A Simple Guide to Renters Insurance Coverage

Renters insurance is valuable because it allows you to get hundreds of thousands in coverage for less than $20 per month. The policies are even cheaper when you merge them with your auto plan. More details on that will follow in this simple guide to renters insurance coverage. Yet for these very reasons, many policyholders forget about their plan and let it lapse. Unfortunately, the problem doesn’t stop here.

According to the Federal Bureau of Investigation (FBI), the average burglary costs the victim more than $2,400 in losses. During 2018, burglars stole and/or damaged $3.4 billion’s worth of belongings and property. Accidents are also harmful. For instance, between 2013 and 2017, residential fires inflicted almost $7 billion on households in “direct property damage.” Cooking equipment, heaters, and faulty electricity/wiring cause 73% of these strategies. The National Fire Protection Association (NFPA) highlighted this in a report that they published in 2019.

Some people may be thinking about getting rental insurance, especially because it covers all of the above. Others could have had a policy in the past, but they let it lapse. If you currently have one, that’s a scenario to avoid. For a start, the average insurance plan only costs $17 per month. This guide to renters insurance coverage will outline the factors that make these policies worthwhile. In fact, we even highlight the ones that most insured consumers don’t even know about. To give an example, your coverage entails accidents in restaurants, malls, and grocery stores.

A Simple Guide to Renters Insurance Coverage: Property, Liability, and Emergencies

Renters policies cover both the owner and their household. Keep in mind, though, that this doesn’t extended to non-relatives who live with the insured, such as apartment roommates. Other than that, almost every renters insurance policy applies to three key areas.

Property and Personal Belongings

Your renters plan protects your items in the event of a flood, fire, or burglary. For example, if someone breaks into your house and steals the TV set, the insurance policy reimburses you for its cost. Moreover, the coverage pays for the related damages, including any broken windows or destroyed furniture. To clarify, here are some personal belongings that your renter’s policy covers:

  • Bicycles, kayaks, and outdoors items
  • Clothing
  • Electronics (laptops, computers, smartphones, …etc.)
  • Furniture and appliances
  • Jewelry and valuables
  • Windows, doors, and flooring

It is important to note that consumers should get enough protection based on the value of their belongings. The typical renters insurance policy covers $20,000 or less. However, the belongings in a two-bedroom apartment, let alone a house, are worth $30,000 on average. Many insurance providers will increase this area of coverage when policyholders ask for additional protection. Therefore, households that own more than the default $20,000 should highlight this point to the insurance agent or company.

Liability

Your renters insurance coverage also applies to guests and affiliates who visit your home. For instance, a college student owns a policy on their apartment. One day, they invited their friends for dinner. When the group started to cook, a guest got severely burnt. This is because the host didn’t properly clean the oven. Firstly, the insurance company takes care of their guests’ medical bills, such as the ambulance, hospitalization, and ongoing treatment.

Secondly, let’s assume that the injured guest filed a lawsuit against the apartment resident. In this scenario, the renters insurance plan pays for the policyholder’s legal expenses, attorney fees, and most (if not all) of the lawsuit’s cost. Having said that, liability coverage has certain limitations. That is to say, the insurance company doesn’t protect roommates and other residents (apart from family and dependents). In our example, the roommate would have had to pay for the lawsuit’s costs if they, not the policyholder, invited the friend.

Most of the time, providers give you $100,000 in liability coverage. Yet you always have the option to increase and decrease the amount. Keep in mind that the premiums also become more and less expensive, respectively. Just as importantly, consumers may mix between their property and liability coverage amounts based on their preferences. For instance, when you have a lot of expensive belongings, you could get additional property protection and reduce your liability insurance. As a result, your premiums stay the same.

Emergencies, Floods, and Fires

Certain events and disasters might make your residence unlivable. Amongst them are fires, broken-down water pipes, and collapsing structures. When this happens to policyholders, the renters insurance will pay for their new/temporary housing (such as a hotel). If the damage is irrecoverable, the insurance company takes care of the moving expenses, including storage units and rental trucks. This, of course, is in addition to the personal property and liability protection.

Your Guide to Renters Insurance Coverage Outside the Home

Policyholders retain their coverage even when they’re away from the apartment or house. Moreover, this applies to all three protection categories. For example, when a thief breaks your car’s window and steals a laptop bag, the personal property coverage kicks in. The insurance provider compensates you, as the policy holder, for the cost of your device and any other stolen items. Yet renters coverage doesn’t apply to vehicles. In other words, the insurance company doesn’t pay for the window repairs. They also don’t compensate you for the value of a stolen car (apart from your belongings).

As far as liability coverage is concerned, it follows you to work, restaurants, and stores. To illustrate, let’s assume that a policyholder accidentally placed their bag-pack several feet away from the table. After that, a waiter slipped over it and suffered a serious injury. Liability insurance may ruminate the waiter for the medical costs and protect you from a subsequent lawsuit. However, this depends on the policy provider and the type of renters coverage that they offer.

Is It Worth It?

Either way, almost every company will cover the three main protection categories. The deductible (i.e. how much you pay) may vary from one policy to the next, although this is common with all types of insurance plans. Moreover, the deductible is minimal in comparison to your belongings’ value and/or any legal and medical costs that you could be liable for. The emergency, fire, and flood coverage is just as worthwhile, even more so for $17 per month.

Whether you have an existing plan or want to get a new one, this simple guide to renters insurance coverage gives you a good place to start. In short, determining how much protection you should have fills the first half of the cup. The second part lays in maintaining the coverage, especially because you never know when you will need it the most.

Renters Insurance: What It Is and Why You Need It

Do you even know how much stuff you have in your apartment? Most people focus on the big things, like laptops and sofas, but there are a ton of little things as well. Often, you couldn’t afford to replace it all if your apartment was destroyed in a fire or something else happened. Plus, what are you going to do if someone comes into your home and steals your jewelry or clothing? You need renters insurance.

What Is Renters Insurance?

Renters insurance is there to protect your possessions if they get damaged, stolen, or vandalized while you are renting from that location. In a sense, it is there to help you through unpredictable problems, including explosions, electrical surges, and fires. Without this insurance, you could go broke trying to replace everything you lost because of a burglary or fire.

Most people incorrectly believe that the landlord’s insurance covers their possessions. Landlords must have coverage for the property, but it only includes the building in which you live. It doesn’t cover losses, such as your sports equipment, furniture, electronics, jewelry, and collectibles, regardless of who is at fault.

It is also a misconception to think that your possessions are covered if your roommate has renters insurance. In fact, their items are covered, but yours are not. It is true that some insurance companies can offer a single policy for roommates. This might seem like the easiest option to consider, but you could end up in a bad situation. What happens if your roommate makes several claims, which causes your rates to go up? As you can see, it is often best to have a policy of your own.

How Much Does It Cost?

Many people don’t want to shell out money for something they hope they never have to use. Still, renter’s insurance is quite cheap. On average, it is just $17 a month. Even if you are trying to save money for a down payment on a house or paying off student loans, you can easily save 50 cents a day to protect up to $50,000 worth of stuff.

What’s Covered with Renters Insurance?

There are a variety of policies available, and insurance companies are likely to vary, but most basic options cover these things:

Personal Property

This includes things like computers, bicycles, kayaks, and more. Whatever you own that is stored in the home is covered by renters insurance. Of course, it works similarly to other types of insurance coverage. Therefore, you must pay a portion of the damage or lost items before coverage starts. It’s called a deductible, and all policies are going to have it.

Let’s say that you have a policy with a $1,000 deductible. You lose $3,000 worth of property in a fire, so you pay $1,000, and the insurer covers the remaining $2,000.

Generally, most policies have a cap on the amount of coverage you can get. This is often around $20,000. Therefore, it’s a good idea to ask your insurance agent how much coverage you need and why.

Liability Coverage

Renters insurance is there to cover accidents that might happen while in your apartment. For example, if someone falls on a wet floor and breaks their nose or your dog bites a guest, renters insurance can help to cover their medical bills.

Liability can also protect you if you’re clumsy and damage things somehow. For example, if you leave the water running in the plugged sink and flood the apartment, your renter’s insurance is going to pay for any damages you cause to the neighbors. Plus, it is going to cover any property you lost in the bargain.

Living Expenses

What happens if a fire destroys the apartment, and you don’t have a safe place to live? You’re not sure where you’re going or how you’re going to cover food. Renters insurance can help to pay for lodging, food, and clothing until you secure another apartment.

Theft

Of course, renters insurance is going to cover theft that occurs in the apartment, no matter what is stolen. However, you may not know that it covers you if things are stolen from your vehicle. It can also ensure that your stuff is protected at the airport, while traveling, and anywhere else. Regardless of where you take your things, they are protected.

Storage Units

Sometimes, you may need to use a self-storage unit to keep some of your items, such as during a deep clean or potential move. If the unit is separate from the apartment, renters insurance can cover part of it. However, it’s not going to cover the full amount, so make sure you talk to your insurance agent to find out coverage limits. Many times, you get 10% of the total contents in coverage. Therefore, if you had $50,000 worth of items inside the unit, you could get $5,000 back if something happened to it.

Food Spoilage

Shockingly, most people don’t think that food spoiling because of a faulty refrigerator is covered with renters insurance, but it is. If an electrical surge disables the fridge and spoils your food, you are going to get a check to cover the groceries that were lost.

Water Damage Coverage

When you ask what renters insurance is you quickly realize that there are many components, so it isn’t easy to explain in a few short sentences because it covers so much. Therefore, you may wonder about water damage coverage.

This is where it gets even trickier, and we’re going to need to break it down into three parts.

Floods

Unfortunately, renters insurance doesn’t cover flooding from an outside water source, such as a river or creek. If you think you may have an issue with flooding, consider a flood policy addendum.

Structural Problems

What happens if your toilet overflows because of a backup in the line or you’ve got leaky pipes? When you are not at fault for these problems, the landlord’s insurance covers structural issues. However, if the leaky pipe or overflowing toilet caused damage to your television or couch, renters insurance is to the rescue and is going to cover those damages.

Flooding and Electrical Damage

So the landlord’s insurance covers the structure, of which electrical outlets are a part. Therefore, what happens if you flood the apartment accidentally and ruin the electrical outlets? Your renter’s insurance kicks in and pays the landlord for the damage to the system because you are at fault here.

How It Works

Now that you know what is covered by renters insurance, it can be helpful to understand how it works. Often, personal property coverage doesn’t protect everything. Many policies go by modern pricing. For example, if you have $3,000 worth of clothes, you are going to get $3,000 (minus the deductible) to buy more clothes. If you spend frivolously, you still have the same amount. You could go to a thrift store and buy the place out, or you could choose to buy name-brand items and spend $300 for a pair of jeans.

Remember, too, that your deductible is the amount you cover. Some insurance companies are going to cut you a check for the amount of loss minus the deductible, but others are going to want proof that you’ve replaced what you can out of pocket.

Are You Required to Have Renters Insurance?

No, states do not require you to have renters insurance to rent a property. This is unlike car insurance, which is mandatory. However, many landlords make renters insurance a part of the lease. Therefore, if your landlord requires it, you must have it before the contract is complete.

Determining How Much Coverage You Need

In most cases, you need to have liability coverage of at least $100,000. If you live in an area prone to flooding, flood coverage should be included, too. Contents coverage (for self-storage units) is going to depend on how much you have stored there at any given time, so it is different for each person.

Many people find it easier to ask themselves this question: If I lost everything right now, how much money am I going to need to buy it all back? Even with that question in mind, you may still not be sure of how much to get. These steps can help:

Inventory Your Stuff

Sit down one night (or multiple nights) and make a list of everything you own. This includes silverware, wall shelving units, socks, undergarments, toasters, mattresses, and all the rest. If it is yours, then add it to the inventory. It might help to take photographs of bigger or expensive items. That way, if there is ever a claim and it’s disputed, you have the necessary evidence to prove that you owned it.

Estimate Value

Once you’ve got a good, solid list of your stuff, determine how much it is all worth. Yes, your socks aren’t that expensive, but that’s not the point right now. Add it to the calculations because you might be surprised at how fast things add up.

Get Quotes

Now that you know the value of all of your items, you know how much coverage you need. Let’s say that your things add up to $35,025. You may want to keep the amount at $35,000 or may want to bump it up a little. You can always talk to your insurance agent about your options. If you work with an independent agent, they are going to help you find the right coverage and policy for your needs.

Life Insurance: What It Is and Why Credit Is Important

When looking at your monthly bills, it may be hard to try to budget on personal expenses. You financially play a vital role in helping your family stay afloat and sometimes wonder what they would do without you. How would they handle the costs if you suddenly passed? If this is a question that has crossed your mind, consider the term life insurance.

Life insurance is not a necessary policy you are required to have. Not many people can afford high set premiums because they either get insurance too late or have bad credit. What do you mean get the policy too late? Life insurance premiums are configured by your age, sex, and medical conditions. The health state in which an individual is in is an essential factor when setting the policy. Why does bad credit matter? The credit score determines the interest rate on premium payment.

What Is Life Insurance?

Life insurance is often referred to as death insurance. Why is that? Some policies only have value after the policyholder has passed. The policyholder pays a premium rate like other bills, and it provides the individual with a set level of coverage. How often do you spend money on this extra bill? Well, there are usually three options given after creating a policy that is right for you. The options include monthly, quarterly, or yearly payments.

How does life insurance work? If the individual passes while the policy is still in effect, the provider pays the beneficiary or the estate the settled amount assured by the system. A policy term can be as short as one year to as long as you are still breathing.

Insurance, like life insurance, gives the holder a peace of mind hoping they never have to use it, but they know it is there if something was ever to happen. Often, people ramble on about how life insurance is just a broader economic plan to steal money from the living. What they don’t understand is that it provides financial security for your family and is an excellent option if you work a dangerous job.

Some policies can be considered as a gamble. A person may pay on this policy for 30 years and never have to use it. Something such as this can make a person feel like they just wasted money for nothing. As mentioned before, it is a peace of mind for many people to know they would still be providing for their family, even after they are gone.

The Process of Life Insurance

The system has become much more complicated than just plugging an age into a table. Configurations come from the balance of full medical history (including close family), your lifestyle choices, favorite hobbies, credit history, driving records, and the type of career you chose to pursue. Why does all this matter? Throughout the years, life insurance has evolved into the probability an individual may live, not when they die. The system tries to create a timeline for the company to predict the likeliness of you living a while. 

However, credit history pertains to the premium payment a person can expect to pay. Insurance companies hire actuaries (a group of people who have studied the tables and can create educated predictions), to help figure out the coverage and the payments suitable for you. The essential factors are age, sex, and current or previous medical conditions.  Men can expect to pay at least 20 percent more than women. Studies have shown men usually die much earlier and more sudden than women.

A primary rule to remember when purchasing life insurance is that the older you are, the more you pay. Why does this matter? Typically speaking, the older you are, the more sensitive your body is to health conditions. Therefore, your premium payment is going to be significantly higher. Younger people are thought to be healthier and expected to live much longer. Unless the young client participates in dangerous activities like rock climbing, skydiving, or deep-sea fishing, the premium then maybe as high as if the person was a 45-year-old smoker who suffers from a life-threatening disease.

When to Consider Getting Life Insurance

Most people don’t need life insurance unless you have dependents. Dependents can be thought of as children, spouses, elderly parents, or anyone else who may depend on your income. However, life insurance is designed for younger people who have established a career and have a family.

Life insurance is made to replace the value you provide for your family when you are no longer here. For working adults, your value would be your yearly income. Take your salary, and subtract personal expenses like groceries, clothes, vacations, and other senseless habits. The amount leftover should be multiplied by five or seven, and that is the sum of money your life insurance should cover.

When should you get a policy? Some people get life insurance within a year of marriage. Depending on which spouse makes more is who should be the policyholder. Many young couples get life insurance because of the plan to start a family within the next few years. Also, when pregnant with your first child is an excellent opportunity to apply for a policy.

Some individuals wait until their retirement plan is in full effect to give the family help after they pass whether this is to help their spouse cover other odds and ins or even to pay for “after-life” expenses. More than likely, the children are grown and financially stable, and you are living on investment income.

Another reason people consider life insurance is to pay for things such as buying a house. If this is the reason, insurance companies may provide you with a 30-year option, and this is a ubiquitous time frame. There are specific policies that are tied directly to mortgages to help pay off house debt.

The last reason when to think about getting life insurance is if you are a business owner or a partner at a big firm. The businessmen name their partner as the beneficiary to help replace profit money if he was to pass. The reason for this is to help the company stay afloat until other arrangements can be made.

Coverage and Types of Insurance

When it comes to life insurance, you need to make sure you are not going to pay a premium that may break the bank. Paying a premium should only be a small extra cost each month. When searching for policies, consider your financial standpoint and how long you genuinely need it. Below are the basic types of systems companies offer.

Term Insurance

This policy covers the holder for a set number of years. The range is from one to 30 years. This policy is one that is tied to most mortgage payments and is also the least expensive option. Some significant aspects of this life policy are that, even if your credit score is not the greatest, the rates stay low. The prices can remain low because the premium is a fixed sum ratio set against the number of years the policy is in effect. However, this policy has no cash value, meaning there is no interest in the payments, and you cannot borrow money.

Permanent Insurance

The theme for this policy is it lasts from “the day you buy until the day you die.” There are multiple payment options associated with permanent life insurance. You have the choice between flexible and fixed rates. The problem often seen with this policy type is that the insurance company invests your premium; likewise, you pay the company more the first year than you make in cash reserves. Also, your credit score either places a damaging factor or a decisive factor on the interest rate of your premium. There is a cash reserve, but it mostly doesn’t build significantly until your third year.

There are various sub-options under permanent life insurance, made to fit the needs of everyone.  

Regardless of which policy best suits your situation, life insurance is a great option to consider if you are worried about your family once you have passed. There are many options to think about when choosing a policy or a company. Make sure you do your math and are ready before contacting any company to help save your time. One significant factor to acknowledge before even thinking about life insurance is your credit score — the better your credit, the lower the rates.

How to Get Jewelry Insurance

Insuring your valuable personal property may be more important than you think. There is no indication of future events in life, and you never know when your insurance policy could save you from a huge headache.

In the past, insurance options weren’t as comprehensive as they are now. That makes sense since such an industry only gets the chance to evolve based on occurrences that are significant enough to warrant a change.

Getting your valuables insured is necessary because your homeowner’s policy may not be as far-reaching as you think. It is not wrong for you to think that personal property is covered in such a policy. However, the amount of coverage that is offered may not be enough.

Insurance is recommended for jewelry where applicable. Of course, this all depends on the amount of jewelry you own, as well as how much of it is considered precious to you. What’s the point of insuring a single $150 watch? Your homeowner’s policy can cover that, right? Even if it doesn’t, replacing such an item is a non-issue in the grand scheme of things.

On the topic of your homeowner’s policy, do you know what the coverage limit for jewelry is? Does it even have one? Take USAA’s insurance, for example. It provides $10,000 of coverage for jewelry in its homeowner’s policy.

That figure can probably work for you, but there’s an amount you need to pay before that coverage is even accessible (your policy deductible). Additionally, that figure you get is a total coverage limit. You don’t get a per-item limit, which may not be convenient for you. If you have a huge jewelry collection, this coverage may not be appropriate.

The concept of insurance for valuables always attracts numerous questions. Prepare to have all your concerns about jewelry insurance addressed, as some of the most frequently asked questions are addressed below.

How Does Jewelry Insurance Work?

Creating a policy for your jewelry is much like creating any other insurance policy. The benefit, though, is that it is a special-purpose policy. This means that it goes way beyond the offerings of a homeowner’s policy, and you can do per-item insurance.

When you want to buy insurance for a piece of jewelry, an appraisal must be done. This illustrates the value of the item, which helps with generating your quote. Once you get the quote, you are free to purchase it and get the ball rolling on your policy.

Before you set things in motion, read the fine print, and get clarification on every detail of your policy. Things can get messy if you try to make a claim for something that isn’t covered by your policy. It’s also a great idea to find out about any promotions or discounts that are in effect.

Choosing a Jewelry Insurance Policy

There are many features that a policy can have. The recommendations for listed items fall into the categories of undebatable items, needs, and perks. These categories refer to how important the items are.

You shouldn’t buy a policy that doesn’t feature undebatable items, but you can gloss over missing perks. You should also try your best to get a policy that covers needs.

Undebatable Items:

  • Single item limit
  • Valuables in total
  • Outbuilding theft
  • Personal liability

Needs:

  • Increase during special events
  • Personal possessions (outside the home)
  • Repair guarantee
  • Legal expenses
  • Accidental damage
  • Sum insured protection
  • Emergency helpline

Perks:

  • Business equipment

Asking the right questions is a non-negotiable requirement to ensure that you understand all conditions and their implications for you. Are you having trouble deciding what to ask? Here are some suggestions:

  • How often should appraisals be submitted?
  • What proof of damage or loss is required?
  • What kind of scenarios are not covered by the policy?
  • Are coverage limits for precious gems based on the cost of said gems?
  • Does the policy cover the full cost of the item?
  • What is the average wait time for claim processing?

Blanket Policy Superior vs Single Item Policy

There is no hard and fast rule that you should use to decide which one to get. It boils down to evaluating your unique situation and choosing the policy that best meets your needs. Consider the following two situations.

First, imagine that you have three pieces of jewelry. Two of these are inexpensive articles of fashion jewelry, and one is a diamond ring. The ring would be the only thing that needs to be insured. Therefore, it would be best to take out a single item policy.

In the second scenario, imagine that you have many pieces of jewelry with varying amounts of value. Also, imagine that your very expensive wedding ring is a part of your collection. In such a situation, you could take out two different policies. The value of the ring may cause it to exceed the provision for a blanket policy when you consider the other items to be insured.

A good idea would be to take out two policies. The single item policy can be used for the ring, while you can use a blanket policy to cover the other items. You may be opposed to purchasing two policies, but if your situation calls for it, then you should do what’s best to protect your valuables.

Jewelry Insurance Claim Process

When you register an insurance policy, it remains in what can be considered a dormant state. You are required to make your interval payments for as long as the policy is in effect.

You could go through your entire life without ever needing to contact your insurance provider. If you do, however, a claim needs to be made. Depending on the provider you go with, this process could be simple, complex, or somewhere in between.

The process of making a jewelry insurance claim is like that of making a motor vehicle insurance claim. There’s a claim submission, an investigation, and an action.

Once you initiate the process, you are usually given a claim number that is used for reference. You need to provide all the information and evidence you can for the best results. If applicable, ensure that you’ve filed a police report prior to making a claim, as the documentation the police station provides is an asset to your claim. You should also provide any photos or other documents you may have on the piece(s). Documentation that establishes the value is important and so is a certification report if there are any diamonds involved.

Once you provide all the information, you simply wait for the process to run its course, after which you are advised on the decision taken and the next steps.

Frequently Asked Questions About Jewelry Insurance

What Does Insurance Excess Mean?

You probably see the word excess thrown around in insurance a lot. This is simply a measure of payment that is required of you in the event of a claim. Some policies don’t have a statement of excess, while others have very exorbitant rates. Always get all the information that’s available on the excess.

Note that a single policy can speak to multiple kinds of excess. For example, there is accidental damage access. If you make a claim based on your accidental damage allocation, you may be required to make an excess payment. However, a good policy doesn’t require any excess for this kind of claim.

Is Travelers Insurance Needed to Cover Jewelry While Abroad?

The answer to this depends on the specifics laid out by your policy. Note that a good comprehensive insurance policy makes no distinction based on where an incident happened. Therefore, if you lose a piece of jewelry at home, the coverage should be the same as if you lost it halfway across the world.

Always remember to inspect your policy and put in the utmost effort to understand all the clauses.

Do You Need Insurance for Jewelry That Is Under Warranty?

Even if your jewelry is under warranty, getting insurance for it is recommended. A warranty is not insurance, and it has a different purpose. The point of a warranty is to ensure that a customer is satisfied with a product. Therefore, if there are any faults arising from the manufacturing process, you can get a replacement or repair.

There is also the matter of all the restrictions that come with warranties. It’s not unlikely for your warranty to become void because of something simple that was out of your control.

Don’t forget that most warranties expire too. In fact, getting a lifetime warranty on a piece of jewelry is very unlikely.

What Should You Do If You Found an Item That You Had Submitted a Claim For?

This happens with many things that aren’t even jewelry. Thinking something is lost and seeing it show up is usually a welcome surprise. However, that surprise can quickly turn to panic when you realize that this is a piece of jewelry that you made an insurance claim for. Of course, if the said claim was approved and taken care of by your insurance provider, things are even stranger.

There’s no need to fear though, as a little honesty is all it takes to make this situation right. You should make it a priority to contact your insurance provider immediately if this happens to you. Once you do, you can expect to be advised on how to proceed.

The scenario usually ends with your providing something of value to the insurance company. This could be cash or a piece of jewelry that was purchased to replace the one you thought was lost.

Of course, this is a question of morality, since you could choose to keep everything. Doing so is not only highly immoral, but it is also a bad idea legally.

You may not think much of it, but withholding the information is a criminal offense. Have you ever heard of the term insurance fraud? You don’t want to be one of those people who end up in a jail cell for something that is so easily avoidable.

What Is Corporate Owned Life Insurance?

Corporate owned life insurance is a new and emerging policy type. For example, with a bank owned life insurance plan, the financial firm acts as the policy owner and beneficiary. Employees are included in the latter. Generally, workplace-provided plans, regardless of who owns or underwrites them, are advantageous for consumers.

Not only do they get free (employer-paid) life insurance protection, but these policies also offer a large amount of coverage. Equally as important, the beneficiaries (i.e. the deceased’s family) don’t pay any taxes on the proceeds. Yet not many people understand how life insurance works, let alone corporate owned plans. After all, it is uncomfortable to think about death and difficult to get excited about payouts that you will never receive.

For that very reason, corporate owned life insurance could become popular and widely offered by employers. Policyholders enjoy living benefits, such as access to the funds during an emergency. Moreover, you can utilize corporate owned life insurance plans even if you leave your job. In fact, there are several other notable advantages that these policies have over traditional employer-provided coverage.

Corporate Owned Life Insurance: A Simple Concept

Life insurance companies make money when policyholders outlive their plans. Just as with any other insurer, life providers determine your premiums based on the risk that you (or your family) will submit a claim. For example, a smoker pays a higher monthly premium than a non-smoker because, in general, the former has a shorter life expectancy.

Corporate life insurance plans retain the same structure. However, instead of directly providing the insurance product, the company pays the premiums. When they accumulate and the employee outlives the plan, the firm collects the cash balance. The employer might be a partial beneficiary. In turn, businesses don’t owe taxes on the premiums, and equally as important, they keep the revenues when employees outlive the plan.

Above all else, corporate owned life insurance providers can invest, withdraw, or borrow from the policy’s cash balance. Employees and policyholders also enjoy this access. In other words, if your workplace covers you with a corporate owned life insurance plan, withdrawing or borrowing against that money might be an option.

Furthermore, your cash balance may grow over time. For example, when a company invests its employees’ insurance funds, they are entitled to the profits. The beneficiaries may allow it to accumulate and therefore grow the death payout. Alternatively, they could take out a loan from their cash balance, including the investment revenues.

An Elite Product?

Instead of covering all of their employees, some companies prefer to only purchase a corporate owned life insurance policy for their executives and leaders. As a result, many people mistakingly believe that these policies aren’t available to the entire workplace. Yet the reality is that this type of insurance product is becoming more popular amongst companies and workers alike. Moreover, corporations’ potential benefits and tax deductions increase when they cover a larger number of employees.

Bank Owned Life Insurance: In Demand

Bank owned policies are arguably the most widely growing form of corporate life insurance. Between 2014 and 2018, for instance, companies and employees obtained hundreds of dollars in additional bank owned life insurance coverage.

Life Insurance: There for Life

One of the main downsides to employer-provided coverage is that it expires when you leave your workplace. This is even more concerning for seniors and retirees. To clarify, your life insurance premiums become more expensive with age because providers take on more risk. Just as importantly, employer-based plans only have a 30-day grace period. After that, you have to obtain coverage privately or through a new job. Corporate owned life insurance policies also expire, but employees retain the benefits for one full year.

For example, if a banker retired or changed companies in March 2019, they may borrow money from their bank owned life insurance balance until the same month in 2020. Moreover, the policy would payout the full death benefit if the banker died during that period. This is important because corporate and bank owned plans give retirees time to find a suitable and affordable alternative. Otherwise, their policies are more likely to lapse in the future due to nonpayment.

At this point, elderly consumers may incur more in premiums for even less coverage. Similarly, employees who leave the workforce as a result of a disability will have access to the cash balance for 12 months in case of an emergency. In an urgent situation, consumers don’t have time to fill out application forms and wait for the bank to approve a loan request.

A Bad Rep

When corporate owned life insurance first entered the market, it became widely abused. Some companies covered their employees without paying their family the death benefit. In fact, some workers didn’t even know that they had a policy because their workplace is listed as the beneficiary. Corporations only purchased life insurance to take advantage of the tax loopholes. Employers also retained the premiums’ cash value and maximized their profits.

Yet in the 1990s, the federal government prohibited some of these practices. Subsequently, firms had to pay millions to the families of former employees that passed away during the early 2000s. In 2006, the IRS further restricted the tax loopholes that workplaces can utilize.

In short, while firms previously abused corporate owned life insurance plans, increased regulation and awareness made these policies secure and genuine.

Protected and Insured

The proceeds from all policy types are tax-free, but corporate and bank owned life insurance plans enjoy certain advantages. Firstly, policy holders attain living benefits, such as access to the accumulated premiums. Secondly, plans last longer when you leave the workplace. Thirdly, investments will allow your proceeds/death benefits to increase.

If you haven’t heard of corporate or bank owned life insurance, you almost certainly will in the future. For a start, you might get cash while you’re alive, instead of after.

Top Benefits and Costs of a Travel Insurance Plan

The importance of a reliable travel insurance plan cannot be overstated, as it can come in handy at any time during the course of your journey. It doesn’t matter if you travel very often or you only go on a couple of important trips in a year, once you have a good travel insurance plan, you can protect yourself from tragedy and unfortunate occurrence.

No one can really tell what situation may arise before, during, or after your journey, that is why it is important to have a plan in place that will take care of any unforeseen circumstances. From medical emergencies, to lost documents, misplaced luggage, and other unplanned expenses, what should be a memorable journey for you can quickly become a nightmare whenever these situations arise.

As we proceed, we will highlight some of the top benefits of a travel insurance plan and the reasons why you need to have one before you embark on your next journey.

Travel Insurance Plan: Why You Need to Get One Before Your Next Trip

For a lot of travelers, the most important thing is to have a perfect trip and see all the places on their bucket lists. There is no wonder why they invest heavily in making their dream trip come to pass. But one major area we all tend to overlook most times is planning for emergencies and unforeseen occurrences that may sneak up at any time during our journey.

Photo Credit: Visionpic.net (Pexels)

You sure don’t wish for any mishap to happen along your journey. However, that does not stop you from taking the necessary precautions before you set out for your trip. You will have a smooth and enjoyable journey if you put all possible emergencies into consideration and create a backup plan for them. In this case, this particular backup plan is your travel insurance plan.

You can opt for a wide variety of travel insurance plans, which will cover your emergency medical bills, stolen luggage, canceled trips, damaged loads, and many more. However, it is important to note that having an insurance plan does not necessarily equate to an accident-free journey. It only means that you will get your full compensation for any mishap that happens along your way. Other top benefits of a travel insurance plan include:

Adequate Medical Attention In a Foreign  Land

Nobody wishes to fall sick or get into any medical emergency when they should be having a nice time. But the truth is, it happens, and when it does, there is nothing you can do about it. Worse yet, falling sick in a foreign land is better imagined than experienced, as you may find it difficult to interact with people that speak a different language or cope with their medical bills. In most foreign countries, you will be spending a considerably higher amount of money on medical treatments, which usually costs less in your home country. However, when you have a travel insurance plan, you can rest assured that your insurance company will reimburse all your medical expenses.

A good travel insurance plan also makes provision for emergency medical evacuation. This is particularly useful during an epidemic, where you need to leave your traffic destination and move to a safe region.

Reimbursement for Trip Cancellations and Sudden Change of Travel Plans

Usually, it is payment before service for most traveling plans and packages. You will most likely pre-pay for a lot of travel-related services, such as flight tickets, hotel and accommodation costs, and a host of other charges. As you never can tell what may come up during the course of your trip, it is always safe to have reliable travel insurance ahead of time.

Owing to some unforeseen and uncontrollable situations like bad weather conditions, natural disasters, safety and security threats, and other high-risk situations, your airline may cancel your flight at any time. When this happens, you may incur a big loss, as you have already made large payments that are in line with your travel plans. But an insurance plan can protect you from any financial loss arising firm trip cancellation, as well as reimburse you for the payments.

Covers the Costs of Missing Luggage and Possessions

Photo Credit: nappy (Pexels)

Whether you travel by air or by road, one thing that is common to all modes of transportation is the loss of loads, belongings, and possessions. There is always a missing suitcase at the baggage claim of an airport or the train station. It is also possible to mistakenly damage your electronic gadgets or devices while packing or arranging your luggage.

However, a travel insurance plan can save you the stress and the hassle that are likely to arise from missing luggage and valuable possessions.

What are the Costs of a Travel Insurance Plan?

The United States Travel Insurance Association estimates the cost of a solid travel insurance plan to be around four percent to eight percent of the total cost of your trip. However, there are other conditions that may either drive up or reduce the cost of your travel insurance.

Some of these conditions include but are not limited to:

Trip Duration and Travel Expenses

Usually, your travel insurance will fall on the high side if you are traveling for a long period. Also, your insurance policy will shoot up depending on how expensive your trip is.

Trip Destination

Photo Credit: JESHOOTS.com (Pexels)

As we all know, every travel destination differs from another. The same thing goes for their economic situations as well. What usually is very affordable in one travel destination may cost an arm and a leg at another place. This can ultimately shoot up your policy cost.

Medical Preferences

If you seek to cover your pre-existing health conditions in your insurance policy, then expect the cost of the insurance to go up. In the US, all medical conditions that exist (even if they are just symptoms) before or at the time of applying for the travel insurance plan fall under pre-existing conditions.

Insurance Coverage

Additionally, the cost of your travel insurance plan will either rise or fall based on the number of risks it covers. Travelers with policies that cover a large number of risks will most likely have a more expensive insurance plan, unlike those with plans that include a few risks.

Travelers’ Age

Generally, older people tend to attract higher travel insurance costs because they are more likely to make an insurance claim for a covered loss.

How Does Life Insurance Work?

If only financial planning was a required course of study at every school, everyone would grow up knowing the benefits of life insurance. They would also jump at the chance to start their policies as early as possible to give loved ones the best possible chance at life.

It requires a level of selflessness to commit to though. After all, you don’t get to live through the payout. If you really care for your loved ones, that shouldn’t matter. What should matter is the parting gift of a chance at a great life, and the ability to pay for some very important things.

Like any other kind of insurance, after you buy your policy, you begin to pay a premium at a recurring interval. Premiums are usually paid on a monthly basis. While your policy is active, your loved ones receive a lump sum of money that is not taxed. Note that this can be provided as an annuity instead of as a lump sum. In that case, it would feel as if a salary is being paid.

If you were the primary breadwinner, then this acts as a buffer until someone else can step up to the plate.

There isn’t one universal life insurance policy. People have unique needs and situations, which means that a single set of terms can’t work for everyone. The recurring cost is not usually very steep; however, there are several factors that can lead to a premium that is easy or difficult to handle.

An insurance company makes the consideration based on the kind of coverage you want, your health, your risk of death, and the length of the policy. This is a look at everything you need to know about the concept of life insurance, as well as how the whole process works.

Life Insurance Workflow

A life insurance contract is one just like any other insurance type. Once you are ready to get the policy going, you review the terms to ensure that you agree to all the stipulations. Of course, one such stipulation is the premium that you’re required to pay monthly.

The life insurance provider is also a part of this agreement. The institution agrees that, in the event of your death during the policy’s tenure, your beneficiaries receive an agreed payout.

Before you decide to buy the policy, remember that you should shop around. This is a rule of thumb in the world of insurance because you can potentially miss out on some amazing benefits when you don’t. While there are agents who genuinely care about a customer’s needs, others are simply working for the commission that they can get. Therefore, they may try to influence you to buy policies that work in their favor.

After your application is submitted, there is a review process that typically spans several weeks. Note that any new health complications or issues have no bearing on a policy that already exists. So if you were to develop some illness after you put pen to paper, not informing the insurance provider is not a crime.

The default premium recurrence on most policies is monthly. However, you may elect to pay bi-annually, annually, or even quarterly. The main thing is that you should choose a policy that best fits your needs.

The life insurance provider doesn’t just take your money and let it sit until you claim. If that were the case, the company would have nothing to gain from the agreement. Additionally, your coverage amount is usually way more than the sum of your paid premiums.

Therefore, the money is used for various investments behind the scenes. The idea is that the ROI should make for a great profit. This goal is for the profit to exceed what needs to be paid in claims.

Insurance companies also profit in other ways. There are situations in which the beneficiaries passed away before the insured person. A profit is also made when getting to the beneficiaries isn’t possible because of other reasons. Also, when payments are not made, a policy can lapse. When this happens, the insured person cannot get a refund for all the payments that were made in the past, which means that the company gets to retain those funds.

The payment that the company gives to your designated beneficiaries is known as a death benefit. Of course, it is used at the discretion of the beneficiaries, but funeral expenses for the insured person tend to be at the top of the list.

Remember that insurance companies have no way of knowing that someone who is insured has passed. At best, the assumption would be that payments have ceased, and the policy goes into a lapsed state. This means that you need to let your beneficiaries know that it exists and where they should go to redeem the benefit.

It’s best to get the claim process going as soon as possible. As soon as the insured person dies, beneficiaries should contact the insurance providers. There was a time when you would have to go through the whole process with a visit, but online services make everything easier now. Some insurance companies can do the entire claim process from an online application, but there are others that require you to come in for a part of the process. Note that some level of paperwork is required regardless of how the claim is filed.

While the policy document may not be needed, there needs to be proof that the insured person has passed on and that the beneficiaries are who they say they are.

Payment for the claim can be issued in as little as two weeks or as many as 90 days. When the documentation is provided, the insurance company goes through a process of review. After reviewing, the insurance company either asks for missing information, approves the claim, or denies it. If the claim is not approved, you are given a reason why so it can be addressed if possible. After the approval is successful, beneficiaries usually receive a check. Note that there are interest charges that the insurance company must pay if the payment takes too long after approval, so there is that motivation to get payments sorted.

If an insured person dies within the first two years of the policy’s establishment, the beneficiaries may find that collecting the payout is delayed. This delay can go on for as long as a year. When someone dies so quickly after establishing a policy, there is always the chance that fraud was being committed. This is called enforcing the two-year contestability clause. Once there is no evidence of fraud, the payout is made.

There are also delays if the company deems that the insured person withheld information or died during participation in illegal activities.

Homicide is another cause of delays. Whenever there is a homicide, anyone who interacted with the deceased before the incident is considered a suspect. This means that friends, family, and enemies are all investigated. The insurance company tends to wait until the police investigation is done before issuing a payout. This is because the company wants to rule out the possibility of beneficiary involvement in the crime.

Photo by J carter on Pexels.com

Who Should Buy Life Insurance?

Some people would say that everyone should purchase life insurance. However, this may not necessarily be the case. Remember that the point of life insurance is to leave funds for your beneficiaries. If there is no one in your life that you desire to care for after your passing, then there’s no point in getting the policy.

However, once those people exist, there’s no doubt about it. This is even more so if these beneficiaries depend on you financially. If you were to pass away, you could no longer provide that support. The bills and financial responsibilities don’t go away when the insured person does, so this is a great way to provide a lucrative buffer until someone else can pick up the responsibility.

Even if the beneficiaries aren’t children, any important person to you fits the bill. A great example of this is the person you are married to. The chances are that you co-operatively handled many of the responsibilities in your lives. If one person were to pass, a life insurance policy would be the perfect thing to offset the financial burden that would instantly fall on the other.

Note that you can make changes to your beneficiaries, so if you just want to get the policy rolling, you can add beneficiaries later. Of course, the earlier you start life insurance, the better the terms you get.

What Does Life Insurance Not Cover?

First, you should know that the policy insures deaths caused by almost anything. There are a few cases in which beneficiaries cannot make a claim. They can, but it is likely to be denied.

Crime is one of the biggest no-nos. If an insured person dies during willing participation in a crime, then there is no payout.

Hazardous activities are also not covered. Some activities put a person at a higher risk of death than the average person. One such activity is skydiving. If you’re jumping out of planes for a hobby, you may end up dead if something goes wrong. If someone reads as a hobby, many things could go wrong without putting the person in danger. Some insurers put a clause in the contract to exclude a dangerous activity that the insured person admits to taking part in. Should the death come from the said activity, there is no payout.

If any information is misrepresented, the insurance company reserves the right to deny the application for a payout to beneficiaries. You may think that this information needs to relate to the cause of death, but it doesn’t. If the insured person dies on a construction site from a cave in, the insurance company can deny a claim because it discovered that the said person didn’t disclose an affinity for sky diving.

Note that misrepresentation investigations don’t only happen when the insured person dies. Even if you haven’t died, your policy could be canceled because of misinformation. Insurance fraud is more common than you may think, and insurance companies need to protect themselves from being swindled out of money.

Does Renters Insurance Cover What You Think It Does?

Renters insurance can be your saving grace in many different situations, and it’s something that you may want to investigate. If you have heard of this kind of insurance, what it covers may be a mystery to you.

While it has a great amount of merit, many people don’t understand or appreciate how valuable it is. Some people believe that their personal property doesn’t warrant the need for an insurance policy, while others think that their property is covered under the landlord’s policy.

A landlord’s homeowners’ policy does not provide coverage for your belongings. This means that you’re in a dangerous situation without a renters insurance policy since unexpected damages are always a factor.

The Cost of Renters Insurance

When many people hear about renter’ insurance, the assumption is that they cannot cover such an “extravagant” cost. However, this belief is purely fictitious, since renters insurance is built to be cost-effective.

Consider the value of your individual items. If renters insurance is such an astronomical cost, wouldn’t that mean that your premiums would add up to a figure that’s more expensive than replacing your belongings?

If that were the case, then there’d be no need for these policies. However, there are policies that cost no more than $20 monthly. Such policies could give you coverage of as much as $100,000 in liability coverage and $10,000 in personal property coverage.

Unless you’re very wealthy, the chances are that you’re in no position to replace your lost belongings in the event of a disaster. Renters insurance provides you with an affordable way to protect your most valuable possessions.

Extent of Coverage

Renters insurance may be more comprehensive and inclusive than you think. Check out the information below on various areas that you are insured for if you choose to grab such a policy.

Personal Property Coverage

One of the most common and most basic components of renters insurance is known as personal property coverage. Once your items are covered, this is the component that allows you to get assistance from your insurance provider to replace them in the event of damage or destruction.

Theft is also covered here, so any stolen items can be easily replaced. The theft is typically only covered if it occurred in the home that you rent. However, there are some policies that cover replacements if the items are stolen from places such as your vehicle.

While this coverage item goes a long way in helping you replace your valuable items, the cost is not completely covered here. There is a deductible, which means that insurers only pay when the insured person pays a percentage upfront.

Note that not all your belongings are usually covered by these policies. Certain valuables, such as precious stones and limited edition coins, are not completely covered. Some insurance companies allow you to take care of this by adding scheduled personal property coverage. This provides the additional coverage that you need to insure such items fully.

Liability Coverage

Another popular component of your renters insurance agreement is known as liability coverage. This type of coverage deals with damage to property belonging to third parties or injuries to others. Of course, it must be proven that you are legally responsible for the occurrence or there is no coverage.

A scenario that could call for this is damage caused to a neighbor’s window by one of your dependents during a normal course of action, such as playing with a ball, or when guests are injured during a visit to your rented property. Having such coverage allows you to take care of these unexpected happenings without the need to worry about the matter being taken to court.

Short-Circuit Damage

This is one of the less popular areas of renters insurance. Note that this may not be offered everywhere, and you should ideally validate this when taking out your policy. This coverage is offered when electrical failures cause you to incur certain expenses.

An example of this is a fridge that is affected by a sudden power cut. The assumption here is that the appliance functioned normally prior to the electrical event. In this case, there are food items in the fridge that may end up going bad.

There are some insurance policies that would allow you to make a claim for the value of the grocery items lost.

Externally Stored Items

Though renters insurance is taken out to cover the possessions you have in a rental property, there are other instances in which it can apply to items that you have in other places.

One such scenario is the one mentioned above, where items are stolen from your vehicle. Another potential application is the property that you have stored in a storage facility. Of course, claims in these situations are processed on a case by case basis, so you may not always be entitled to coverage for items in external locations.

Forgery and Fraud

Not everything covered by renters insurance is tangible. A thief could break into your home and take off with your credit card. While the card is tangible, the damage that it does is not.

This thief could start spending heavily, and you would be put at a large inconvenience. If this were to occur, your insurance policy might offer you the coverage you need to reimburse you for the amount that you lost.

What Is Not Covered by Renters Insurance?

While renters insurance covers a lot under its umbrella, it’s important for you to know that coverage isn’t provided for every scenario that you can imagine. Being able to account for the areas that are not covered allows you to put the necessary strategies in place to ensure that you are adequately covered. This is a look at the areas to which your coverage does not extend under a renters insurance policy.

Pest Damage

Pest damage can be unpredictable; however, it is preventable in many cases. You need to take all the precautions possible to ensure that your belongings are not damaged by pests. This is because insurance companies are not usually willing to cover the damage they cause under renters insurance. This includes pests such as bugs, rodents, and other vermin.

If your property is destroyed by any of these creatures, the best you can do is start thinking about how you can go about replacing it out of your own pocket.

Natural Disasters

This is a very important one, as you can be subject to various disasters, depending on where you live. While there are coverage options available for natural disasters, they do not fall within the realm of renters insurance, so you may want to investigate purchasing some additional coverage for yourself so you don’t have to worry about such unpredictable events.

Sinkholes, earthquakes, and flooding tend to be excluded from policy coverage. Surprisingly though, you may be covered for windstorms and volcanic eruptions.

Nuclear War and Terrorism

This was different many years ago. Back then, insurance policies spoke specifically to the protection that you were offered from acts of war and terrorism. There was no additional cost associated with this.

However, the tragic events of 9/11 forced insurance companies to rethink this aspect of coverage, so they removed it altogether.

It’s not impossible to get covered for this, but you’d be looking at an extra cost. Terrorism coverage is available, which protects the building that you are living in. Such coverage is best purchased by landlords since the whole building is covered that way.

Unfortunately, many landlords don’t opt for such coverage, so you may need to pay an additional cost to be covered for terrorism. If you do so, however, only the section of the building that you occupy is covered.

Motor Vehicles

Since renters insurance can cover the property that is stolen from a motor vehicle, many people assume that the vehicle itself is also covered. This is not the case, so don’t plan on relying on your renters insurance in the event of car theft. This is what auto insurance is for, so that is what you should lean on for the protection of your vehicle.

Roommates

This is where things can get a little tricky. Based on the way renters insurance was explained, the assumption is that all property in the rental property is covered once you have decided to take out a policy.

However, if you have a roommate, a distinction is made, and that person’s property is not covered. Therefore, any destructive event would only lead to reimbursement for you. The policy is intended for the protection of the person who is paying the premiums only.

If your roommate wants to have coverage that is like yours, they would need to take out a policy that is independent of your own. Another option is to get a joint policy. If you are comfortable with the idea, you can choose to get a policy with the person. It’s important to talk to each other and understand the parameters though. One of the most important such parameters is the claim payout. A single payment is split between the policy owners in this instance. So you should understand the coverage amount and how much each person is entitled to.

Renters Insurance Considerations

You should never take out a policy before you know how much coverage you need. The only way to get this information is to take stock of everything you own. Even if doing that is a struggle for you, you should at least try to take an inventory of anything that you would want to be covered in any unforeseen event.

Once you have that, you need to put a value to all these items. The sum of these figures tells you how much coverage you need to be adequately protected. There’s no need to have $50,000 worth of coverage if you own $20,000 worth of stuff, right?

Remember that it is also very important for you to have an in-depth understanding of your policy. Find out what is covered and how the process works so you’re not dead in the water if something does happen.

Finally, shopping around is always a good idea. Compare the prices and benefits that different providers are offering before you settle on one.

Commercial Insurance: How It Works

Are you planning to own a business? If so, you may need to learn a thing or two about commercial insurance. This insurance is necessary because it covers all the basics when it comes to business. There are various types of commercial insurance that cover each aspect of your corporation. However, there are benefits and disadvantages to every separate policy. Consider this article as a guide to help you get a better understanding of how these policies work.

First, let’s discuss the different types of commercial insurance. This insurance is split into five categories to ensure extensive coverage for your facility and employees. Below are the groups you can expect to choose from when applying for a commercial insurance policy.

  • Property
  • Auto
  • Liability
  • Workers’ Compensation
  • Employee Benefits

Read on to explore each of the different aspects between each type of coverage and how they work.

Definition of Commercial Insurance

Commercial insurance is generally known as one or more types of coverage to protect businesses and everything associated with it. While some may see insurance as a scam to take your money, it can be very beneficial in unfortunate events. Commercial insurance has low-interest rates and can lower your premiums the longer you stay with a company. Commercial insurance was made to ensure company owners can breathe without having a ton of weight on their shoulders.

Property

Property coverage protects your property from anything ranging from a minor situation to a significant loss. To dig deeper into the details, property commercial coverage ensures all of your physical assets. What exactly is covered by commercial insurance? The property policy covers your building, furniture and equipment, any outdoor signs or banisters, product inventory, fence and landscaping, and much more.

Why does insurance cover all of these things that don’t matter that much? Landscaping doesn’t matter to the actual business itself except for the curb appeal. However, if an angry customer decided to wreck your flower beds, then the insurance replaces the cost of the damages. In the scheme of things, the appeal of your establishment does matter to your clients.

Property insurance has different types of coverage, from essential to superior levels. The ample amount of coverage covers anything from fires (electrical or gas), to any explosions, busted pipes, lightning, wind, hail, theft, and any sort of vandalism. Unfortunately, earthquakes and floods are separate expenses that have to be added to either policy level. Even though this is an extra expense, it may be worth it if you live in an area where either of those events is common.

Auto

Any company vehicles and you or your employees are covered by commercial auto insurance. The downside to auto insurance through commercial policies is that it is only liability. If you were to request full coverage, you would need to get each vehicle a separate policy.

The coverage is just like a regular auto liability. The medical coverage varies between companies and has comprehensive coverage. Comprehensive coverage helps pay for damages caused to any company vehicle. This includes anything from weather damage to injuries caused by an accident.

The collision coverage pays for any damage to your vehicle if you hit another individual. The collision coverage includes other accidents, like if another person hits you or if your car rolls over. This aspect of these policies covers any damage to all the company vehicles no matter who is at fault. When it comes to the topic of an uninsured motorist, this auto insurance does cover medical expenses up to a certain amount. However, if you get in an accident in a company vehicle, worker’s compensation does not include lost income. If you had any passengers, they are not covered by this policy, unless they are employees of the company.

Liability

Liability commercial insurance is considered an extra blanket of protection on top of your other policies. Essentially, this policy picks up the slack of all coverage stops. Protecting your business and everything that has to do with it is essential to your assets, clients, and profits. It is a good idea to inform your employees in their contracts about all the extra benefits they have under your insurance. Having the extra security blanket ensures that employees and clients have nothing to worry about. Even though these bills may add up, it can save you a ton of money in the long run if something significant was to happen. 

Liability commercial insurance is also known as umbrella insurance. There are two reasons to add a liability policy to your business. The first is to ensure that you are covered in all areas that the other plans don’t. If you got into an accident in a company vehicle that was in a restricted territory, liability picks up the slack. It also creates a more extensive budget on medical expenses and any damages to physical assets.

Workers’ Compensation

Any small business owner needs to make sure this insurance is included in their bills. Worker’s compensation is commonly known as workman’s comp, which covers employees if they get sick or injured while on the clock. However, if you are at work but not on the clock and get hurt or ill, you do not receive these benefits.

The laws behind this insurance vary between states. Each state requires different companies to provide a set of rules that their employees must follow to reap the benefits. Workers’ compensation covers examples like lifting a heavy object, operating machinery, slipping on wet surfaces, or any injuries due to a fire or massive explosion.

Nonetheless, if an employee is wasting time or not following the company’s rules and gets injured, they are not covered. The higher-ups investigate most injuries on a job site. New laws require businesses to have a camera in every room except bathrooms or shower rooms. It is having laws like this that make it easier to confirm any request for workers’ compensation. The usual time it takes to receive workman’s comp is between two and four weeks.

Worker’s compensation does not include an employee traveling to and from work. Also, if an employee is injured on the job but is impaired from drugs or alcohol, they are not covered for lost wages.

Employee Benefits

The greatest asset to any business begins with its employees. Employees set the pace and create expectations for the higher-ups. The better the employees and the work they do, the more your employer wants to raise the benefits. Some people think their boss just wants to make their life harder, but they push you to be your best because they know what you’re capable of. Employee benefits can come in all shapes and sizes. Whether it is PTO time (paid time off) or more vacation days, employers want their employees to enjoy their job and the work environment.

Benefits are seen as anything that the employee receives besides a paycheck under your employment. Whether it is medical insurance or bonuses yearly, benefits keep your employees happy and enthusiastic about their jobs.

Employee benefits are essential when it comes to creating more giant corporations. The more employees a business has, the more benefits they need to add. This ensures that all employees are treated fairly and helps minimize discrimination.

The Coverage You Need

Even though each different policy offered in commercial insurance seems essential, you may not need them all. The FDA (Food and Drug Administration) has set regulations and laws depending on the type of business you own. If you own a small café, you need any coverage to cover any assets. Likewise, if you deliver, you need auto insurance and a significant policy for employee benefits. However, if you just own the building and do not run the business yourself, you still need property coverage, worker’s compensation, and employee benefits.

The typical reason for needing worker’s compensation is for industries like construction or factories. Either field requires the employees to be around heavy machinery, (sometimes) dangerous chemicals, harmful surfaces, and hazardous situations. In construction, employee benefits are highly recommended and need to be one of the top priorities.  Partners cannot expect their workers to deal with long hours, unlikeable weather conditions, and set days off with no benefits.

Depending on the size of your business and the extent of money you are willing to pay, it determines the amount of coverage you should obtain. 

Risks of Too Much Coverage

The main risk of too many coverages lies within your capital budget. A capital budget is a set amount of money that a business owner invests in their company. It may seem a bit odd, but insurance for your establishment is seen as an investment. The ample amount of coverage needed is just for the building itself. However, most owners decide to cover every visible part of their company.

The problem with investing too much into your business is a loss of profit. The more you spend on your company, the less you are making. Capital budgets are set to ensure that benefits cannot fall into a deficit. Nonetheless, if you are drowning yourself in bills just to cover “what if” factors, consider what you need. People always want that peace of mind, but falling behind on bills is not worth it.

Every business owner needs some kind of commercial coverage. Researching your state laws and city requirements is always a good idea before jumping in and spending more money than you need. Too much coverage can only hurt you and your business in the long run. Think about what physical assets you have for your business and what natural occurrences happen often. For instance, not every area is known to have major earthquakes or has frequent flooding. In a state like Oklahoma, it is vital to have property insurance in case a tornado sweeps through your location.

Make an appointment with an insurance agent to help discover the best policies for your business and employees. Remember to do some insurance shopping before just deciding on one. Be sure to get multiple quotes before finalizing any paperwork.

How Does Insurance Work?

There seems to be a type of insurance for just about everything these days. This is not a bad thing, as you can never underestimate the value of protection. You can insure just about anything that is valuable to you. This could be your house, your car, or even your favorite pair of sneakers.

Even if the policy is being taken out on certain things that are not tangible, it still works the same way. This is the reason that you can get coverage for things like your life.

So what do you know about an insurance company? You probably know of the way you give it a predetermined amount, which recurs at an established interval. Of course, when the time comes, all those payments should come in handy, as they contribute to the assistance that you get when you need it.

Even with that knowledge, you don’t necessarily understand insurance. That’s what this article is here for. It’s time for you to understand and appreciate the workflow of insurance.

What is Insurance?

The most basic way of looking at this is as a service that serves a protective role for you when damage occurs. This can be damage to your property by certain means or damage that you cause to someone else’s property.

No matter which of the two occur, there is a financial consequence that comes into the mix. This consequence must be both addressed and satisfied for recovery from the damage to be successful.

Insurance is a contract that absolves people of the financial responsibility that is associated with both losses and damages. The contract is usually governed by a policy, which has numerous clauses that establish the provisions and boundaries of the said contract.

Of course, there is a financial risk involved; however, insurance transfers the burden of this risk to the insurance provider. This works well because insurance providers have many customers.

Payments are collected from all of these customers, which helps the insurance company to put itself in a position to protect its members. The result is that you get to enjoy the benefit of peace of mind while the insurance company accepts the liability associated with your risk factors. The combined contributions of all the members help the company to be able to meet the needs of each customer.

It does seem like a game of random chance when you think about it. If every single member of an insurance company needed to make a claim at the same time, one can imagine that things would get a bit messy for that company.

While there are many different insurance types available to you, they don’t work much differently from each other. Each of these types has a variety of policy kinds that you can access under them.

For example, consider auto insurance for a moment. This is one of the many types of insurance. Now, there isn’t one way to insure your vehicle, and that is where the different policy kinds come into the equation.

There is comprehensive auto insurance, third-party insurance, and third-party, fire, and theft insurance. All these three policy types can be used to insure vehicles, but the provisions that are outlined in each define what you are entitled to and what you are required to do if you wish to stay in good standing.

For the right price, you can find an insurance provider that is willing to insure your business or personal interests. Some of the most common insurance types are as follows:

  • Life insurance
  • Homeowners insurance
  • Auto insurance
  • Health insurance

Auto insurance is a special case compared to all the others. When you think about any other kind of insurance, there is no requirement that mandates it. You could go through your life with none of these insurance types, and you wouldn’t be penalized for anything.

If you were to try to do the same with car insurance, you could find yourself with a hefty fine on your hands. This is because auto insurance is the only form of personal insurance required by law. The United States records an average of six million auto accidents yearly.

When you have that many going on, there is some level of protection needed for the motorists who are using the roadway. Additionally, every time a vehicle is driven, the possibility exists for it to require the intervention of an insurance company.

There is no other reliable way to ensure that drivers can always get the financial intervention needed when their vehicles get damaged or when they damage vehicles that belong to others.

If you run a business, then you probably need special kinds of insurance based on the nature of your business. Take a restaurant, for example, that owns a deep fryer. This is a common kitchen appliance in the world of fast-food restaurants, but serious injury can occur when it is used. It’s hot and filled with hot oil. What could possibly go wrong?

Not every insurance policy is for something that is so broad. Some policies are taken out for specific reasons. Some examples of this are professional liability insurance, medical malpractice, and kidnap and ransom (K&R) insurance.

Understanding the Workflow of Insurance

At this point, the concept of insurance should be drilled into your brain, so now it’s time to focus on how the workflow proceeds where insurance is concerned. First, you need to understand the components that come together to give said workflow.

Policy Premium

This boils down to the amount that an insurance company charges you to maintain the policy that you decide to purchase. Therefore, you can view this as the cost associated with your insurance.

The premium that you are assigned comes from a base figure that may be modified to give you the amount that you are required to pay towards the insurance. Some of the factors that contribute to the modification are your history, your place of employment, your location, etc. Some of these parameters make you eligible for discounts, which are applied to reduce your final price.

Note that there are also modifications that lead to a higher price. For example, various taxes could be applied to your premium, which results in the cost being elevated. Alternatively, there are some insurance companies that fall under a jurisdiction that mandates the need for service fees.

This premium is paid at an agreed interval. You can pay annually, monthly, or even bi-annually. Not every company offers every interval level, but these are the three that you can almost expect from a provider.

The cost of the premium depends on a few factors, such as the level of risk associated with the insurance type you want and the level of coverage that you are looking for. The formula is very simple to understand in this regard. The lower the risk associated with your desired policy, the cheaper it should be.

Take a person who is purchasing a car, for example. If this person has a ten year old driver’s license, the insurance company is likely to be comfortable with the prospect of that person being in the driver’s seat. What happens if the driver has a license that is only three months old though?

In that case, the perceived level of inexperience would work against the driver. A person with such a driver’s license is a high-risk driver. There is likely to be a significantly higher cost for that person based on that single factor.

The Deductible

No matter what kind of insurance you get, the chances are that there is a deductible involved. Some insurance companies allow you to choose what this figure is for certain insurance agreements.

When something happens that requires you to make a claim, the insurance company takes up financial responsibility, assuming you were operating within the lines of your contract.

Before the company makes any payment, however, you are required to present a deductible. The deductible is a percentage of the cost of the claim that you must pay out-of-pocket. Once you do so, the remainder of the claim’s cost is met by the insurer. Note that a higher deductible tends to yield a lower insurance premium.

Based on the type of insurance being used and the insurer that you do business with, you may find that deductibles are not always applied during claims. Instead, there are instances in which it is applied at the policy level.

Policy Limit

Insurance policy coverage is not infinite. If it were, insurance companies would be setting themselves up to take quite the tumble. Though you are protected in the event of certain occurrences, there is a maximum payment that an insurance company is willing to make to honor your claim.

While this maximum can be imposed on a per-claim basis, there are also cases in which it is applied over the policy’s term. In the latter cases, this is called the lifetime maximum of the policy. The higher a policy limit is, the higher the premium is that you are required to pay.

The Process

By the time you purchase your policy, the three elements above would’ve been established. Northing relevant happens when you don’t have the need to make a claim. When you do, however, is when the insurance company carries out its responsibility of protection.

The process begins when you make a claim. This is usually a statement of intent to receive financial coverage based on what is stipulated by the policy. There is usually a facility provided for you to provide information surrounding the event that leads to the claim.

Before any payment is made, an investigation is carried out to ensure that you were operating within the parameters of your agreement when the incident occurred. Once this is verified, you are then required to provide your deductible. If you do not, then all progress is halted. No action can take place unless the deductible is covered.

After this is taken care of, the insurer takes the relevant action, which can be a payment, a purchase, etc. This is taken based on the limit of the policy. If the amount that is needed is less than or equal to the policy limit, then you have no problem. However, if that number is exceeded, you need to find a way to make up the difference.