Halloween is a time of witches, ghosts, goblins, scary stories and nightmares. As boring as they may be, insurance agents have nightmares too. So, in the spirit of Halloween I share three myths that I hear on a regular basis that give me the chills and nightmares is the same way your favorite scary movie does.
- It will never happen to me – Then why buy insurance? We buy insurance for protection against the claims that may come. I am certainly not a proponent of purchasing insurance you don’t need, but it does make sense to play the what if scenarios. What happens if you don’t have “full coverage” on your vehicle and someone that doesn’t have insurance hits you. Can you afford to replace it? Do you have another vehicle you can drive? If the answers to these questions are no, then you might need to pay that little extra for the comprehensive and collision coverage (the actual name of full coverage), with rental coverage.
If it will never happen then the coverage will be really, really cheap because the cost of your insurance policy is literally based on what the insurance company expects to payout for you that year. No, you won’t have a claim every year, but when you do it’s also likely to be more that what you have been paying for the last several years.
- I think it’s covered, so it is, right? WRONG! Insurance is a contract of adhesion. That is the legal term for take it or leave it. Insurance is filled with exclusions and limitations, and when you sign that contract it means you accept the terms as set forth by the insurance company. While we try our best to notify you of the big exclusions, the contracts and “fine print” can take forever to go through. So, here are a couple I would like to point out on different policies:
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- Homeowners Insurance doesn’t cover Flood – yes there are water claims that can be covered, I am talking the rains come down, the floods come up, some through your front door. You can purchase this, but it is a separate policy.
- Homeowners Insurance doesn’t cover earthquake – Again this can be purchased, but it’s not automatically included, but rather is automatically EXCLUDED.
- Liability coverage doesn’t provide physical damage coverage for your vehicle. In Arizona if you have liability only, the other party is at fault, and doesn’t have insurance, your policy will not pay to replace your vehicle. In some states there is something called uninsured motorist physical damage, so if you get hit by someone that doesn’t have insurance you can get your vehicle repaired. Arizona is not one of these. If you don’t have comprehensive and collision coverage, we will not repair your car if the other party doesn’t have insurance.
- Wear and Tear is not covered on any insurance policy. Your car will get old, it will need oil changes, it will have flat tires we all know insurance doesn’t cover these things. But for some reason we don’t understand this concept when it comes to homeowner’s insurance, the same thing exists. We won’t cover wear and tear to your roof, AC units and other things around the house unless the cause of the loss is something else.
There are many more exclusions. These are the big ones. Refer to your policy as there are many more, but you can see why these things might cause nightmares.
- There’s a grace period, right? – AAAAGGGHHHH!!! Yes, when it comes to auto payments there is a legal requirement for there to be a grace period for payments. In the state of Arizona, the rules state you have 7 days. How you run your finances is up to you, but what gives me nightmares about this line of thinking is that only applies to regularly scheduled payments, not renewals. So, at renewal if you don’t pay the policy doesn’t go into effect. Meaning you are left without coverage until you renew the policy. You can see why that might give me nightmares. People running around without insurance that think they do have insurance.
There are many more, but as professional worriers and risk managers being concerned about what’s going on and what’s covered and not covered is what we do. This is why at Gila Insurance Group we try to teach our clients about their options as they buy the policy so that surprises are limited when there is a claim, it’s up to our clients to decide how to best cover themselves armed with that knowledge. If you have questions about the insurance coverage you have with us, we are happy to answer questions you have. Knowing what to expect can be priceless. If you need to make changes to your policy please contact us today!
For a long time, we have been looking for a program that would simplify the life of landlords with multiple properties. When it comes to landlords who have multiple properties, insurance can be a pain. You either have to have a single policy for every property (this would be a personal lines policy like a dwelling fire policy), or if you are lucky enough to have enough properties you can list them on a commercial property (a commercial policy allows you to have one policy with a list of properties). But if you happen to have 6 or 7 properties you are kind of stuck in the middle. Until now! Nationwide Insurance Company recently made their business owners policy available to landlords that have up to 12 properties. This includes single family homes, duplexes, tri-plexes, and 4-plexes. They also will do insurance for larger apartment buildings. This would allow investors with growing portfolios to enjoy benefits of a single commercial policy for their properties. What are those benefits?
- Simplicity – Let’s be real for a second. Everyone likes coverage, but most landlords make their insurance decisions on price. But how much time to you spend handling the various policies and paperwork BS that you have. Likely more than you should. One policy for all your properties minimize this.
- Liability – Generally Commercial policies generally start at 1 Million in liability coverage. Their liability coverage tends to be a little broader and include coverage for personal and advertising injury. We at Gila Insurance Group believe personal injury is a key coverage for landlords. Medical Payments is generally a higher amount on commercial policies.
- Property Coverage – Coverage on a commercial policy and a personal lines policy is similar. In that the homes would still be insured at the replacement cost, subject to a deductible and covered at on a “special” policy form. Meaning that unless its excluded its covered. Unlike personal lines policies, most commercial policies do include coverage automatically for back up of sewers and drains. Like the individual personal lines policies coverage like flood and earthquake are still excluded. If you need this coverage you will still need a different policy to ensure you get this coverage.
- Personal property – Not generally an issue for landlords, unless you are renting furnished properties, but here is one of the greatest benefits of a commercial policy for landlords. A business owners policy covers personal property in apartments, rooms, or common areas furnished by you as building not personal property. Also, personal property owned by you that is an appliance used for refrigerating, ventilating, cooking, dishwashing or laundering is actually considered building not personal property. That is huge as that means you can get better coverage on those appliances you are furnishing your tenants that you would on a personal lines policy.
- Loss of Use/Loss of Rents – Covered in a similar way on both policies. This only steps in if you have had a covered loss (the building burns down, you aren’t getting rent, but have to pay the mortgage, we pay your rent) and you are responsible for showing the rent that you have lost.
- Exceptions – Not everything can be perfect, right? So, what are the drawbacks of doing it this way? There are 2.
- On a personal line or dwelling fire policy you usually get some coverage for other structures automatically. On a commercial line policy, you don’t. What are other structures? These would be shops, sheds, detached garages, fences. So, if you have one of these that you are worried about you would need to list the building on the policy.
- On a personal lines policy they generally exclude ordinance and law coverage (the idea that a city makes an ordinance that shingles have to be pink, then grandfather non-pink shingles until you have to get a building permit and find out that pink shingles cost way more than grey shingles), but then personal lines policies come back and give you 10% of the value of the home for ordinance and law coverage (I know insurance is confusing). That is not the case on a commercial policy. It can be covered, but it has to be added. So, make sure its there.
The short of it, is this is awesome. We at Gila Insurance Group have been searching for this for 3 years and have it. If you are a landlord with multiple properties to insure, call us at +1-928-428-6440 and let’s get a policy in place for you today!
