National Risk Management and Associates

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Floods & Insurance

Flood Insurance Courtesy of iii.org

Floods occur in every region and 90 percent of all natural disasters the United States involve some type of flooding. Minimize the damage and losses from a flood by taking these precautions.

Understand flood watches and flood warnings

There are different alerts for floods, depending on the type of and immediacy of the potential danger. Educate your family and yourself about your community’s flood warnings:

  • Flood watches are issued when rain is heavy enough to cause rivers to overflow.
  • Flood warnings describe the severity of the situation and indicate when and where the flood will begin.
  • Flash flood watches are issued when heavy rain is occurring or is expected to occur.
  • Flash flood warnings are issued when flooding is occurring suddenly. In the event of flash flooding in your area, move immediately to high ground.

Take practical measures to protect yourself, your family and your property

Preparedness is paramount when it comes to encroaching floodwaters. Here are precautionary steps to take well before the threat of a flood is upon you.

  • Maintain a supply of emergency provisions, such as flashlights, batteries, a battery-operated radio, a first aid kit, medication, sturdy shoes, emergency food and water, cash and credit cards.
  • Maintain a supply of building materials and tools so you can fortify your house from a storm. These would include plywood, plastic sheeting, nails, hammer, shovels and sandbags.
  • Make a home inventory listing all of your possessions to help facilitate the claim filing process if your belongings are damaged or destroyed.
  • Locate switches for gas, electricity and water and know how to shut them off. In the event of an evacuation, you’ll want to turn these off before you leave.

For more preparedness tips, handy checklists (including ones you can personalize yourself) and evacuation planning advice to cover a variety of disasters, get the I.I.I.’s Know Your Plan app. It’s a great tool to help get you and your family—including pets—organized and ready to act more quickly if an emergency strikes.

Next steps link: Think you’ll need financial protection against flood damage? Read these facts about flood insurance.

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Do You Need Insurance for a Home-Based Business?

Home Based Business InsuranceCourtesy of iii.org

Whether you’re running a part-time, seasonal or full-time business from your home, you’ll want to carefully consider your risks and insurance needs. Starting a business—even at home—can be a challenging venture, and having the right insurance can provide a financial safety net and peace of mind.

Your insurance choices should, in part, be based on the type of business you operate. For instance, if you’re a sole practitioner home-based accountant, you’ll have very different insurance needs than your neighbor who runs a childcare business. When considering insurance for your business, here are some questions to ask yourself:

  • What type of business do I run? What are the potential risks faced by your type of business?
  • What is the value of my business property? Do you have expensive equipment, such as cameras or commercial printers? Do you stock valuable business inventory, such as gemstones?
  • Does my business have employees?
  • Do customers or contractors visit my business at my home?
  • Do I use my car or other vehicles in the course of my business operations?
  • Does my business store customers’ financial and personal information on a computer or through a cloud computing service?

The answers to these questions will guide which types of insurance to purchase—and how much coverage you’ll need. For your home-based business, the main types of insurance to consider include the following:

Property and liability insurance

Depending on the nature of your home-based business, you’ll need insurance to protect the value of your business property from loss due to theft, fire or other insured perils. You’ll also need liability protection to cover costs if someone is injured as a result of visiting your business or using your product or service. Your homeowners insurance may provide some protection for your business, but it may not be sufficient. Options for property and liability insurance for home-based businesses include:

  • Adding an “endorsement” to your homeowners policy
  • Stand-alone home-based business insurance policies
  • A Business Owners Policy—or BOP—which combines several types of coverage

Business vehicle insurance

Your personal auto insurance may provide coverage for limited business use of your car. But if your business owns vehicles or your personal vehicle is primarily used for business purposes, you’ll need business vehicle insurance.

Workers compensation insurance

If you have employees, you’ll want to strongly consider purchasing workers compensation insurance to cover costs if an employee is hurt on the job. Workers compensation insurance provides wage replacement and medical benefits to employees injured in the course of employment, in exchange for relinquishing the right to sue the employer. In some states, workers compensation insurance is mandatory, so be sure to check your state’s workers compensation website for local requirements.

Other types of insurance may be suitable for your home-based business as well. Your insurance professional can help you evaluate your needs and select insurance to meet your budget.

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Condominium Insurance

Insuring a co-op or condoCourtesy of iii.org

Because co-op and condominium owners share their building structures, two policies—a master policy and an individual policy—are required to fully protect all parties involved. Learn more about insuring a co-op or condo.

If you are purchasing a condo or co-op, the bank will require insurance to protect its investment in your home, and your co-op or condo agreement will likely require you to have insurance, as well. There are actually two different policies necessary to fully insure co-ops and condos—a master policy for the building, and an individual policy to cover you for liability, to protect your belongings and to insure any apartment structural elements that are not covered by the master policy.

Here’s what you need to know about each type of insurance.

The master co-op or condo policy

This is the policy that protects the entire apartment structure; the building management is responsible for it and its premiums come out of your maintenance fee or association dues. The master policy covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.

In some cases, the association is responsible for insuring the individual condo or co-op units, as they were originally built, including standard fixtures. In these instances, the individual owner is only responsible for insuring alterations to the original structure of the apartment, like a kitchen or bathroom remodel.

In other co-ops or condos, the association is responsible only for insuring the bare walls, floor and ceiling. In the event of a disaster, the owner is responsible for elements like kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures etc.

It is important to know which structural parts of your home are covered by the condo/co-op association master policy and which are not, so you can properly insure your apartment through your individual policy. This information should be in your association’s bylaws and/or proprietary lease, which can usually be obtained from the co-op or condo board, or from the company that manages the building. If you have questions, talk to your co-op board, condo association, insurance professional or family attorney.

Your individual co-op or condo insurance policy

Your mortgage lender and your co-op or condo by-laws will likely require that you have your own insurance on top of the master policy because your ability to repair your apartment after a disaster protects the value of the unit.

An individual policy provides coverage for your personal possessions and for any structural elements not covered by the master policy if you are the victim of fire, theft or other disaster listed in your policy. Like a standard homeowners policy, you also get liability and, likely, additional living expenses (ALE) protections.

It’s a good idea to find an insurance professional who has experience in co-ops and condominiums. When selecting a policy, don’t forget to ask about available discounts, such as for extra bolts on the doors or additional fire alarm systems. If you insure your unit with the same company that underwrites your building’s insurance policy, you might also get an additional reduction in premiums.

To adequately insure your home and protect your assets, you may also want to consider the following, additional coverages. Consult your insurance professional for advice on what’s right for you.

  • Unit assessment reimburses you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby and all the unit owners are charged the cost of repairing the loss.
  • Water backup insures your property for damage by sewer backups or drain back ups—these are not covered by either your co-op/condo policy or your flood policy.
  • Umbrella liability is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo/co-op policy.
  • Flood insurance or earthquake insurance may be necessary if you live in an area prone to these disasters.
  • Floater for additional coverage for expensive jewelry, furs or collectibles.

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Do You Have Enough Homeowners Insurance?

Homeowners Insurance Coverage TipsCourtesy of iii.org

For many people, their home is their greatest asset, so it is crucial to avoid being underinsured. To properly insure your home, it is important to ask your insurance professional four key questions.

1. Do I have enough insurance to rebuild my home?

Your policy needs to cover the cost of rebuilding your home at current construction costs. Unfortunately, some homeowners simply purchase enough insurance protection to satisfy their mortgage lender. Others confuse the real estate value of their home with what it would cost to rebuild it. Quite simply, you should have enough insurance to rebuild your home in the event that it is completely destroyed. Be sure to consider the following:

  • Replacement cost – Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
  • Extended replacement cost – This type of policy provides additional insurance coverage of 20 percent or more over the limits in your policy, which can be critical if there is a widespread disaster that pushes up the cost of building materials and labor.
  • Inflation guard – This coverage automatically adjusts the rebuilding costs of your home to reflect changes in construction costs. Find out if your policy includes this coverage or if you have to purchase it separately.
  • Ordinance or law coverage – If your home is badly damaged, you may be required to rebuild it to meet new (and often stricter) building codes. Ordinance or law coverage pays a specific amount toward these costs.
  • Water back-up – This coverage insures your property for damage from sewer or drain back-up. Most insurers offer it as an add-on to a standard policy.
  • Flood insurance – Standard home insurance policies provide coverage for disasters such as fire, lightning and hurricanes. They do not include coverage for flood (including flooding from a hurricane). Flood insurance is available through the federal government’s National Flood Insurance Program (www.floodsmart.gov), but can be purchased from the same agent or company representative who provides you with your home or renters insurance. Make sure to purchase flood insurance for the structure of your house, as well as for the contents. Excess Flood Protection, which provides higher limits of coverage than the NFIP in the event of catastrophic loss by flooding, is available from some insurers. Keep in mind that there is a 30-day waiting period before the insurance is valid.

2. Do I have enough insurance to replace all of my possessions?

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of coverage on the structure of your home, you would be covered for $50,000 to $70,000 worth of the contents of your home, depending on the policy.

The best way to determine if this is enough coverage is to conduct a home inventory, which details everything you own and the estimated cost to replace these items if they are stolen or destroyed by a disaster. Keep your home inventory in a safe place if you have physical copies; or store it in the Cloud if you are using a home inventory app.

You can insure your possessions in two ways: by their actual cash value or their replacement cost. Make sure you review with your insurance pofessional which type of coverage is best for your particular situation.

  • Actual cash value policy This coverage pays the cost of replacing your belongings minus depreciation.
  • Replacement cost policy This coverage reimburses you for the full current cost of replacing your belongings.

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To illustrate the difference between the two types of policies, suppose, for example, a fire destroys a 10-year-old television set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV with a comparable new one. If you have an actual cash value policy, it will pay only a small percentage of the cost of a new TV set because the old TV has been used for 10 years and is now worth a lot less than its original cost. Some replacement cost policies specify that the new item be purchased by the insurance company as they may be able to purchase at a bulk or special rate. The price of replacement cost coverage is about 10 percent more than that of actual cash value.

3. Do I have enough coverage for additional living expenses?

Coverage for additional living expenses pays the extra costs of temporarily living away from your home if you can’t live in it due to an insured disaster such as a hurricane. It covers hotel bills, restaurant meals, transportation and other living expenses incurred while your home is inaccessible or being rebuilt. It is important to note that it covers only those expenses that are over and above your regular living expenses, so it would not cover your mortgage, or regular trips to the grocery store. If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20 percent of the insurance on your house. Some companies will sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.

Make sure you know exactly how much coverage you have for additional living expenses, and whether there is a time limit. If the standard coverage is not adequate, it can generally be increased for an additional premium.

4. Do I have enough insurance to protect my assets?

Although not a key element in disaster planning, it is also important to have adequate liability protection. This covers you against lawsuits for bodily injury or property damage that you or your family members may cause to other people. It also pays for damage caused by pets. Liability insurance pays for both the cost of defending you in court and for any damages a court rules you must pay—up to the limits of your policy. Most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available.

It is important to purchase enough liability insurance to protect your assets. If the standard liability coverage in your homeowners policy is not sufficient, you may need an excess liability, or umbrella, policy, which provides additional coverage over and above what is covered in your home (and auto) insurance policy.

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Rent Without Wasting Money

Car InsuranceCourtesy of iii.org

There are more options for renting a car than ever before—bricks-and-mortar, peer-to-peer and membership-based car sharing services. While this means more choice for renters, it also creates more questions about insurance coverage. Use these tips to properly insure yourself when renting a car, and avoid wasting money on duplicative coverage.

If you’re looking to rent a car, depending on your needs and location, there are a number of alternatives—the traditional brick-and-mortar companies, peer-to-peer car services and car sharing programs—each with its own insurance parameters. It pays to understand your existing coverage first, and then look at your rental insurance options.

No matter what company or what kind of company you’re renting from, the most important step is to read and understand the car rental or car sharing agreement. Most companies clearly state what is covered as well as the supplemental coverage that can be purchased. If you don’t understand, have the rental or car sharing company representative walk you through.

If you’re renting a car, check your own coverages first

Before you enter an agreement with any type of rental service, maximize use of the insurance you’re already paying for and avoid paying for duplicate insurance.

If you own or lease a car and/or have homeowners insurance, call your insurer to first check the following:

  • How much coverage you currently have on your own car – In most cases, whatever auto insurance and deductibles you have on your own car would apply when you rent a car (providing you are using the rental car for recreation and not for business).
  • If you still have collision or comprehensive – If you dropped these coverages on your own car as a way to save money on your car insurance, you may not be covered if your rental car is stolen or damaged. Insurance rules vary by state, so it is best to check with your insurance professional for the specifics of your policy.
  • If you are covered for administrative fees, loss of use or towing charges – Check to see whether your insurance company pays for—or provides a rider for—additional fees.
  • Whether your homeowners or renters insurance covers the loss of possessions – These policies (not your car insurance) generally cover your belongings if they are damaged or stolen out of your vehicle.

The credit card you use to rent a car may also provide some insurance. Though coverage is likely to be limited—for example, it may only cover the deductible if you make a claim—it’s worth knowing what protections it will provide.

  • Know that benefits differ – Insurance coverage can depend on the company or bank that issues the card or even the level of card. For example, a platinum card may offer more robust coverage than a green card. If you have more than one card, you may want to compare what insurance they offer for car renters.
  • Contact the credit card issuer to find out what they cover – If you are depending on a credit card for insurance protection, ask the company or bank that issued the card to send you their coverage information in writing.
  • Credit card insurance benefits are usually secondary – That is, they will kick in after your personal insurance policy or the insurance coverage offered by the rental car company are utilized.

Insurance if you’re renting from a brick-and-mortar car rental

Brick-and-mortar car rental companies are generally found at airports, train stations or other locations where travelers converge. These traditional rental companies allow you to simply reserve or select a vehicle from one of the many generally available on any given day. The insurance you’ll be offered is fairly standard (though, like all car insurance, it varies by state).

Depending on what type of auto and/or homeowners insurance you carry, you may want to consider some of the insurance coverage provided by the rental car company. While auto insurance regulations, costs and coverage will vary by state and insurer, consumers renting from traditional companies can generally choose from the following coverages:

  • Loss Damage Waiver (LDW) – Also referred to as a collision damage waiver, an LDW is not technically an insurance product—it is designed to relieve or “waive” renters of financial responsibility if their rental car is damaged or stolen. Waivers may also provide coverage for “loss of use,” in the event the rental car company charges for the time a damaged car cannot be used because it is being fixed, as well as towing and administrative fees. The LDW may become void if the accident was caused by speeding, driving on unpaved roads or driving while intoxicated. However, if you carry comprehensive and collision auto insurance, you may already be covered for damage to a rental car.
  • Liability Insurance – By law, rental companies must provide the state required minimum amount of liability insurance coverage—often this does not provide enough protection. If you carry your own auto insurance and have opted for higher liability limits (which is recommended), you’ll be adequately covered. Non car-owners who are frequent renters have the option of purchasing a non-owner liability policy, which can provide the additional liability needed.
  • Personal accident insurance – This covers the driver and passengers for medical and ambulance bills for injuries caused in a car crash. Whether or not you should consider this depends on your health insurance and the personal injury protection (PIP) provided by your auto insurance, which will likely cover medical expenses.
  • Personal effects coverage–This provides insurance protection for the theft of items from a rental car. Consider this if you do not carry homeowners or renters insurance to cover this type of loss.

Insurance if you’re using a car sharing service

With car sharing programs, for a monthly or annual membership fee, consumers can pick up a vehicle at a wide range of locations for periods ranging from minutes to days. These programs are popular in urban settings where owning a car can be expensive or difficult, but where it’s convenient have a car available when it’s needed. Coverage options vary widely, but there is usually some insurance included.

The insurance offered by these types of companies is not standardized so read the insurance coverage information carefully (it can usually be found on the service’s website). If you have any questions, call the company’s customer service line. And contact your auto insurer if you feel you need more information to make an educated insurance coverage decision.

  • Car sharing programs (like ZipCar) generally include insurance costs in the fee. However, if the car is involved in a collision or is stolen, the renter may be billed for a specific dollar amount that is stated in the membership agreement. For an additional cost, customers can purchase a “waiver” to avoid paying the accident fee.
  • Many car sharing programs limit coverage for young drivers to the minimum state required amount of liability. Renters under the age 21 should read the insurance coverage carefully. If it’s not adequate to their needs, they can look into whether their parents’ auto insurance would cover them for the difference, or purchasing their own non-owner liability policy.

Insurance if you’re renting from a peer-to-peer service

Peer-to-peer car rental networks enable consumers to rent personally owned cars from others. Insurance coverage varies widely, depending on location and service.

  • Peer-to-peer rental services (like Turo) may offer a range of insurance options and, under some circumstances, the driver may decline coverage.

 

Next steps: When considering these options for your rental car, it helps to have a general understanding of your auto insurance coverage.

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24 Hour Hotline: (407) 415-8528

National Risk Management & Associates
220 Magnolia Avenue
Sanford, FL 32771
Phone: (407) 767-2950