In-Home Business Exposures

Aided by technology, many people have started working from home. However, the Homeowner’s policy doesn’t cover business activities, so where can you get coverage? When can an endorsement be made to your Homeowner’s coverage to add the coverage? When can’t coverage be endorsed to your Homeowner’s policy?

In-home businesses are becoming a common occurrence, thanks to technology. With the ability to videoconference with anyone at anytime over the internet, the business world has become a smaller place—and is allowing more people to work from home. Some people can connect to their company's servers and work from home. Others use the new technology to sell their wares online, using their home as there head office and/or warehouse. And still others run non-internet based operations, such as daycares and pet grooming. So when does a home business require an endorsement to the Homeowner's policy, and when does it require a separate commercial policy?

Most Homeowner’s policies do not automatically cover any business property or liability at all. However, most Homeowner’s policies give you the option to endorse your policy to cover an in-home business exposure. Typically, that endorsement will extend coverage from your Homeowner’s policy to cover incidental business liability and cover your business personal property as well. However, this endorsement is typically reserved for in-home offices only. An example would be if you had a company computer at home that could connect to your company’s server and allow you to work from home—making calls, fill out reports, etc. 

Typically, things get more complicated if the entire business is ran in-home. Businesses such as the aforementioned daycare and pet grooming probably wouldn’t be able to be covered by your Homeowner’s policy. This is because the entire operation is based from the home, instead of being an incidental exposure. Also, there are extra coverages that those types of businesses would need (E.g. business income, animal bailee coverage, molestation and misconduct coverage) that are not even offered for homeowners.

In-home businesses are becoming more common, and the risks are becoming more complicated. If you think you may have any in-home business exposure, make sure to contact your insurance agent and have a discussion about the specific risks of your situation and your insurance options!    

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Keeping an Inventory

When insuring property, commercial or personal, it can be highly beneficial to create an inventory of all your items. There are many advantages to keeping a schedule of your items, and taking inventory can be aided by technology.

Homeowners, Condo-owners, Renters, and businesses all have something in common—they have a lot of stuff! Now, the items may be a bit different for each, but the need to schedule these items is vital for all of them.

Why should I make a list of my possessions?

• Making a list of your items will help determine the amount of personal property coverage to initially obtain
• In a claim, an inventory can speed up the claims process, getting you paid sooner
• In a claim, an inventory will ensure you get completely and accurately reimbursed for your loss
• After a catastrophe, you will need to quantify your losses to qualify for tax breaks or disaster assistance.

So how do I do it?

Though it may seem overwhelming to keep track of all the items you have, know that even a partial list is better than no list as all, and the list can be organized however you see fit. You could organize it by highest cost item to lowest, by room, by most recent purchase, by item type, or any way you find intuitive.

Taking inventory can also be aided by technology. Apps such as the Insurance Information Institute’s ‘Know Your Stuff’ app allows you to write down the item location, category of item, item name, item’s make, and the item’s model. It also allows you to take a picture of each item. The information is then synced to their website where you can easily access it from anywhere with an internet connection, keeping it safely stored online.

If you decide to make a list by hand or in a spreadsheet, make sure to save a copy of it outside of the home, perhaps at work, a family member’s house, or a copy saved to a Cloud database. Also, you may find it beneficial to store other important information with your inventory list. Some useful information to save would be a copy of you and your family’s legal documents, financial records, passwords, and PINs for bank accounts.

Creating a list of your items can seem to be a very daunting task. Maintaining it will be an ongoing process as well, but remember that a partial list is better than no list at all, and that keeping a list will make sure you get the full use out of the insurance coverage you bought!

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Underwriters--Gatekeepers of Insurance

Why do insurance agents ask so many questions? What is an underwriter? Who do they work for? What is their function? How do I convince them to give me the best coverage for a good price?

Underwriters are the men and women that check over your agent’s quote submissions. Each Underwriter only work for one insurance carrier/company (E.g. Progressive), and they ultimately receive the information that your insurance agent asked you for. With that information, they have to determine if you are eligible for insurance, and if you are, what types of coverage you qualify for, how much coverage can be provided, what exclusions should be applied, and what the premium should be. 

So the first step is to determine if you fit into the company’s desired risk appetite. To do this, they have to follow the carrier’s rules and guidelines in accepting prospects. A few examples of ‘risk appetite’ and ‘rules and guidelines’ are the following:

• Some carriers will only accept clients who place both their home and auto insurance with them.
• Some carriers won’t accept buildings that still use fuse boxes instead of breaker boxes.
• Some carriers won’t insure people/entities with certain types of claims
• Some carriers won’t insure people/entities who have a predetermined amount of claims or total amount of claim dollars
• And many more, all unique to each insurance company 

If the prospect meets all of the criteria, the Underwriter will then determine what kind of quote they will give. They will determine if there are any special conditions, if they need to add any exclusions, and will ultimately decide what the overall price will be. And until the underwriter gives their approval of a quote, the agent cannot bind coverage.

So How Can I Convince the Underwriter to Give Me Discounts?

One of the main functions of an underwriter is to create a risk profile for each person/entity. The more complete the profile is, the more the underwriter will know about the client. And the more the underwriter knows about the client, the more comfortable they will be with giving discounts and credits to them. The types of things that give a good description of a client, personal lines or commercial lines, includes, but is not limited to, the following:

• Update information
• Credit reports
• Bio/resume of the client/entity
• Claims history with detailed claim descriptions
• Risk management procedures
• Experience information

The more information an agent can give the underwriter, the better the quote they will give. Maybe that means fewer exclusions, lower deductibles, a better price, or a combination of some or all of those! Note that all information given to an agent is confidential, and will only be used to provide the Underwriter with necessary information for quotation.

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

IRMI Tip of the Month: Helping Teenage Drivers

There are several things parents can do to help keep their teenagers safe behind the wheel. Here are a few tips.

• Coach Your Son or Daughter. You should "coach" your teenage driver. Talk openly and frankly with him or her in order to determine his or her attitude about being behind the wheel. Work with your teen to set ground rules, such as the number of people allowed in the car, where the car may be taken, and curfew.
• Utilize Emergency Road Service. If you do not belong to a motor club, you should consider joining one that provides 24-hour emergency road service. That way, your teenager may call for help at any time if they need gas, need a jump-start, are locked out, or need a tire changed. You can also arrange with the motor club to provide service for your teen if they are in a friend's car.
• Have an Open Discussion About Driving Under the Influence. While no one wants to think about the possibility of their teenager drinking and driving--or being in a car with an impaired friend at the wheel--we need to be realistic. History has shown that teenagers will experiment with alcohol. You should make it clear to you teen that driving after drinking is not acceptable, and is very dangerous for everyone. However, if they ever do drink, or are in a car with someone else who is impaired, make it clear to your teen that he or she can call you at any time of the day or night and that you will come to get them--no questions asked.

Two other effective, though more costly, things that can be done are:

• Install a "Governor." Many vehicles, such as school buses and certain types of delivery vehicles, have a "governor" installed in them that restricts the amount of fuel that can be injected, thus preventing the vehicle from being driven over a certain speed. A governor in your teen's car may help keep him or her within the speed limits.
• Install a Global Positioning System (GPS) in the Teen's Car. You can program it to let you know where your teenager is driving at any time. With the GPS, you can set a radius of operation and the GPS will notify you if your teen has taken the car outside of that radius. It can even alert you when the speed limit is being exceeded. Finally, A GPS can notify you if the car is being kept out past an agreed upon curfew. Note: We realize that this may seem like a rather extreme measure. Use of a GPS may best serve those parents who have a reason to mistrust their teenager.

When your son or daughter gets a drivers license, work with your insurance agent to review various options for both of you. It is important for you—and your son or daughter—to remember that, yes, your auto insurance rates will go up, but they will come down after a couple years of driving experience. However, the rates will really go up if your teenager has tickets or gets into accidents.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2008, International Risk Management Institute, Inc.

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.