HOMEOWNERS’ INSURANCE FAQ
Unlike driving a car, you can legally own a home without homeowner’s insurance. But, if you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to get homeowners insurance coverage. That’s because lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, tornado or other disaster. If you live in an area likely to flood, the bank will also require you to purchase flood insurance. Some financial institutions may also require earthquake coverage if you live in a region vulnerable to earthquakes. If you buy a co-op or condominium, your board will probably require you to buy homeowners insurance.
After your mortgage is paid off, no one will force you to buy homeowners insurance. But it doesn’t make sense to cancel your policy and risk losing what you’ve invested in your home.
Would you be able to remember all the possessions you’ve accumulated over the years if they were destroyed by a fire? Having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return and help you purchase the correct amount of insurance. See our blog post for tips on how to make a home inventory list.
There is a big difference between when an insurance company cancels a policy and when it chooses not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except:
- If you fail to pay the premium.
- You have committed fraud or made serious misrepresentations on your application.
Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days’ notice and explain the reason for non-renewal before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don’t get an explanation, call your state insurance department.
Homeowner’s insurance premiums are not tax deductible except under special circumstances. If you rent out your home or use your home for business purposes, you may be able to deduct some of your homeowner’s insurance premiums. It is best to speak with a tax advisor on what you can or cannot deduct.
Your homeowner’s insurance premiums may be included in your mortgage payment, if they are escrowed. It is common practice to set up an escrow account when purchasing your home to take care of the monthly mortgage payment, property taxes, and homeowner’s insurance with a single payment. If you are unsure if your payments are set up through escrow, contact your mortgage lender.
Yes. A person who owns his or her home would have a different policy from someone who rents. Policies also differ on the amount of insurance coverage provided.
- HO-1: Limited coverage policy
This “bare bones” policy covers you against the first 10 disasters. It’s no longer available in most states.
- HO-2: Basic policy
It provides protection against all 16 disasters. There is a version of HO-2 designed for mobile homes.
- HO-3: The most popular policy
This “special” policy protects your home from all perils except those specifically excluded.
- HO-8: Older home
Designed for older homes, this policy usually reimburses you for damage on an actual cash value basis which means replacement cost less depreciation. Full replacement cost policies may not be available for some older homes.
- HO4-Renter
Created specifically for those who rent the home they live in, this policy protects your possessions and any parts of the apartment that you own, such as new kitchen cabinets you install, against all 16 disasters.
- H0-6: condo/co-opA policy for those who own a condo or co-op, it provides coverage for your belongings and the structural parts of the building that you own. It protects you against all 16 disasters.
AUTO INSURANCE FAQ
NO! Almost every state requires you to have auto liability insurance, including Florida. Florida also has financial responsibility laws, which means that you need to have sufficient assets to pay claims if you cause an accident. If you don’t have enough assets, you must purchase at least the state minimum amount of insurance. But insurance exists to protect your assets. Trying to see how little you can get by with can be very shortsighted and dangerous.
If you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You’ll need to buy these coverages in addition to the Florida minimum required Property Damage Liability and Personal Injury Protection coverages.
The loan company may also require “gap” insurance. This refers to the fact that if you have an accident and your leased car is damaged beyond repair or “totaled,” there’s likely to be a difference between the amount that you still owe the auto dealer and the check that you’ll get from your insurance company. That’s because the insurance company’s check is based on the car’s actual cash value, which takes into account depreciation. The difference between the two amounts is known as the “gap.”
The cost of gap insurance is generally rolled into the lease payments. You don’t actually buy a gap policy from an auto insurance carrier. Generally, the auto dealer buys a master policy from an insurance company to cover all of the cars it leases and charges you for a “gap waiver.” This means that if your leased car is totaled, you won’t have to pay the dealer the gap amount. Check with the auto dealer when leasing your car.
What is the difference between collision and comprehensive coverage?
- Collision covers the damage to the car from an accident with another automobile or object.
- Comprehensive covers a loss that is caused by something other than a collision with another car or abject, such as a fire or theft or collision with a deer.
What is the minimum car insurance coverage required in Florida?
The State of Florida requires all drivers to have at least $10,000 coverage in both Property Damage Liability and Personal Injury Protection. If you have previously been involved in a major crash or have been convicted of a certain offense, you may also be required to carry Bodily Injury coverage. Also, if you are financing a car, your lender may also have specific requirements on the types of auto insurance coverage you purchase (such as collision or comprehensive coverage).
What’s the difference between cancellation and non-renewal?
There is a big difference between when an insurance company cancels a policy and when it chooses not to renew it. Insurance companies cannot cancel a policy that has been in force for more than sixty days except:
- If you fail to pay the premium,
- You have committed fraud or made serious misrepresentations on your application, or
- Your driver’s license has been revoked or suspended.
Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state in which you live, your insurance company must give you a certain number of days’ notice and explain the reason for the non-renewal before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don’t get an explanation, call your state insurance department.
BUSINESS INSURANCE FAQ
Contact our office for an appointment with one of our knowledgeable insurance agents. We will discuss your business practices and services to help you to determine the types of insurance your company needs and steer you away from unnecessary policies.
Florida companies with four or more employees (regardless of part-time or full-time status) must carry worker’s compensation. In addition, there are a few specifications for certain industries. Construction employers must carry worker’s comp insurance if they employ one or more individuals. Farmers with five or more employees and twelve or more seasonal employees must have coverage. Also, all public employees must be offered worker’s comp insurance coverage.
If your insurance policy includes theft or commercial crime coverage, then embezzlement or theft conducted by an employee is also covered.
So long as you have the right type of business liability insurance you may be covered against the lawsuit. However, there are certain exclusions such as intentionally caused harm, or the cost of liability exceeds your coverage amount. Many companies purchase business umbrella insurance to expand their coverage and liability limits.
- General Liability
- Professional Liability/ “Errors and Omissions”/ Malpractice Insurance
- Director’s and Officer’s Liability
- Product Liability
- Premises Liability or Property Liability
- Employer’s Liability
- Employment Practices Liability
- Environmental and Pollution Liability
LIFE INSURANCE FAQ
A beneficiary is the person or financial institution (a trust fund, for instance) you name in a life insurance policy to receive the proceeds. In addition to naming a specific beneficiary, you should name a second or “contingent” beneficiary, in case you outlive the first beneficiary.
If there is no living beneficiary, the proceeds will go to your estate. If there are probate proceedings this could possibly delay your loved ones receiving the money. The proceeds may also be subject to estate taxes.
Pay special attention to the wording of your beneficiary designations to ensure that the right person receives the proceeds of your estate. If you write “wife/husband of the insured” without using a specific name, an ex-spouse could receive the proceeds. On the other hand, if you have named specific children, any later-born or adopted children will not receive the proceeds – unless the beneficiary designation is changed.
Picking a beneficiary, and keeping that choice up-to-date, are important parts of purchasing life insurance. The birth or adoption of a child, marriage, or divorce can affect your initial choice of who will receive the death benefit when you die. Review your beneficiary designation as new situations arise to make sure your choice is still appropriate.
You should review your insurance needs at least once a year. If you have a major life change, you should contact your insurance agent or company representative. The change in your life may have a significant impact on your insurance needs. Life changes may include:
- Marriage or divorce
- A child or grandchild who is born or adopted
- Significant changes in your health or that of your spouse/domestic partner
- Taking on the financial responsibility of an aging parent
- Purchasing a new home
- Refinancing your home
- Coming into an inheritance
LONG TERM CARE INSURNACE FAQ
Yes, the premiums for long term care insurance can be partially tax deductible.
No! Long term care insurance coverage is generally available for individuals age 18 to 84. As long as you are currently in good health, you can purchase long term care insurance.
If you have a trust that is being actively maintained by an attorney at least once a year for changes in the law, then you may not need long term care insurance. However, if your trust is not being actively managed, then it may be ineffective when the time comes to use its benefits.
Those with a committed plan through Medicaid may also not need additional long term care insurance, however, be aware of the limitations and options provided by Medicaid’s long term care options.
Long term care insurance provides more than just benefits for nursing home costs and care.
In home care is also an option under long term care insurance.
