy cover against?

Before we discuss the specific coverages and limits of your policy, we first need to explain what types of events, or perils, are covered on your policy. If you have what is known as an HO3 or an HO5 policy (the 2 most common policies), the structure of your home will be covered against all perils except ones that are excluded by the policy. This is the broadest coverage you can get as it provides coverage for less common events. At claim time, instead of looking at the list of items that are covered, the insurance company would instead look to make sure the cause of the loss was not on the list of excluded items. Some commonly excluded perils include but are not limited to the following.

• Flood
• Earthquake
• War
• Nuclear Hazzard
• Intentional Loss
• Seizure or destruction of property by the government

If you have an HO5 policy, your contents are covered in the same open peril fashion as above. However, if you have an HO3 policy, your contents are only covered against perils that are specifically listed on the policy. This is where an HO5 policy excels over an HO3 policy. The typically named perils include but are not limited to the following.

• Fire
• Lightning
• Windstorm or hail
• Explosion
• Riot of Civil Commotion
• Aircraft
• Vehicles
• Smoke
• Vandalism
• Theft
• Volcanic Eruption
• Falling Objects
• Weight of ice or snow
• Accidental discharge or overflow of water
• Sudden and accidental rupture of a heating, AC, or plumbing system
• Freezing of plumbing system
• Sudden and accidental damage from artificially generated electric current

While this is a pretty comprehensive list of the common perils, it does leave a coverage gap for events such as the mysterious disappearance of an item, dropping and breaking an item, or even less common events like if you spill wine on a couch or a pet destroys your favorite dress The aforementioned scenarios would be covered on an HO5 policy.

Included Property Coverages

A homeowner policy has four basic included property coverages. These coverages protect the structures on your property, the property in the structures, and the loss of use of your property.

Dwelling Coverage: This coverage covers the main dwelling and any structures attached to the main dwelling.

Other Structures Coverage: This coverage covers any structures on the property that aren’t connected to the dwelling. This includes sheds, fences, pools, mailboxes, etc.

Personal Property Coverage: This provides coverage for property owned by the insured anywhere in the world. There are some stipulations on what type of personal property is covered and in some cases, there are limits on how much coverage is provided for categories such as jewelry, firearms, and others.

Loss of Use Coverage: This provides a place to stay if the home becomes uninhabitable due to a covered loss.

Included Liability Coverages

Personal Liability Coverage: This covers bodily injury or property damages that the insured becomes legally obligated to pay. In most cases, this relates only to the insured’s dwelling location.

Medical Payments: This is a no fault coverage that can provide money for medical costs to someone other than a resident that is injured on your property. This can pay even if the insured is not legally obligated to pay. For example, if a guest trips on a step and injures him or her self.

Optional Coverages

Personal Injury: Provides coverage for libel, slander, and other injury’s unrelated to bodily injury.

Water Sewer Backup: This pays for damages due to water that backs up into an interior drain from an outside source. The most common example is a sump pump that fails, letting water back up into the home and causing damage.

Earthquake Coverage: In Indiana, this coverage usually involves a higher deductible such as 10% of the property coverage. Its intent is to provide coverage for a catastrophic earthquake, not minor damages due to an earthquake. Because of the high deductible, the coverage is usually pretty affordable.

Personal Articles: Items such as jewelry, fine arts, and firearms usually have a separate lower limit on homeowner policies. Because of this, it may be necessary to insure larger collections with a personal articles (or inland marine) coverage. Many companies can insure these scheduled items as part of the homeowners policy. It is common for this coverage to have a $0 deductible.

Replacement Cost or Actual Cash Value

Replacement cost coverage means that at the time of loss, the insurance company will pay the cost to replace the item fully and will not take depreciation into account.

Actual Cash Value coverage will pay the replacement cost minus the depreciation of the item.

Homeowners policies may pay replacement cost for losses to the dwelling but Actual Cash Value for losses to personal property so it’s important to look closely at you quote or policy to determine how yours is structured.

How much coverage do you need?

For the dwelling, assuming you have a replacement cost policy, you should insure your house for enough that it can be replaced if there is a total loss. Replacement cost is often times more than the home’s current market value. In most cases, the insurance company or your insurance agent will do a calculation of your homes replacement cost based on your homes square footage and features.

By default most insurance companies provide coverage for the rest of the property based on a percentage of the dwelling insurance. For example, an insurance company may default your personal property to 50% of your dwelling cost. In most cases, this value can be changed if it is too low or too high.

A conversation with your agent is the best way to make sure your home is properly covered. Make sure they know about any special features or property that you have that would fall outside a normal home.

The post The Homeowners Policy Explained first appeared on Carson Insurance Agency.

1st Party Claim Scenario Examples:

• Ransomware Attack
• Virus/Malware Attack
• IT Failure or Accidental Data Damage
• Denial of Service Attack (DOS)
• Business Interruption

3rd Party Claims Scenario Examples:

• Privacy Breach
• Security Breach

It’s important to note that over the last few years, the majority of claims that are filed have been 1st party claims.  Therefore, it’s important when choosing a policy or analyzing your current policy, to make sure you have adequate limits for 1st party coverage.  A lot of insurance companies also have separate sub-limits for certain events.  For example, the policy may call out $250,000 of coverage, but there may be a sub-limit for ransomware of $50,000.  In this case your coverage for ransomware attacks would be limited to $50,000, not $250,000.

The post What is Cyber Coverage? first appeared on Carson Insurance Agency.

Exceptions

There are some common exceptions to consider when renting a vehicle.

• Most policies won’t cover moving trucks or vehicles over a certain weight.
• If you only carry liability on your cars or on the car that the rental car is replacing, most policies won’t provide physical damage coverage to the rental car
• Most policies won’t cover a rental car outside the US or Canada.  However, often times an umbrella policy will provide some coverage.
• Many personal auto policies won’t cover the rental agency’s loss of revenue as a result of not being able to rent the car while it is being fixed.

Are there any advantages to buying the rental car coverage?

If you do decide to buy the insurance from the rental car agency and have a physical damage claim (accident, rock to the windshield, etc), you have the luxury of walking away without much hassle.  More importantly, since your insurance carrier won’t pay out for the claim, it won’t be assigned to your loss history and won’t affect your insurance rates.

The post Do I need to buy insurance for a rental car? first appeared on Carson Insurance Agency.

Named Peril:

A named peril policy is a policy that specifically names the perils that will be covered. Often times, things such as fire, lightning, explosion, smoke, wind, hail, vandalism, riots, and certain types water damage are covered. Depending on the policy, what is covered will vary but if it’s not listed, it will not be covered.

Open Peril:

On the other hand, an open peril policy will cover any peril that is not excluded from the policy. Common exclusions for a homeowner policy are war, earth movement, floods, and nuclear hazards. Again, each open peril policy will have different exclusions, but unless it’s specifically excluded in the policy, it will be covered.

Example

So let’s say that during a house party, a guest spills their drink on your brand new couch. It’s unlikely that a named peril policy will have a named peril for “drink spilling” so it would most likely not be covered. However, on an open peril policy, unless “drink spilling” is excluded, you’re in luck!

To further complicate matters, it is common on a homeowners policy to separate what is covered for the structure and the contents. So for example, some policies will cover the structure of the home on an open peril basis but the contents on a named peril basis, while another might cover both the home and the contents on an open peril basis.  It’s a good thing to know, and your agent should be able to quickly tell you what type of policy you have.

The post Named Peril vs Open Peril Explained first appeared on Carson Insurance Agency.

General Liability Insurance

General Liability (GL) Insurance protects your business from claims of bodily injury and property damage arising from work that you’ve done or a product you’ve sold.  Liability insurance only pays out to “the other guy” and never pays to your business.  One important benefit of GL insurance is that it pays for defense costs even if the lawsuit is groundless, false, or fraudulent.  General Liability Insurance is usually the first type of insurance a business will get and many consider it the most important.  Some examples of claims that GL Insurance would pay for are below

1. A customer enters your store and slips on a wet floor that had just been cleaned and sues for his medical bills.
2. Your employee forgets to turn off the water before replacing a faucet in your customer’s bathroom and floods part of the house.  The customer sues to fix the damages caused by the flood.

Property Insurance

Property Insurance is a pretty broad term and can cover lots of different property.  However, it can be broken down to 3 main categories for most businesses.

1. Building Coverage – Covers the structure of a building owned by the company (roof, walls, foundation, carpet, etc)
2. Business Personal Property – Covers the contents inside of the building (furniture, computers, tools, etc)
3. Business Income – Covers the costs to do business in the event of a loss that prevents business being conducted (relocation costs, income from rent or production, etc)

Commercial Auto Insurance

In my experience, a lot of startups don’t have company owned cars, but that doesn’t mean you shouldn’t consider a Commercial Auto policy.  One easy and fairly inexpensive coverage to carry is known as Hired and Non-Owned Auto coverage.  This coverage protects your business from liability claims in the event that you or one of your employees causes damage while driving for business reasons.  It’s important to note that this coverage does not protect the driver personally.  Of course, if you do have company owned vehicles, a commercial auto policy can protect you from both liability and physical damage to the owned vehicles.

Inland Marine Insurance

Inland Marine Insurance is another broad coverage that can covers property in transit and away from your business locations.  Regular property coverage usually only protects property that stays on your company property and doesn’t normally include property owned your customers.  In the following cases, there is a need for Inland Marine Coverage.

1. Coverage for tools that you travel with (An air compressor or a camera that you take from job to job).
2. Coverage for a customer’s property (a dry cleaner’s customers’ clothes)
3. Coverage for a home you are building for another person.

Workers Compensation

If someone gets hurt or disable on the job, the employer could be liable to pay for medical costs arising from the injury.  For this reason, most states require Workers’ Compensation for any business that has employees.  In most cases, payment is made to the employee no matter who was at fault for the injury.  Because the employees are covered for injuries on the job site, they are usually unable to file suit against the employer.

Professional Liability

General Liability Insurance protects you if you cause bodily injury or property damage, but what if you’re sued for making a mistake or omission that causes damage that’s not bodily injury or property damage?  Well, that’s where Professional Liability Insurance comes into the equation.  Professional Liability Insurance is sometimes referred to as Errors and Omissions (E&O) or in certain industries, Malpractice Insurance.  This type of insurance is usually pretty specific to the type of industry of the business that is purchasing it.  The coverage for a software developer’s policy will look very different from a doctor’s office’s coverage.  Below are a few examples of claims that a Professional Liability policy might cover.

1. A software developer updates his client’s website and an error in the code reduces the price of several items by 50%.  The client is demanding the difference.
2. A hair stylist accidentally dyes her customer’s hair the wrong color.  Her customer is getting married tomorrow and sues you.
3. A security guard wrongfully detains a man walking home from work and the man demands compensation for your mistake.

Like General Liability Insurance, Professional Liability Insurance also covers defense costs even if the lawsuit has no merit.

Employment Practices Liability Insurance

Employment Practices Liability Insurance commonly referred to as EPLI protects your business from claims arising from wrongful employment process including wrongful termination, discrimination, sexual harassment, and retaliation.  Like the other liability coverages mentioned above, EPLI coverage includes defense costs.  Most companies offer limits starting at $50,000 but they can go up to $1,000,000 or more.

The Business Owner Policy

This really isn’t a type of Insurance but it’s worth mentioning as a large portion of new businesses start with this type of policy.  A Business Owners Policy is a package of liability and property coverages that can include the aforementioned types of Insurance (except workers compensation).  These types of policies are usually but not always less expensive than a typical commercial package policy and can give you very broad coverage.  Not all companies are eligible for a Business Owners Policy but its good to ask as it can help simplify the Insurance process.

These coverages may not all be required for your business but it’s a good idea to at least know that they exist as you grow your business.  Have a conversation with your agent about your business so they can understand exactly what you do and they can make sure you get the right coverage.

The post 7 Insurance Coverages to Consider for Your Business Startup first appeared on Carson Insurance Agency.

Homeowners Insurance Sub Limits

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The standard limits may be enough for the typical homeowner but if you own more property in a certain category it may be necessary for you to schedule individual items to make sure they’re covered.   On most homeowner policies, an endorsement exists to schedule individual items and in most cases, the coverage is available and commonly offered with the following three benefits.

1. Items can be insured with a $0 deductible
2. Items are covered in the event of theft, mysterious disappearance, and breakage.
3. Items are covered up to the full limit anywhere in the world.

The endorsement can be very affordable as well.  For example, to insure a $5,000 engagement ring, you could expect to pay somewhere around $1 per $100 of value or around $50 per year.  To add your items to your policy you’ll need a receipt or a recent appraisal of the item.  Ask your agent how the coverage will pay at the time of loss.  Most policies are actual cash value which means they will pay the cost to replace the item minus any depreciation.  Other policies can offer an agreed value settlement, which means that you and the insurance company have agreed on a value upfront and that value will be paid at the time of the loss.  With a policy that pays actual cost value, it’s not a good idea to insure an item for more than its worth.  The value you have insured the item for is a limit, but it doesn’t guarantee that you will get that much in a loss.   If in 2017, you insure your 2012 Macbook Pro for $2000 (what you paid for it in 2012) and you have a loss, the settlement may be closer to $700 due to depreciation.  If you’re insuring it for $2,000 you’re paying unnecessary premium!

Your homework assignment is to look at your home, condo, or renters policy, or contact your agent and check the sub limits to make sure you’re adequately covered.  If you need more coverage, have a discussion with your agent on what makes the most sense for you.  I can promise you that it gives no agent pleasure to deny the full payment of your claim because an item exceeds the maximum sub limit.  In fact it may be the least satisfying part of our jobs.

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