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Before you consider renting out your home, your guest room—or even your couch—first contact your insurance professional so you fully understand the financial risks and can take the proper precautions. Here’s some general information to jumpstart your insurance conversation.

If you are considering renting out your home, your guest room or even your couch your first step should be to contact your insurance professional. Peer-to-peer home sharing opportunities such as Airbnb can be a great way to bring in extra money and are increasingly popular; however, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

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The western U.S. wildfires and this year’s active hurricane season have highlighted for vehicle owners the importance of having optional comprehensive auto insurance coverage, according to the Insurance Information Institute (Triple-I).

“Comprehensive provides coverage for fire and flood-damaged vehicles. Yet it only accounts for about 16 cents of every dollar a driver pays for auto insurance,” said Scott Holeman, Director, Media Relations, Triple-I. “Consumers need to be cost-conscious when shopping for any insurance product, but comprehensive coverage just makes financial sense, especially if you live in an area where either wildfires or floods are a threat.”

Every U.S. state except New Hampshire requires its drivers to purchase liability insurance to drive legally. Comprehensive and collision coverage are optional coverages nationwide. Nearly four out of five drivers opted to purchase comprehensive (78 percent) and collision (74 percent) coverage in 2017, according to a Triple-I analysis of National Association of Insurance Commissioners (NAIC) data.

The typical U.S. driver paid just under $160 a year for comprehensive coverage in 2017. The total average auto insurance expenditure in that same year was $1,004.

Beyond covering fire and flood-damaged vehicles, comprehensive also pays either to repair or replace a vehicle damaged from falling objects, an explosion, an earthquake, a windstorm, hail, theft, vandalism, riot, or contact with animals such as birds or deer. In addition, comprehensive usually covers windshield replacement. Comprehensive insurance is usually sold with a separate deductible, although some auto insurers offer glass protection without a deductible.

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Many businesses—especially small businesses with fewer employees—depend on a single person or a few key people for their success. If a key person becomes unable to work or dies, the business might lose valuable accounts or be temporarily unable to operate, resulting in lost revenue.

The loss of an important employee can hurt the morale of a business, but the financial impact can be mitigated if a business purchases key person insurance. This type of coverage can enable a business to continue paying its bills and fund the search for a new employee. In unfortunate instances where a business cannot survive without the key employee, the funds from key person insurance can be used to pay severance to employees, distribute funds to investors and close the business in an orderly manner.

Key person insurance is usually owned by the business, which pays the premiums. This coverage is also a requirement of most banks and lending institutions when applying for financing or credit.

Who qualifies as a “key person”?

There are no hard-and-fast rules for identifying key persons in your business. Generally, anyone who directly contributes to a company’s bottom line or is fundamental to its operations might be considered a key person. Examples include:

• C-Suite Executives—such as a CEO or COO.
• Leading sales personnel.
• Heads of product development.
• Engineers or other difficult-to-replace personnel.

Types of key person insurance

Key person insurance comes in the following two forms:

• Key Person Life Insurance—This type of coverage differs from regular life insurance in that it specifically covers individuals in a business who are crucial to company operations. It provides the business with an infusion of cash if an insured key employee dies, regardless of cause or place of death. These funds can help compensate for revenue lost as a result of the death, as well as pay off debts, buy out surviving shareholders’ interest from heirs and finance the costs of a new employee search or training programs. Key person life insurance can be purchased as term insurance lasting for a defined period of time or as extended universal or whole life coverage. The amount of coverage is based on a key person’s income, overall business revenue and the portion of revenue attributable to the key person.
• Key Person Disability Insurance—This policy will provide funds to a business if an insured key employee becomes disabled and unable to work—partially or entirely. While standard disability insurance covers an employee’s lost salary and medical expenses, a key person disability policy provides funding to a business to make up for lost revenue, the cost of hiring a new employee and other related expenses.

Like other disability and life insurance policies, the cost of premiums for key person insurance depends on the age, health and role of the key employee, as well as the risks the employee takes in their personal life—for example, does the CEO fly her own plane?

“First-to-die” key person coverage

A cost-effective option for buying key person insurance is for a group of executives to join together on a “first-to-die” policy that insures just the first of the group who passes away. Once the policy is used to cover the loss of the first person to die, another member of the group becomes eligible for coverage. Thus, the key person insurance continues for the new members of the leadership team, but premiums reflect the fact that only one life is being covered at a time.

This type of insurance can be a useful tool when it comes to succession planning for your business—and having a succession plan is crucial to ensure the successful transfer of your company or business interests.

Your insurance professional can provide guidance on options and costs of individual and first-to-die key person coverage.

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Insurance can provide limited coverage for property damage for small boats such as canoes and small sail boats or small power boats with less than 25 mile per hour horse power under a homeowners or renters insurance policy. Coverage is usually about $1,000 or 10 percent of the home’s insured value and generally includes the boat, motor and trailer combined. Liability coverage is typically not included–but it can be added as an endorsement to a homeowners policy. Check with your insurance representative to find out if your boat is covered and what the limits are.

Larger and faster boats such as yachts, and personal watercraft such as jet skis and wave runners require a separate boat insurance policy. The size, type and value of the craft and the water in which you use it factor into how much you will pay for insurance coverage.

For physical loss or damage, coverage includes the hull, machinery, fittings, furnishings and permanently attached equipment as part of either an actual cash value policy or on an agreed amount value basis. These policies also provide broader liability protection than a homeowners policy. But there are distinct differences between the two types of policies.

Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel’s approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.

Agreed Amount Value basis policies mean that you and your insurer have agreed on the value of your vessel and in the event of a total loss you will be paid that amount. Agreed Amount Value policies also replace old items for new in the event of a partial loss, without any deduction for depreciation.

Physical damage exclusions might include normal wear and tear, damage from insects, mold, animals (such as sharks), zebra mussels, defective machinery or machinery damage.

Boat insurance also covers:

• Bodily injury—for injuries caused to another person
• Property damage—for damage caused to someone else’s property
• Guest passenger liability—for any legal expenses incurred by someone using the boat with the owner’s permission
• Medical payments—for injuries to the boat owner and other passengers
• Theft

Most companies offer liability limits that start at $15,000 and can be increased to $300,000. Typical policies include deductibles of $250 for property damage, $500 for theft and $1000 for medical payments. Higher limits may be available. Additional coverage can be purchased for trailers and other accessories. Boat owners may also consider purchasing an umbrella liability policy which will provide additional protection for their boat, home and car.

Boaters should also inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered and verify that towing coverage is included in the policy.

Boat owners should also inquire about discounts for the following:

• Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
• Coast Guard approved fire extinguishers
• Ship-to-shore radios
• Two years of claims-free experience
• Multi-policies with the same insurer, such as a car, home or umbrella policy
• Safety education courses, such as those offered by the Coast Guard Auxiliary, U.S. Power Squadrons, or the American Red Cross.

Boat Safety

There are thousands of recreational boating accidents per year. Contributing factors to these accidents include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.

To prevent boating accidents, we offer these safety suggestions:

Care and protection of vessel

1. Check weather forecasts before heading out.
2. Let someone know where you’re going and when you expect to return.
3. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
4. Carry one or more fire extinguishers, matched to the size and type of boat. Keep them readily accessible and in condition for immediate use.
5. Equip the vessel with required navigation lights and with a whistle, horn or bell.
6. Consider additional safety devices, such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio.

Care and protection of crew and guests

1. Make sure that every person on board the boat wears a life-jacket.
2. Know and obey marine traffic laws, the “Rules-of-the-Road.” Learn various distress signals.
3. Keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
4. Pay attention to loading. Don’t overload; distribute the load evenly; don’t stand up or shift weight suddenly in a small boat; and don’t permit riding on the bow, seatbacks or gunwales.
5. Don’t operate a boat while under the influence of alcohol or drugs.

Skippers can obtain free advice and boating-safety courses from the U.S. Coast Guard Auxiliary. Upon request, the auxiliary will conduct a Courtesy Marine Examination (CME) on your boat, checking electrical and safety equipment and fuel hoses. Boats meeting safety standards are awarded the CME decal “Seal of Safety.”