Industry FAQ's
Auto Insurance
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premiums and the insurance company agrees to pay your losses as defined in your policy (every company provides you this information).
An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.
Your auto policy may include six coverages, each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries you, the designated driver or policyholder cause to someone else. You and family members listed on the policy are also covered when driving someone else's car with their permission.
It's very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else's car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $100 to $1,000-the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible.If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver's insurance company. If they are successful, you'll also be reimbursed for the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $1000 deductible.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
States do not require that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.
Before you rent a car:
1. CONTACT YOUR INSURANCE COMPANY.
Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it's used for pleasure and not business. If you don't have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.
2. CALL YOUR CREDIT CARD COMPANY
Find out what insurance your card provides. Levels of coverage vary. If you don't have auto insurance, you will need to buy coverage at the car rental counter.
The following coverages are available to you at the rental car counter:
• Collision Damage Waiver (CDW)
Sometimes called a Loss Damage Waiver (LDW), this coverage relieves you of financial responsibility if your rental car is damaged or stolen. The CDW may be void; however, if you cause an accident by speeding, driving on unpaved roads or driving while intoxicated. This coverage generally costs between $9 and $19 a day. If you have comprehensive and collision on your own car, you may not need to purchase this coverage.
• Liability Insurance
This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance. It generally costs about $7 to $9 a day. If you don't own a car, and rent cars often, consider purchasing a non-owner liability policy. This cost varies. Frequent car renters sometimes find this more cost-effective than constantly paying for the extra liability coverage.
• Personal Accident Insurance
This provides coverage to you and your passengers for medical/ambulance bills. This type of insurance, usually costs about $3 per day, but may be unnecessary if you are covered by health insurance or have adequate medical coverage under your auto policy.
• Personal Effects Coverage
This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters insurance, you may be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1.25 per day. Some rental car companies combine personal accident and personal effects coverage together as one type of insurance, while others sell it individually.
The cost of insurance at the rental car counter will vary depending on the rental car company, state, and location of the dealer and the type of car you rent.
Some rental car companies may check your credit and driving history and may deny coverage. Check with the rental car company to find out its policy.
HOMEOWNERS INSURANCE
Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.
Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.
Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility.
Here are a list of different types of homeowners insurance:
HO-3 special form; this policy (most commonly sold) protects your home from all perils except those specifically excluded (that information can be found in the policy jacket)
HO-4 renters insurance; These policies are for those who rent the house or condo they live. It protects your personal property and any parts of the apartment/house you may own, such as new kitchen cabinets you have installed.
HO-6 Condominium/Townhouse; this policy are for those who own a condo or townhouse where the association coverages for the structure, it protects the interior and personal property of your condominium/townhouse.
A standard homeowners insurance policy includes four essential types of coverage. They include:
1. Coverage for the structure of your home.
This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
Most standard policies also cover structures (known as ?other structures coverage?) that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about purchasing more insurance. (Also review the policy jacket you received to verify coverage).
1. Coverage for your personal belongings.
Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.
Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes accidental disappearance, meaning coverage if you simply lose that item. And there is no deductible.
Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house ?- up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. They are not covered for damage by wind or disease.
3. Liability protection.
This covers you against lawsuits for bodily injury or property damage that you or family members cause to other people.
4. Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
This pays the additional costs of living away from home if you can't live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 10% of the insurance on your house. You can increase this coverage, however, for an additional premium. Some companies sell a policy that provides an unlimited amount of loss-of-use coverage -- for a limited amount of time.
If you rent out part of your house, this coverage will also reimburse you for the rent that you would have collected from your tenant if your home had not been destroyed.
Unlike driving a car, you can legally own a home without homeowners insurance. But, if you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to get homeowners insurance coverage. That's because lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, tornado or other disaster. If you live in an area likely to flood, the bank will also require you to purchase flood insurance. Some financial institutions may also require earthquake coverage if you live in a region vulnerable to earthquakes. If you buy a co-op or condominium, your board will probably require you to buy homeowners insurance.
After your mortgage is paid off, no one will force you to buy homeowners insurance. But it doesn't make sense to cancel your policy and risk losing what you've invested in your home.
If you rent out your Home, Townhouse or Condominiums these are the policies you need to purchase and you will find normally to be cheaper than you standard homeowners policy.
HO-6 policy? This policy used for condominiums can be both owner and tenant occupied. But if being rented out it is very important to add to your policy Unit Rented to Others endorsement. (not all companies have this endorsement, look to dp2)< Dwelling Fire Policy 2 (aka DP2) policy ? this policy also used for condominiums are for owner and tenant occupied, just like the HO-6 policy except these policies can be written for condos that are under a business or corporation (very common to see in Florida).
Dwelling Fire Policy 3 (aka DP3) this policy is the most commonly used for home that are being rented out. But keep in mind that this policy does not cover for theft and has other limitations. (make sure to review you policy carefully)
In the event of a flood, your National Flood Insurance Program (NFIP) policy
covers direct physical losses to your Building and Contents.
Some properties, especially along coastal areas, may be subject to limitation if the
property is elevation with and ground level enclosure.
For a better understanding and summary of what is & is not covered we
recommend you contact us or visit www.fema.gov/flood-insurance.
FEMA's special policy for condominium buildings
FEMA created a special flood insurance policy for residential condominiums? It's called
the Residential Condominium Building Association Policy (RCBAP). It is designed to cover
residential condominium buildings in the Regular flood program.
This RCBAP flood policy allows association to have the following:
• Covers entire building under one policy
• One deductible for a building
• Higher limits available
• Provides replacement cost loss for buildings
What items are covered under the RCBAP?
The RCBAP policy extends coverage to
• Building
• Common areas
• Unit, including drywall, cabinets, ceilings, fixtures, appliances and flooring.
This differs from the way a typical hazard, or homeowner’s policy covers the condominium
building. For hazard policies, a policy usually covers the structure and common areas, and may
or may not extend to the unit, depending on what the condominium Master Deed says. This is an
important difference to understand when determining the amount of flood insurance that should
be carried.
How much coverage is available?
The RCBAP allows a condominium association to purchase coverage for the up to $250,000 per
unit not exceeding the replacement cost. For example, a 2-unit condo can purchase a policy with
up to a $500,000 building limit, a 10-unit condo can purchase up to $2,500,000 etc.
What if this limit is not sufficient to replace everything covered by the policy? An excess flood insurance policy can be purchased to add more coverage. Also consider a private market flood insurance policy. These policies have coverage similar to the FEMA flood policy but many times
will insure up to the full replacement cost of the building.
Replacement Cost Value (RCV)
The RCBAP covers the insured property for replacement cost value (RCV). The RCV is not the
same as market value. Replacement cost is the current cost to repair or replace the insured
property with similar quality materials. The RCBAP requires that a policy insure to value and
must cover at least 80% of the RCV or the maximum available under the FEMA policy. If not
properly insured to value at the time of a loss, a co-insurance penalty will be applied, and the
insured will not be reimbursed fully for a loss.
Should I purchase my own condo unit flood policy too?
A unit owner can purchase an individual flood policy that will cover personal contents in the
unit, including clothes, TV, furniture and basically anything that isn't nailed down. Think of
turning your unit upside. Whatever falls out is contents. Please note a unit-owner HO6
homeowners’ policy does not cover flood damage, so an individual flood unit policy should be
an important part of your insurance program.
For more detail information and copy of the actual policy form you can find this on FEMA
National Flood insurance program website.
BUSINESS INSURANCE
Insurance companies selling business insurance offer policies that combine protection from all major property and liability risks in one package. (They also sell coverages separately.) One package purchased by small and mid-sized businesses is the business owner?s policy. Package policies are created for businesses that generally face the same kind and degree of risk. Larger companies might purchase a commercial package policy or customize their policies to meet the special risks they face.
Business Owners Policies (aka BOP) include:
1. Property insurance for buildings and contents owned by the company -- there are two different forms, standard and special, which provides more comprehensive coverage.
2. Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location. (This coverage is not always automatically included on all policies, must verify if included or excluded)
3. Liability protection, which covers your company's legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
BOPs do NOT cover professional liability, auto insurance, worker?s compensation or health and disability insurance. You'll need separate insurance policies to cover professional services, vehicles and your employees. (For more information on these other types of insurance contact us at 305-451-1467)
Professionals that operate their own businesses need professional liability insurance in addition to an in-home business or business owners policy. This protects them against financial losses from lawsuits filed against them by their clients.
Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. When liability is limited to acts of negligence, professional liability insurance may be called "errors and omissions" liability.
Professional liability insurance is specialty coverage. Professional liability coverage is not provided under homeowner?s endorsements, in-home business policies or business owners policies (BOPs).
As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel -- liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.
Whether you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many details about how you use vehicles in your business, which will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.
While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.
If you have a personal umbrella liability policy, there's generally exclusion of business-related liability. Make sure you review you Umbrella policy carefully.
Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.
Notice how the Business Interruption Insurance will help your business during a major lose (covered peril).
Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.