Month: June 2014

Do You Have Insurance When You Use Someone Else’s Car?

Posted on by shasha insurance

Bob is a sales manager for a chemical equipment company. He drives his employer-furnished car thousands of miles each quarter on business. He also drives it on weekend trips, errands around town, and vacations. Focused on his job, he doesn’t give much thought to who will pay if he has a car accident.

Janet and her husband own one car and can’t afford to buy a second right now. They get by as best they can with one, but sometimes this is a challenge. It seems like a gift from heaven when their retired neighbors offer to let Janet use their car over the winter while they live in Florida. Janet doesn’t think about insurance coverage; she’s thinking about how she no longer has to take a 90-minute commute involving three buses.

Bob’s employer has an auto insurance policy that will cover an accident he has while using his car on company business, but it might not cover accidents occurring when he drives it for personal use. If Bob strikes a pedestrian while driving to a sales appointment in midtown Manhattan, his employer’s insurance will probably cover any liability for the injuries. However, if he hits another car while he’s on vacation in Hilton Head, the employer’s policy might not apply.

Janet’s auto insurance policy will not cover an accident she has while she’s using her neighbor’s car. The policy states that it does not apply to injuries or damage resulting from the use of a vehicle that is A) furnished or available for her regular use; and B) not listed on the policy (an exception is would be a loaner car she has while her car is being repaired.) Her neighbors have made their car available to her to use anytime for a period of months. Consequently, if she’s involved in a multi-car pileup on the way home from work, and she is at least partly liable for the accident, her insurance will not cover her share of the liability. If the neighbors have insurance in force, it should cover the accident. If, however, they forgot to pay their premium and the policy has been canceled, there will be no insurance available.

Both Bob and Janet could use some additional low-cost coverage on their auto policies. This coverage, Extended Non-Owned Coverage–Vehicles Furnished or Available for Regular Use, extends the policy’s liability and medical payments coverages to cover situations like Bob and Janet’s. The coverage has two important features:

It applies only to the person listed on the policy endorsement unless indicated otherwise. If the endorsement shows only Bob’s name, then the policy will cover only him for the use of the company car. Otherwise, the policy will cover him, his spouse and any family member using the company car.

The coverage applies on an “excess” basis over other collectible insurance. This means that the insurance company will look to the vehicle owner’s insurance to pay first; if that insurance doesn’t apply or gets used up, then the individual’s policy will pay. For example, if Janet’s neighbors have a valid insurance policy, their policy will pay for the loss until the amount of insurance is used up; then Janet’s policy will pay. If the neighbors’ policy has lapsed, Janet’s policy will pay from the first dollar.

Individuals with situations similar to Bob and Janet’s should consult with a professional insurance agent about the cost of purchasing this coverage. For a relatively small cost, they can protect themselves while they enjoy the use of a vehicle someone else owns.

Homeowners – Are You Underinsured?

Posted on by shasha insurance

About two out of three U.S. homes are underinsured, according to a 2008 survey by Marshall & Swift/Boeckh LLC (MSB), a leading provider of building replacement cost data. Based on this new data, the average homeowner’s policy only insures the home to about 82% of the projected replacement cost of the home. Over the past decade, this point has been driven home as the U.S. has endured hurricanes, wildfires, and tornadoes.  Throughout the course of natural disasters, thousands of homeowners were left without enough coverage.

Although the study did not show results regionally, nationwide the average policy falls 18% short of the projected cost to rebuild the house. Put in other terms, the owner of a house insured for $200,000 would be short by $36,000 of the funds needed to rebuild, if the averages held true.

Why do thousands of Americans find themselves in this predicament?  The most common reason for all of this is quite innocuous: homeowners often forget to update their policies.  For instance, suppose a homeowner decides to put an addition onto their home, which would drive up the value of the property beyond the stated policy limits.  If the home improvement is never reported to the insurance company, no additional coverage is added to the policy. Additionally, rising construction costs and ever-changing building codes are raising the price tag to rebuild.

To avoid this problem, homeowners should re-assess policies as they renew each year. If a homeowner suspects a change in the value of their home, this suspicion should be communicated to his or her insurance agent.  Although not every homeowner wants to insure to the full replacement cost of the home, this possibility should at least be examined and considered.

Is Your Home Properly Insured?

Here are some tips to help you evaluate your homeowners’ insurance:

  • Understand what your policy does and does not cover.  Remember that  just because your bank requires your policy to cover the mortgage at a minimum, this does not mean your insurance should be based on this amount. You need to insure your home, not the mortgage on your home.
  • If available, consider adding an inflation guard to your policy.  Although this will cost extra money, it will help offset the rising cost of rebuilding, should disaster strike.
  • If building codes change, which they inevitably do over time, you will most likely be required to rebuild according to the new laws. The older the home, the more expensive it will be to bring it up to code. In most cases, policies will not pay for these extra costs. An “Ordinance or Law Endorsement” can help pay these hidden costs.
  • Talk to builders in your area to get an approximation of replacement costs. The going rate per square foot for new construction should be considered in estimating replacement costs.  Current appraisals are also an excellent source to utilize.

What the New Flood Insurance Maps Mean to You

Posted on by shasha insurance

Is your property at risk of damage from flooding? If you answered “no,” think again. Every property has a flood risk; some may have a more severe risk than others, but all have some risk. A home on a lakeshore has a pretty obvious exposure to flooding. So, however, does a building miles from a body of water, located on a street with storm drains on it and a steady water supply. Because standard homeowner’s and commercial property insurance policies do not cover flood losses, the federal government makes insurance available through the National Flood Insurance Program. The NFIP evaluates the risk (and determines the insurance premium) for each property in a participating community according to its location on that community’s Flood Insurance Rate Map. Recently, those maps have been changing, and some property owners have received big surprises.

For a variety of reasons, the Federal Emergency Management Agency, which administers the NFIP, has spent the past several years working with participating communities to update flood maps. Some areas have experienced development that has changed water flow and altered drainage patterns. Soil erosion has impacted other areas, while changes in hurricane activity have affected coastal areas. The new digital maps give more accurate flood risk information on a property-by-property level.

For every property, the flood map changes will produce one of three outcomes:

* The risk level changes from low or moderate risk to high risk;

* There is no change in the risk level

* The risk level changes from high to low or moderate.

According to the NFIP, a low or moderate risk means that the risk of flooding is reduced but not completely eliminated. Such properties are still vulnerable from floods resulting from heavy rainfall, rapid snowmelt, clogged storm drains, and other causes. Properties with a high risk have at least a one percent annual chance of flooding. This means that a property with a 30-year mortgage has a one in four chance of flooding sometime during the life of the loan.

When the NFIP issues new maps, it normally provides a six- to twelve-month period before the new maps take effect. This gives affected property owners time to understand the changes and prepare for their effects.

If your risk level has changed to high, the federal government will require your mortgage holder to verify that you have bought flood insurance. The cost of insurance will increase to reflect the higher degree of risk. The NFIP has “grandfathering” rules to help property owners who built in compliance with the maps in effect at the time of construction or who have maintained continuous flood coverage on the property. This can offset some of the additional cost. The owner of a building that is sufficiently high above the minimum height at which a flood is likely to occur may actually see a premium reduction.

If your risk level has changed to low or moderate, federal rules will no longer require you to buy flood insurance. However, you will still have some risk of flooding, so it may be wise for you to retain the coverage. According to the NFIP, 25 percent of flood insurance claims come from properties with low or moderate risks. You may be able to convert your standard flood policy to a Preferred Risk Policy, which carries a lower cost.

Even if your risk level has not changed, you should discuss your situation with a professional insurance agent, who can suggest ways for you to protect yourself financially from flood losses. The NFIP says that flood is the most common natural catastrophe in the U.S. The time to prepare is before that flood occurs.

How Much Homeowners Insurance Do You Need?

Posted on by shasha insurance

Because your home is probably the biggest investment you’ll ever make, you’ll want to take measures to safeguard that valuable investment. The best way to protect your home investment is through homeowner’s insurance.

However, you shouldn’t settle for just any policy. The type and amount of insurance you need depends on your specific home, what’s in it and your personal requirements. But how much insurance is enough? Here are a few ways to you determine just how much insurance coverage you need:

Market value may not be enough

While you may be tempted to purchase just enough homeowner’s insurance to cover the market or resale value of your home, this may not be enough. While the market value may be enough coverage for some homeowners, that’s typically not the case.

Your home’s market value is not the same as what’s known as its “replacement cost.” The replacement cost of your home is the amount of money you would need to rebuild your home to its previous condition if a loss were to occur. This amount is different from your home’s market value, purchase price or the outstanding amount of your mortgage loan.

Especially right now, when property values are falling throughout much of the nation, the market value of your home is probably much lower than its replacement value. Therefore, you should not use the market value to determine how much insurance coverage you need.

Calculate the replacement cost

So, how do you figure out the replacement cost of your home? Your homeowner’s insurance company can calculate how much it would cost to rebuild your home based on the following:

  • Square footage of your home
  • Type and quality of your home’s construction
  • Any updates, special features or add-ons to your home
  • Quality and cost of materials used in your home

Read the fine print

Before you purchase a policy, read all the fine print so you know exactly what the policy covers. Homeowner’s insurance generally covers damages to your home and “other structures” on your property, such as a shed, detached garage, gazebo or pool.

In most policies, the amount of insurance coverage you receive for other structures is 10 percent of the amount of coverage you receive on your home. For example, if your insurance policy covers $100,000 on your home, the coverage you would receive for your other structures would be $10,000 combined. If you believe that the structures on your property are worth more than 10 percent of your home coverage, you may want to request additional coverage.

Take a look at your personal liability coverage

Most homeowner’s policies also include personal liability and medical expense coverage. Generally, your homeowner’s insurance company will pay up to $100,000 on a legitimate civil claim against you for an injury that occurred on your property.

However, this still may not be enough to cover a major lawsuit. You might consider purchasing a separate personal umbrella liability policy, which can offer additional protection. This type of policy offers a higher level of liability coverage and ensures that you and your family’s assets will be protected if someone sues you for damages. Umbrella policies typically pay up to a predetermined limit, which is usually $1 million, for liability claims made against you and your family.

Protect your valuables

If you have particularly valuable jewelry, artwork or collectibles in your home, you may want to opt for even more homeowner’s insurance coverage for additional protection. You may assume your valuables are fully covered by your homeowner’s insurance, but that’s not always the case. It all comes down to what’s called the “sublimit”-this is the limit on the amount the insurance company will pay for specific types of personal property. Although your policy’s total personal property limit may be $75,000, the sublimit for jewelry may be as low as $1,500.

Read through your contract and find your policy’s sublimit for artwork, jewelry and collectibles. If your valuables are worth more than the sublimit, you may want to purchase additional insurance to cover them. You can purchase what’s called a “floater” and have this worked into your homeowner’s policy. Insurance floaters typically cover one specific item, so if you have multiple valuables, you may need to purchase floaters for each item you want to insure.

Talk to a professional

Discuss your unique homeowner’s insurance needs with your insurance agent. He or she can help you determine what kind of policy will best fit your needs and whether or not you may require additional coverage.

Make the Right Decision When Choosing an Auto Repair Shop

Posted on by shasha insurance

Over time, car engines and parts have become increasingly complex, and most people just aren’t all that familiar with the inner workings of their vehicles. So it is often difficult to determine whether an auto repair facility makes honest assessments and charges fair prices.  Fortunately, there are a number of guidelines that provide assistance in determining that an auto repair shop is both competent and honest.

First of all, don’t choose a shop based on its location.  Although this may be the convenient choice, it may not be the best choice. The National Automotive Parts Association (NAPA) suggests that you find a reputable repair shop before you need repairs. When you are not worried about your current transportation needs, and not rushed to get a repair completed, you will make a more informed and logical decision regarding car repairs.

Ask Questions.  Contact local repair shops and ask about their experience with your particular vehicle make and model.  Do they specialize in certain types of repairs?  Don’t be afraid to ask the shop for a few references.  An upstanding facility that wants your business should be happy to provide them.  A reference call only takes a few minutes and could save you a lot of grief later.  Also, ask neighbors, family, friends, and co-workers to recommend repair shops they have used that do good work at fair prices.   

Investigate.  Contact your local Department of Consumer Affairs or Better Business Bureau to see if complaints have been registered against the repair shop you’re considering.  You can also ask if an independently owned and operated shop is associated with NAPA.  A shop must have a reputation for service quality in its community to be certified as a NAPA Auto Care Center.

Plan an On-site Visit.  Upon arriving at the shop, notice whether the vehicles being repaired are equal in value to yours.  Is the staff helpful and considerate? Is the facility well organized and tidy?  Does it have modern equipment? 

Within the shop, all policies (guarantees, labor rates, methods of payment, etc.) should be posted and/or explained to your satisfaction.  Inquire if the facility provides a written guarantee on parts and labor, and ask about customer satisfaction policies.

NAPA Guidelines.  Some shops advertise “free inspections,” but this is often not to your benefit.  Inspections take time, and the facility must somehow recover the cost of the time it spends on the inspection. This process usually results in an attempt to sell you repairs–whether they are necessary or not.  According to NAPA, “All reputable auto care centers must charge a nominal fee for basic inspections.”

NAPA recommends against basing your choice of repair shop on price alone.  In addition to parts and labor, you are also paying for the expertise of the mechanics.  The shop should have modern equipment as well as the skilled technicians required to make the needed repairs.  Does the shop have the ASE symbol prominently displayed?  ASE-certified technicians are trained and tested to achieve certification in a variety of repair specialties.  Furthermore, they must be re-tested every five years to maintain the nationally recognized ASE-certification.  The display of trade school diplomas and certificates of advanced course work from car manufacturers can also help identify qualified technicians.  Since it is the technicians themselves who are personally certified, not the shop, you may want to ask for assurance that a certified mechanic will handle the repairs on your vehicle.

Communicate. Once you have chosen a shop, discuss beforehand what parts will be used to repair your vehicle.  Brand name parts are typically built to the original manufacturer’s quality or better, and they usually come with warranties. ON the other hand, remanufactured parts and non-brand name parts often cost less and may also carry warranties.  Ask the staff to discuss the pros and cons of which parts to use.

Disagreements can occur due to lack of communication between the customer and the shop.  It is easy to become intimidated when communicating with a repair shop, and you hear a lot of words and concepts you don’t necessarily understand.  A sign of a reputable facility is the ability to communicate your vehicle’s problems to you, along with your options for fixing the problems.  Do not be afraid to ask questions about the repairs as well as the costs.  It is equally important to give the shop a full description of the problem.  If the car is “making a strange sound,” try to explain exactly when it happens.  Does it happen when braking or accelerating? when the engine is hot or cold? on a full or empty fuel tank?  The point is to do your part to assist the mechanic in accurately diagnosing and repairing the problem.

In these economic times, the average cost of a new vehicle exceeds $28,000, and consumers may need to drive their cars longer.  Basic vehicle maintenance and good repair service are the best ways to keep your car running smoothly for many years to come.

Parents, Tell Your Kids: Stop Texting and Drive

Posted on by shasha insurance

In the summer of 2009, a shocking video posted on the Internet gained widespread attention from the media. Viewers found it so upsetting that YouTube restricted access to it on its Web site. Created by the police department of a small town in Wales, it depicted a fictional but horrific car accident that claimed the lives of four people and seriously injured the driver who caused it. The culprit: A teenage girl who was sending a text message from her cell phone while driving.

“Texting” while driving is a very dangerous practice. Car accidents are already the leading cause of death for people aged 16 to 20, according to the Centers for Disease Control; by distracting them, texting increases their chances of getting in accidents. Eastern Virginia Medical School ran a study in which 21 teenagers with at least six months’ driving experience and no chemical influences simulated driving in 10 minute segments. When they sent text messages or searched their MP3 players while driving, they changed lanes and speeds more often than when they did not. Some of them ran over pedestrians.

The federal Department of Transportation convened a Distracted Driving Summit meeting in the fall of 2009. Participants discussed solutions to a variety of distractions, including ways to get teens to stop texting behind the wheel.

  1. Just as they would talk to their teens about the dangers of drinking and driving, parents should talk with them about driving while texting. Teens don’t necessarily think about how risky some behaviors may be. Driver education instructors might not raise this issue, so it’s up to parents to address it.
  2. When they have the conversation with their teens, parents should not worry about being too harsh. Cemeteries are full of teenagers who thought they were immortal, so this is no time to soft-pedal the message. Have them watch the Welsh police department’s video, give them testimonials from other teens to read, and show them stories about accidents like the one in 2007 that killed five girls who had just graduated from high school near Rochester, New York.
  3. Some state and local governments have enacted laws against texting and driving. New York, California, Arkansas, Texas and Missouri are a few of the states that have enacted bans. Parents should find out the laws where they live and make sure their teens know.
  4. Parents should set firm rules with tough consequences for violations. Loss of driving and cell phone privileges are some of the penalties parents may want to consider for breaking the rules.
  5. Parents should model the behavior they want from their teens. They should avoid talking on cell phones or texting while driving themselves. These practices are not any safer when someone over age 40 does them; parents should set a good example and drive safely.

Learning to drive is an important milestone in a teenager’s passage to adulthood. It is important for safe driving habits to become ingrained in new drivers. Parents are their children’s first teachers in many subjects; texting and driving should be no different. Teens’ lives and the lives of the people sharing the highways with them depend on it.

Tips to Find Affordable Car Insurance for Your Teen Driver

Posted on by shasha insurance

If your teen is getting ready to put his hands to the wheel, it’s time to think seriously about car insurance options.  A dreadful thought for many parents…but with a little research and careful planning you may be able to obtain affordable car insurance for your teen.  Let’s explore some ways to lessen the cost of your teen’s auto insurance.

Proper Driver Training

Many teens opt for driver’s education in high school, and this is a wonderful way to decrease your teen’s car insurance rates right from the beginning.  Many car insurance companies offer discounts to those who have completed a driver’s education course successfully.  Not to mention driver’s education provides proper on-the-road training for your teen.  The instructor can teach all the written and “unspoken” rules of the road while also showing proper driving techniques including defensive driving.  Knowing how to drive properly helps decrease the chances of careless driving thus making your teen a much safer driver.

Law versus Fun

Emphasize to your teen that although driving is fun, it’s also a serious responsibility.  Make sure he understands how the law works and the stiff penalties for speeding, racing, careless driving, drunk driving, running stop signs or red lights, not wearing seatbelts, parking in undesignated areas, etc.  Explain that even one traffic offense can eliminate his chances for affordable car insurance in years to come, and may even cause him to lose his driving privileges for a while.

Does Your Teen Make the Grade?

Some insurers offer discounts to students who keep their grades up.  This is somewhat of a reward for you as a parent and your child if your teen gets good grades or has a high GPA (grade point average).  Your car insurance company may offer this discount because insurers feel that a teen who demonstrates responsibility and carefulness in school is more likely to do the same while behind the wheel of an automobile.  This can be used as an incentive for your teen as well.  You might even offer a bonus allowance to your teen for keeping his grades up, using the money you’ll save with cheaper car insurance!

Choose Cars Wisely

Teens and sports cars – these two words shouldn’t be used in the same sentence if you’re shopping for auto insurance.  Insurance companies frown upon teens buying or driving sports cars, even if the teen is a safe driver.  Sports cars in general tend to carry higher insurance rates for drivers of all ages, but teens are especially vulnerable to temptation when it comes to showing off their new car and testing how fast it will go.  Opt for a sedan or family-style car with all the safety features possible.  The good thing about safety features is your insurance company may offer discounts for certain safety features such as anti-lock brakes, air bags, added frame support, and others.

Opt for an Add-On to Your Policy

When your teen first starts driving, consider adding him to your current insurance policy for a while.  You can do this as long as you remain the primary driver of your vehicle. Then your teen will be able to enjoy the lower rates based on your discounts and age.  If he has only a beginner’s permit, check with your insurance company to find out if he should be added to the policy as a driver.  Most will cover teen drivers automatically under your policy while driving with a permit.

Shop for the Best Deal

If you’re shopping for a car insurance policy for your teen, you’ll be surprised at the differences among companies.  Every company varies in what it considers to be “high risk” drivers.  Some insurers specialize in insurance for young drivers and are able to offer cheaper rates than others.  Also, compare each company’s discounts for teen drivers.  Some may offer more discount opportunities than others.

Having a teen driver creates awareness about road safety and car insurance like nothing else.  Use these tips to guide you as you shop for car insurance that will provide the most coverage for your money.

Car Insurance 101 – The Importance of the Annual Insurance Checkup

Posted on by shasha insurance

Few people look forward to shopping for insurance, and once that coverage is in place there is a strong temptation to simply leave it as is. But that set it and forget it approach can be a big mistake. Insurance needs change over time, and it is important for everyone to take a look at their own insurance needs to make sure those life, health, home and car insurance policies are still providing adequate coverage and protection.

Reviewing your insurance coverage, including your car insurance policies, on a regular basis is a great way to save money and gain peace of mind. If the results of your assessment show that you do not need to make any changes you will have the satisfaction that comes with knowing that you are well protected. If on the other hand you find gaps in your coverage you will be able to address those shortcomings and avoid problems down the road.

Check the Cost of Coverage

When you first purchased automobile insurance you no doubt shopped around – comparing premium rates and coverage levels for every insurer you could find. But since then you may have assumed that the company you are insured with will always have the lowest price in town. That may or may not be true – but the only way to know for sure is to check the rates offered by competitors.

Is it Time to Drop Collision Coverage?

The annual insurance review also gives you a chance to determine whether or not it still makes sense to carry comprehensive and collision coverage on your vehicle. If the value of the car you drive has dipped below $3,500 it may not be prudent to carry full coverage. You may be better off dropping that coverage and stashing the premium savings into an emergency fund. Your current policy should break out the cost of collision coverage, so it will be easy to see how much you could save. If you have the fiscal discipline it takes to funnel the money you save into a special account you can self-insure and cover the cost of repairing or replacing your car in the event of a total loss.

Reviewing your insurance coverage may not be fun, but it is certainly important. Taking the time to do an annual review of all your insurance coverage can yield significant cost savings and give you the peace of mind that comes with knowing you are well protected.

Car Insurance 101 – Why State Minimum Coverage May Not Be Enough

Posted on by shasha insurance

No driver can afford to be without automobile insurance, but it can be difficult to know how much coverage you really need. These days most states require that all drivers purchase car insurance, and in states where coverage is mandated there is a minimum coverage threshold that must be met. Many drivers assume that this state minimum coverage is enough, but in many cases that level of protection is completely inadequate. It is therefore important for every driver to evaluate his or her own insurance needs in order to determine the best level of coverage for liability, property damage and other insurance categories.

Why the Minimum

When states pass laws mandating that every driver carry automobile insurance they need to consider a number of factors, but affordability is often near the top of the list. If the state legislature is going to force people to purchase a product or service they need to make sure that product or service will be affordable. For this reason many states set the bar very low for car insurance coverage. This low bar makes policies more affordable, but it also leaves many drivers without the protection they really need.

For that reason it is important to look at your own state’s minimum coverage levels and determine if those levels really provide adequate coverage. If for instance your state requires that you carry only $10,000 in property damage insurance, what happens if you total your neighbor’s brand new Porsche 911? If you do not have enough property damage insurance in place you could be on the hook for the rest of the damages. The same is true of personal injury – it is important to take a realistic look at the minimum coverage levels set by your state and determine whether or not they are truly adequate for your needs. The more you have to protect the more insurance coverage you will need.

The Low Cost of Upgrading

Many drivers simply assume that upgrading an existing car insurance policy from the state mandated minimum coverage levels to something more realistic will be prohibitively expensive, but that is not necessarily the case. In many cases drivers can upgrade from the minimum set by their state to $300,000 worth of coverage or more for only a small increase in their premium levels. Upgrading coverage can be extremely affordable for those considered to be good risks, but even those with a few black marks on their driving records are often surprised at just how affordable that extra coverage can be.

Reviewing your car insurance coverage on a regular basis is the best way to make sure you are providing adequate protection for your car, your family and your personal property. By knowing the legally required coverage levels and adjusting those levels to suit your own needs you can save money on your premium without sacrificing the protection you need.

Do You Have Coverage Wherever Things Go Wrong?

Posted on by shasha insurance

How is this for bad luck?

* Bob goes on vacation to Cancun. While he’s walking on a sidewalk one day, a car jumps the curb. He jumps out of the way and escapes injury, but his $2,000 camera gets run over by the car.

* To cheer himself up, Bob goes to a golf shop to try out some clubs. Forgetting where he is, he takes a practice swing; his back swing breaks the nose of the woman looking at putters next to him.

* Bob cuts his vacation short. He returns home to find snow and ice have accumulated on his driveway. The next day, he also receives an emergency room bill for the broken ankle suffered by a neighbor who slipped on the driveway while attempting to look in on his cat.

* Bob retreats to the hideaway cabin that he owns in the mountains. He chops some trees for firewood on what he thinks is his property. Actually, the trees are five feet on his neighbor’s side of the property line.

Bob has a homeowner’s insurance policy covering his house. Does it cover any of these losses? For three of the four losses, the answer is yes.

A typical policy covers an insured person’s personal property anywhere in the world. It also covers property that person is using, even if he doesn’t own it. The property is covered for losses caused by any of the perils listed in the policy, including fire, lightning, smoke, explosion, vehicles, and others. Therefore, Bob’s policy will pay to repair or replace the camera damaged by the car. However, the insurance company will subtract his deductible from the amount it will pay.

In addition to insuring property, a homeowner’s policy covers an insured person’s legal liability for injuries or damages suffered by others. It covers liability for all of the person’s actions anywhere in the world, except for types of losses that it specifically lists as not covered. Accidentally hitting someone in the face with a golf club is not on the list, so Bob’s policy will pay the amount he owes for the woman’s medical treatment.

Likewise, Bob has coverage for the neighbor’s broken ankle. Since he invited the neighbor to check on his cat, and his driveway was not in a safe condition on which to walk, he is legally liable for the injury. The policy covers liability arising out of an “insured location.” The term “insured location” has many definitions; one of them is the residence listed on the policy. Bob’s policy lists his home, so it covers losses that arise from the home.

Unfortunately, the next loss is where Bob’s luck runs out. His policy lists his home but not his cabin. It does not cover his liability that arises out of premises he owns, rents, or rents to someone else if that premises is not an insured location. Since he owns the cabin and did not list it on his policy, and it does not fit into any of the other definitions of “insured location,” the policy does not cover his liability for accidents that happen there. Consequently, he must either seek coverage under another policy, if there is one, or pay for the damage to the trees out of his own pocket.

It’s a good idea to have a periodic chat with a professional insurance agent about your life circumstances. If you have a place in the mountains, own significant amounts of special property such as jewelry, or conduct business out of your home, you need special insurance coverage. Make sure you have the right coverage before you have a run of luck like Bob’s.