Why Flood Insurance Is Not Automatically Included In Your Homeowners Insurance

It is not unusual to find that insurance policies come with varying exclusions. One of the most common exclusions is flooding – it’s simply not covered by homeowners insurance, and very few homeowners bother with it. 

According to a 2016 survey by the Insurance Information Institute, only 12% of homeowners have flood insurance. In the previous year, that figure was 15%. Why homeowners do not seek cover for such a potentially devastating event could be due to many reasons, but the most probable might be an assumption by most people that their homeowners insurance covers them in the event of flooding.

Regardless of the reason, the fact remains that your homeowners insurance doesn’t cover flooding, and in this article, we take a look at why this is so. But before we proceed, it is important to know that there is a difference between water damage and flood damage. 

Water damage from a broken or leaky pipe in your home would be covered; but what is properly referred to as a ‘flood’ in insurance terms would not be. Flooding, in insurance terms, refers to a situation in which a body of water outside your home overflows to a point where it enters your home. Usually such events are due to a natural disaster and more than one home is affected. It’s this kind of flooding that’s not covered.

1.           Costs of flood losses exceed premiums collected

The first reason is a simple matter of economic sense – it doesn’t make any for insurance companies. The cost of damage associated with floods is simply astronomical. Interestingly enough, there was a time – before 1950 – when flooding was covered by the homeowners insurance. However, over time, losses incurred as a result of flooding increasingly became too much of a burden. As a result, many insurance companies started excluding flooding from their homeowners insurance packages. 

Eventually, in the early 1960s, all private insurance companies stopped offering flooding insurance because it wasn’t profitable. This created a huge gap and forced homeowners to bear their losses, many of which was simply too onerous owing to the high costs of the losses. This forced the government to step in. At first, the government provided public disaster aid to assist homeowners before the NFIP was established in 1968 to provide flood insurance.

2.           Relatively low numbers of properties involved

The way insurance works, so that it is profitable for insurance companies, is to have a lot of people subscribing to a policy. Larger numbers of people translates into a larger pool of money from premiums to offset losses from the few people who do need to claim on the insurance policy. 

When the reverse is the case, then the pool of money is smaller. And so insurance companies would literally be shooting themselves in the foot if they included flooding as part of homeowners insurance without extra premiums to make the pool of money larger. But of course, the ability to charge extra premiums is based on the premise that more people would be willing to pay it for flood insurance, a notion already negated by the 12% statistics cited earlier. 

However, private insurance companies offer additional insurance known as ‘excess coverage’ on top of the flood cover the government offers. The government only offers up to $350,000 in coverage - $250,000 for house structure and up to $100,000 for the contents and personal possessions in the house.

Ultimately, insurance companies need to make profits; providing flood cover diminishes that profitability and that is the main reason why flooding is usually not included in homeowners insurance covers.

Homeowners Guide to Simply Understanding Home Insurance

This policy covers a personal property or a house in case it is destroyed or damaged by an occurrence or event covered by the policy. The replacement or repair costs required in the private property are usually paid by this kind of insurance. The occurrences or events are termed as “covered losses.”

Note: Before buying home insurance Houston TX, you should know that it is a contract between you and the insurance company. 

You should carefully go through it and understand what exactly is covered and how much the limit of the coverage is. Since the renters and homeowners in Texas fall under the Consumer Bill of Rights, you should also be aware of your rights. Moreover, while buying or renewing a home insurance, you should get a bill of rights from your insurance company.

Can I Get Insurance on A Home I Do Not Own?

This is a common question often asked and the answer to it is, no. You can’t get homeowners insurance on a home you do not own. To get it, the home should be named after the individual living in it. Homeowners insurance policies specifically mention that the person under whose name the policy is issued should be the real owner of the house and they should be living there. Another factor to be considered is that the home should not be left vacant for 30 consecutive days, otherwise the policy will be considered invalid.

General Questions to Ask

When it comes to homeowners insurance, there are some questions whose answers should definitely be known. 5 such questions along with the answers are mentioned below:

1.      What factors can affect the premiums?

Some of the important factors are the characteristics and features of the house (e.g. the structure type, the age of the house, wiring, garage, roof, etc.), its location, protective devices (if installed, premium cost will come down), personal factors, and claims history.

2.      Why should a home inventory be completed?

When you buy a home and a Homeowners insurance policy, you should maintain a complete home inventory. If any claims occur in the future, it will be settled quickly. A complete home inventory allows the insurance companies to easily verify the property. This, in turn, quickens the claim settlement.  

3.      How can a home inventory be completed?

You can start with making a list of all your possessions. In that list, describe each item along with the make, model and the place from which it was purchased. Besides noting down the details, you should keep the sales receipts and purchase contracts as a proof.  

You can make a few especial lists or include different sections in the same list. You should also note down the valuables you own, such as jewelry, artwork or paintings in one list and other less-valuable things in another list. Moreover, you can take pictures of the individual items and rooms. Or you can go a step further and videotape your house and in that videotape, make all the contents of your home properly visible.

When it is done, save the inventory list on your PC and on a separate disk. All the photos, videotapes and documents describing inventory should be stored securely in a safe deposit box.

4.      What is the difference between non-renewing and canceling?

The non-renewing of a policy means that a policy is not continued after completing a predefined term. It can be your or the insurance company’s decision to discontinue the policy at the end of the policy tenure. If it is the company’s decision, you will be provided clarification and asked to raise any doubt within a specific time.

Usually, it is not seen that an active policy is canceled by the insurance companies. These cancellations occur because of premium payment failure, or the owner commits fraud or has made some serious misrepresentations on the application.

5.      Which parts make up a policy?

The HO policies vary from company to company. But there are certain basic components that are common in all the policies, including the very first page (part) of an insurance policy that contains a summary of the homeowner.

In other parts of the policies, definitions of complex terms used in the document, information about coverage and exclusions, terms and conditions, and endorsements are mentioned.

How to Find the Best Insurance Agent near Me? 

As mentioned above, the coverage and rates may vary depending on the insurance company. So, it is always suggested that you do a proper research about all the options available on the market. After all, it is your money and you should put it in the right place.

The first thing you can do is identify your requirements (coverage and coverage amount). Then you should research different insurance companies and agents in your area, and get quotes from them. While comparing, make sure that the comparison is between two policies of different companies but the coverage is same.

After that, discuss the details with your insurance agent. Be truthful while answering any question, as any lie will have its consequences which will hurt at the time of claim. Ask your agent whether or not you are eligible to get discounts. At this time, one more thing you should consider is the “high deductibles.” 

An important point to note here is that higher deductibles will lower the premium amount but during the time of claim, you won’t get any higher claim amount. So choose sensibly.

Before finalizing a dwelling policy, you should also consider investigating the complaint index, financial rating, and license status of the insurance company. This will provide you with information about the company’s strength, financial stability, and customer service.

Do I Need a Homeowners Insurance If I Own My Home?

It is not mandatory for the owner to get homeowners insurance but if your house is financed, your lender will want your house to be insured because it will protect it from damages caused by unforeseen situations, like fire or natural disasters.

If your home is in an area where flooding is common, your lender will probably require you to buy a separate flood insurance policy. After the mortgage is over, it will be completely up to you to decide whether you will stop or continue the homeowners insurance.

What Is a Peril and What Perils Are Included in a Home Policy?

The mishaps against which the insurance companies give the protection are called “perils.” This term is an industry term and is very common in the insurance sector. There are some common perils that are usually covered by most home insurance policies. The common ones are fire and smoke; lightning strikes; hail and windstorm; explosion; vandalism and malicious mischief; damage caused by a car, airplane or vehicle; theft, falling of objects; the weight of snow and sleet; and water damage.

All the above-mentioned causes are commonly covered in a normal home policy, as stated earlier. The insurance company pays for the repairs required by damages. In cases like fire and storm, the homeowners are forced to live at another place and the insurance company pays for those expenses as well. However, if you live in a flood-prone area where serious damage is more likely to be caused by flooding, you will need to buy a separate flood policy.

You should note that a HO policy covers the damage caused by many incidents, but there are some scenarios that it does not cover. You can get further information by going through your policy’s terms or discussing your requirements with your agent.

Commercial Property Insurance Guide for Choosing the Right Policy

With the commercial property insurance, a commercial property gets protection in terms of compensation from many unwanted happenings, such as theft, fire, and natural disasters. 

A lot of business organizations, including manufacturers, retailers, non-profit institutions, and service-oriented enterprises get covered with this type of insurance. Commercial property insurance even covers ranches or farms.

When these properties suffer from a theft or get damaged by fire or storm, they are compensated by the insurance to replace or repair them. Commercial Insurance Houston TX policies also pay for the replacement of a lost or stolen property.

Types of Commercial Property Policies

In Texas, commercial properties are divided into three categories as mentioned below:

1.      Basic form policies: The common perils are covered in these policies. For example, storms and fires.

2.      Broad form policies: In these policies, common perils as well as other damages caused by structural collapse, water, sprinkle leakage, the weight of snow, sleet and ice are covered.

3.      Special form policies: These policies cover all kinds of perils except the ones specifically excluded in the policy. The exclusions commonly include harms from earth movement, flood, terrorism, war, wear and tear, nuclear disaster, and insects.

Prior to buying a policy, study it carefully. You may require buying separate policies or additional coverage, like a windstorm, crime coverage, or a flood policy to completely protect your enterprise.

If you are operating a business in more than one location, you can get it completely covered by a single policy unless the business at different locations has different risk profiles and functions. 

For example, some businesses have a factory at one location and the administrative office at another. In such cases, the agent can clarify whether a single policy will cover it or separate policies will be required.

Note: In the Texas coastal counties, damages from a windstorm are not covered in most of the commercial property policies available. For example, the Harris County’s parts in Galveston Bay and 14 other coastal counties are excluded. So, businesses situated in these counties will require a separate policy to cover a windstorm.

In case you lease or rent a building, your property in the building won’t be covered in the building owner’s policy. A tenant coverage should be bought separately to insure the furniture, machinery, and merchandise. The cost of tenant coverage is usually less than the coverage of a building because in this policy, only the building’s contents are covered instead of the whole building.

Commercial Property Coverages

Some insurance professionals say the policies for commercial property lack standardization. There are certain minimum requirements by the state that insurance companies should meet, but they can further develop or modify the policies on their own. Thus, the terms of policy and coverage may vary from one insurance provider to another.

CMP (Commercial Multi-Peril): Multiple coverages are incorporated in these policies so that the property gets complete protection from a single policy. This may cover commercial property, commercial auto, inland marine, and liability. In comparison to buying individual coverages, it costs less to buy a CMP policy.

BOP (Business Owner Program): These are the common commercial policies for small businesses. Businesses that have adopted these policies get the liability and property covered in a single property.

A variety of unwanted happenings are covered in commercial property policies and they are either the base property’s part or one can avail them by endorsing different coverages. While endorsing or expanding the coverages of a policy, the premium usually increases. Moreover, the coverages can be bought as individual standalone policies.

Common coverages: There are certain risks that almost all the commercial property insurance policies in Texas cover, including buildings not owned but regularly used, newly constructed or acquired buildings, personal properties of employees, off-premises, business interruption, extra expenses, valuable papers, law or ordinance, machinery and boiler, and inland marine.

Crime coverage: As different types of criminal activities can harm the property, there are different policies to give businesses protection from crimes. Some common crime coverages include safe burglary and robbery, loss of money and glass because of theft, alteration or forgery, and disappearance or destruction of important assets in the commercial property.

When a Texas commercial insurance policy pays for the losses due to a crime, it pays on the basis of the discovery or the loss sustained. In the discovery coverage, you are covered upon discovery losses and in the loss sustained coverage, you are paid for losses incurred during the duration of the policy.

Flood Coverage: Some insurance companies cover the risk of flood in their commercial property coverage. But it is usually available in the areas with less risk of flood. However, NFIP (National Flood Insurance Program) is the one that offers the flood insurance.

Qualification for NFIP coverage requires the business to be located within the NFIP engaging community. To minimize flood damage, these communities have adopted floodplain management and federal building programs. Communities with a high risk of flooding fall under NFIP and NFIP wants every structure in these areas to have the flood insurance.

Hail and Windstorm Coverage: In the coastal areas of Texas, insurance companies usually do not cover damages from a hail or a windstorm in their commercial property policies. If your business exists in certain areas of Harris County or 14 coastal counties of Texas, you should avail the windstorm coverage by TWIA (the Texas Windstorm Insurance Association).

This is available for all the properties made, remodeled, or repaired prior to 1^st January, 1988. However, the commercial developments after this date need to be inspected.

Understanding Commercial Property Rates   

To understand the rates, you should know that a process called underwriting is followed by the insurance companies. It usually determines the likability of your business to file an insurance claim. The premium rates are directly proportional to your claim’s likelihood. If the likelihood is more, the premium will be more. If it is found by any Houston commercial insurance company that your enterprise is on the higher risk for loss, it may deny issuing a policy.

The rates of commercial property insurance are usually determined by the primary factor, fire risk. The underwriting process by insurance companies includes inspection of a commercial property for possible hazards. The fire rating of a business property is determined by five factors of a standard rating system used by fire inspectors. These factors are the quality of construction materials, location of the property, whether the property is occupied or not, protective measures to prevent fire, and exposure to external fire dangers.

Shopping for Commercial Property Insurance

When it comes to buying a CIP, you should consider certain things which may affect your buying decision.

Prior to applying for a commercial property insurance coverage, you should get rid of all the possible hazards that can increase the chances of an insurance claim. Your insurance company or agent will guide you in eliminating the hazards.

While shopping, get quotes from different companies. Remember that a cheaper policy may cover fewer risks. Some insurance companies may deny giving you the commercial property insurance because every company has different underwriting criteria. However, you should not stop searching for the best one for you if you are denied.

Another factor to consider is the “higher deductibles.” When an insurance company pays you for a claim, you are charged a cost for the claim. Here, more deductibles mean less premium. Sometimes it happens that you end up paying more from your pocket during a claim. 

Further, look if your policy has a limit which means a specific amount being fixed up to which the insurance company will pay. Last but not least, do not forget to check the licenses of your insurance company and agent.     

The 5 W’s to General Liability Insurance Coverage for Contractors

General Liability Insurance for Contractors

General liability insurance is the perfect insurance type for contractors. They do not require a comprehensive BOP since they usually do not own the commercial building they are working on, which means there is no need for property insurance. In addition, they do not have lots of operational expenses or active payrolls. 

Therefore, general liability insurance is undoubtedly the perfect type of insurance for contractors both in Houston, Texas and the rest of the world. A few useful details covering the 5 W’s associated with liability insurance coverage for contractors are discussed below for your better understanding.

What Does It Cover?

The general liability insurance provides coverage for the following claims:

·       Bodily injury

In case one or more of your employees get injured while working in your business premises, you have a legal obligation to take care of their medical expenses which are usually covered by general liability insurance Houston TX.

·       Property damage

When you are carrying out a contract, there exists a chance that you might end up damaging another property in the vicinity, owned by someone else. However, general liability insurance takes care of it for you.

·       Data loss

With globalization and evolution of computers, data is being considered one of the most valuable assets owned by a business organization. In case you suffer from a data breach, general liability would compensate you for your losses.

·       Personal injury

Personal injury coverage by general liability insurance may include slander, libel, copyright infringement, and false advertising.

·       Disasters causing property damage

In case damage occurs to your property by some uncontrollable factors, such as theft, lightning strike, fire or other natural disasters, you can use your GL coverage. 

·       Rental property damages

General liability insurance also provides coverage for any damages caused to a rental property by your company.

·       Financial losses

When you are offering your services or products to a clientele, you might come across different financial crises and general liability insurance Houston TX would be there to help you get over them.

·       Failure to meet deadlines or deliver the end product

In case you are unable to deliver your promised service or product on time, general liability insurance would cover for you.

·       Liquor liability

If you own a business that is not associated with the manufacturing, distribution, furnishing, serving or selling of alcoholic beverages, you may use this coverage to take care of an accident that involves liquor.

What Limits Are Generally Available?

Just like the majority of the insurance coverage plans out there, different general liability insurance policies provide different limits and the maximum payable sums in the event of different claims. Minute risk assessment is very important before signing up for such a policy to make sure that the coverage is adequate and you will never have to pay out of your own pocket in case of an inconvenience.

For instance, consider a scenario in which you are being sued for an amount of $0.3 Million on account of a slip and fall injury. If your policy coverage is limited to $0.25 million, you would have to pay the difference out of your own pocket. Therefore, it is important to carry out a proper research in order to make sure that the equation is balanced.

What Businesses Might Need This Coverage?

General liability insurance may be availed individually as well as in collaboration with the business owner policy (BOP). Many contractors may also opt for a standalone coverage using a program known as the progressive Advantage Business Program. This type of insurance comes in handy for all business owners, but it proves to be the most effective for small business owners and contractors. Such sort of business owners cannot afford to deal with a lawsuit; but keeping in view the high frequency of accidents, there is a good chance that they might come across one soon. While small business owners might not be able to deal with the implications of a lawsuit, general liability insurance is there to make things much easier for them and help keep the business functioning. Moreover, some clients or employers may also require one to carry a specific amount of general liability so as to work for them.

What Is the Average Cost?

When it comes to the cost of general liability insurance policies, it may vary greatly depending on a number of factors, such as your business type, associated risks, etc. For instance, building contractors would naturally require a much larger coverage in comparison to someone who runs a marketing consultancy firm. The location of the business also influences the costs. Some of the work sites are considered to be a lot more dangerous and therefore they are liable for different types of claims, so they cost more than the comparatively safer sites. A CGL provider normally asks for the following information before calculating your premiums:

·         Location of the business

·         Previous claims history

·         Past and current business activities

·         Amounts of payrolls

·         Years you have been in business for

·         Type and size of the business

The minimum premium amounts usually start from somewhere around $350 per annum, but the majority of general liability insurance policies provided for small businesses may fall around $750-$2000 per annum, depending on the business type and the coverage requirements. Considering the amount of money you might end up saving through such policies, the amount seems pretty nominal.

In case you own a business that falls into a category with low risks, getting a BOP would be a good call since it serves as a collaboration of Property Insurance and General Liability Insurance whereas the premiums are usually nominal. If you currently own a BOP, it is recommended to get it rechecked in order to make sure you have the right coverage limits.

What Are the Benefits of Having This Type of Policy?

General liability insurance may benefit a contractor in a number of ways. Some of the most common ones are discussed below:

·       Asset protection

In case your business is alleged by a third party on account of a property damage or bodily harm, you might be sued to compensate for the liabilities. General liability insurance will protect all your assets by taking care of liabilities and pay for the damages so you do not have to get them out of your own pocket.

·       Survival in case something goes wrong

In a world of uncertainty, nothing is reliable. Even if we are highly careful, things might still go wrong within a matter of few seconds. Therefore, the best course of action is to get general liability insurance to save you from any unwanted situation. This kind of policies allows you to get back on your feet in case things go out of your hand.  

·       Protection for the whole business

General liability insurance provides protection for your whole business, including your employees and customers. Knowing the fact that your entire workforce is well protected from any kind of uncertainty, you get the peace of mind to excel in your business.

In the end, it may be said that general liability insurance is a must-have for small business owners as well as contractors. Rather than having to pay lots of money out of your own pocket in the event of a liability, let general liability insurance take care of it.

Keeping in view the current scenario of our society, the frequency of lawsuits is increasing with every passing day. Regardless of the fact that you own a small or a large business, only a single lawsuit might be able to take it down for good. Therefore, the right thing to do is to calculate your risks and operational liabilities, and get insured at your earliest convenience. 

Why Is Personal Branding Important?

Nowadays, one can find information about 1 out of every 5 people by a simple online search. Online data is generated by different individuals and entities who have different purposes for posting such information. Not all that you will read online about yourself or other people known to you will be flattering and that is why personal branding was created.

Simply put, personal branding is a foolproof method for you to generate the right information about yourself online. This involves creating a personal brand in an online format that represents who you are and your unique personality while cognitively burying any negative personal information available online. In essence, personal branding is a certified method of creating, managing, and controlling your online reputation.

A simple Google search of different individuals will reveal a lot of idealized and fabricated versions of them that may be ridiculous or exaggerated. This falsehood does not do well for individuals seeking new opportunities in marriage, career, friendships or education. Personal branding helps us honestly and accurately portray ourselves exactly how we want to be seen while putting to rest any inaccurate or false information that we may deem harmful to our reputation.

This new trend of creating our personal online brand is highly beneficial and important, especially when it comes to searching for a new job. Research shows that almost 80% of American recruitment agencies and employers will carry out an online search of the potential hires before zeroing down on their final choice. Based on the online feedback received, the chance of getting the job may shift from 100% to 0% pretty quickly.

The three possible online presence scenarios for different potential hires might be an overwhelming negative feedback from news posts, social media posts, articles or blog sites; a total lack of online presence where every search reveals nothing about the individual other than people with similar names; and general positive feedback relating to the individual’s personality, work ethic, academic achievements, and more.

While some academics may argue that any form of online presence is better than none at all, this may not be the case when being considered for an employment opportunity. Recruiting agencies and employers will be more favorable to a candidate with generally positive online feedback versus one with overwhelming negative feedback, or one with no online presence at all. There is an unspoken sense of confidence exuded by an individual with positive feedback about their character, achievements, and personality.

Online dating sites are somewhat the new way to meet people, mingle, and find love. When scanning through random dating site profiles, you are bound to find some incredibly interesting and unlikely profiles that keep you wondering why the individual would be single and not in a successful relationship already. Well the truth of the matter is that almost everybody tries to present himself/herself in his/her best form on his/her online dating profile to attract better partners.

The worst part about not having a personal online brand and having a false online dating profile is that a simple Google search will reveal contrary information to what you have portrayed. By creating your own personal online brand, you can rest assured that what your potential partner sees online is what they will realize when they will finally meet you. 

A positive personal brand plays a big role in your eventual success in life. By creating a strong personal brand, you automatically present yourself as a market leader in whichever capacity that may be relevant to your brand. This unequivocal display of leadership, strength, prowess, and professionalism leads to a lot of successful opportunities coming your way.

After knowing these few but insightful reasons as to why personal branding is important for you and your business, we hope that you will take the challenge and start working on your online personality today.

Author: Frank Medina, find him online @thefrankmedina