Insurance FAQ’s

As we alluded to before, homeowners insurance coverage differs depending on your plan and insurance carrier. You’ll find different options, choices, and costs depending on which insurance company you choose.

Our agents can work with you directly to explain all aspects of different carriers’ policies. We’ll provide in-depth explanations and offer tips and strategies to choose the right policy and optional additional coverages that would benefit your current situation.

In some cases, you can get a deduction on your taxes from homeowners insurance. For example, any accidental loss (say, a neighbor drove through your garage door) must exceed 10 percent of your adjusted gross income to be considered a tax-deductible expense. There are other case-by-case situations too, so it’s best to sit down with a tax professional to talk through your options.

If your mortgage lender sets up an escrow account, your homeowner’s insurance will likely be escrowed too. That means most people pay monthly along with their mortgage payment, but if you are responsible for your own homeowner’s insurance premium, we have carriers available that will offer a variety of premium payment options.

You can cancel your homeowner’s insurance policy easily, but it’s best to work directly with your insurance agent while making sure you prevent any lapse in coverage so you avoid an unpaid claim during the time you weren’t covered. You should also notify your mortgage company when you make an insurance change. When you cancel your policy, you will receive a refund of the unused insurance premium.

A deductible is the amount that the insured must pay before the insurance coverage kicks in.

For example, let’s say you incurred $1,000 of damages to your vehicle and your deductible is $250. The insurance company would pay you $750, and you would pay $250 out of pocket.

The deductible amount is pre-set based on your policy, and you can choose the amount. A lower deductible will mean a higher premium and vice versa.

Every situation is different, and our highly trained insurance agents can help you select the right type of coverage for you. We often recommend comprehensive coverage, because it provides the greatest peace of mind. That said, the age and type of your vehicle along with financial considerations may necessitate taking only liability coverage.

In many cases yes, but not always. Depending on your overall driving history and the specifics of the accident (whether it was your fault or not for example), it is possible that your rate will not go up. Some providers offer “accident forgiveness” features which also help.

Historically flood damage coverage has been very expensive to providers, and they have refused to cover flood damage as a part of their general policies. That limitation led Congress to create the National Flood Insurance Program in 1986, providing government support for flood insurance.

Generally speaking, zones V, A, and AE will require flood insurance. D may or may not, and X often does not. Your lender, however, may require flood insurance for other reasons, independent of your flood zone location.

The amount of damage covered under the Dwelling Form is based on one of two methods: Replacement Cost Value (RCV) and Actual Cash Value (ACV).

Replacement Cost Value (RCV) is the cost, without depreciation, to replace that part of a building that is damaged. To be eligible three conditions must be met:

1. The building must be a single-family dwelling; and
2. The building must be your principal residence at the time of loss, meaning you live there at least 80 percent of the year; and your building coverage is at least 80 percent of the full replacement cost of the building, or is the maximum available for the property under the NFIP.

Actual Cash Value (ACV) is replacement cost value at the time of loss, less the value of its physical depreciation. Some building items such as appliances and carpeting are always adjusted on an ACV basis. For example, wall-to-wall carpeting could lose from 10 to 14 percent of its value each year, depending on the quality of the carpeting. This depreciation would be factored into the adjustment. Personal property is always valued at ACV through NFIP. See here for more details.

Life insurance pays out a fixed amount of cash benefits to a designated beneficiary in the event of the death of the insured.

Life insurance policies usually fall into two categories: term or whole life.

Term Insurance provides a specific death benefit amount over a specified term that you select. Term periods typically range from 5 to 30 years. If you qualify, you can obtain term life insurance in almost any amount, but payouts typical ranges go from $25,000 up to $5 million.

Due to their defined term and payout, term life policies are often the most cost-effective life insurance policies available.

For example, a family that just purchased a home could get $250,000 of term life insurance on the main breadwinner, in order to pay off the house if he/she were to pass away.

You could also convert a term life policy into a permanent /whole life policy, the other main category of life insurance.

Permanent life insurance combines death benefits with investment features and has no specified term or end date. Permanent policies allow you to build cash value that grows tax-free.

The investment component and the fact that it never expires also mean that permanent life policies cost more than term life policies.

There are several types of permanent life policies:

Whole Life – In these policies, the benefits and cash values are guaranteed, as are the premiums.

Universal Life – These policies offer the same fixed investment performance as whole life policies but have more flexibility in areas like premium payment schedules and the duration of death benefits.

Variable Universal Life – You can invest the cash portion in stocks, bonds, or other market vehicles which can both increase or decrease your death benefit depending on the return of the investments.

Storage Units – Some renter’s policies can be extended to cover storage units, but that may cost extra. It’s best to compare that cost against insurance provided by the storage company.

Dog Bites – If your dog bites someone, your coverage varies by policy. Certain breeds may also be excluded from coverage. If this is a concern, animal liability insurance can be purchased separately, providing additional coverage.

Flooding – Rental insurance rarely covers damage caused by flooding from an outside source. Flood insurance must be purchased separately.

Insect Infestations, Bed Bugs, and the Like – These are almost always excluded from coverage.

Expensive Jewelry, Heirlooms, Collectibles, Watercraft, ATVs, etc. – Policies typically have limitations and/or sub-limits for high-dollar value items like this. Talk to one of our agents to discuss properly insuring these special items.

Damaged computers, TVs, or other appliances – renters insurance will not cover you if you spill coffee on your laptop. Similarly, malfunctions with TVs or other appliances are not covered.

When it comes to liability coverage, many renter’s policies provide a range of options between $100,000 to $300,000. The cost difference between these options is typically less than $15 or $20 for the entire year.

If you entertain guests regularly, you may want to consider a higher liability limit to have the peace of mind that you are adequately protected.

These terms refer to the way that your insurance payout will be calculated for damage to personal belongings, as follows:

Actual Cash Value – Under this method, the amount you receive for a damaged or lost item will be its current market value, less deprecation. For example, let’s say your three-year-old digital camera is stolen from your rented home. The current price to buy the camera new is $1,500, but yours is only deemed to be worth $1,000 due to its age. If your insurance policy paid out based on Actual Cash Value, you would receive $1,000 (less your deductible).

Replacement Cost – If your policy provided for replacement cost, you would receive the amount required to replace the item, $1,500 (less deductible) for the camera in the example above.

Because replacement cost policies pay you more, they often cost more as well. Selecting the right choice de- pends on the possessions you’re most concerned about protecting and your budget.

Yes, so long as the roommate is also named on the lease. All parties named on the lease can share the renter’s insurance cost, but keep in mind that the coverage is also shared. So, if your policy provides $15,000 of personal property coverage, that amount stays the same regardless of how many people are on the policy.

The following perils can typically be covered, but some may require higher levels of coverage like comprehensive insurance:

• Sinking
• Fire
• Theft
• Storms
• Collision
• Capsizing
• Explosion
• Stranding

Quite possibly. In many cases, lake or freshwater use is cheaper to insure than saltwater use.

If your homeowner’s policy does cover your boat, it’s often minimal and limited to a relatively small amount. Liability is nearly never covered. For these reasons, we do not recommend relying on your homeowner’s policy to cover your boat.

Determining the right amount of coverage is a critical part of the purchase process. It will depend on the value of your condo, the value of your possessions, the risks specific to your location, and the desired amount of coverage. A Texan Insurance agent can analyze your situation and help you select the right amount of coverage.

Yes. You are required to pay the deductible out of pocket before insurance takes over. A higher deductible means a lower monthly premium, while a lower deductible means a higher premium.

Yes

Direct Damage Coverage

• Covers loss or damage to business property
• Flexible and can be tailored to meet your needs
• Items can be added or removed from your policy as needed
• Some catastrophic events like hurricanes or tornadoes may not be covered
• Floods and earthquakes are rarely covered and require separate insurance
• Homeowner’s insurance likely will not cover equipment used in a home business, so commercial property insurance is required

Time Element Coverage

• Protects against losses tied to the time required to make repairs after a covered loss
• Business income coverage protects against lost income due to damaged property from a covered loss
• Extra expense coverage recoups excess costs the business incurs to keep it running while repairs are made
• Leasehold interest coverage protects you against the losses you incur if your lease is canceled due to a covered event

 Inland Marine Coverage

• Covers tools or equipment that is transported overland to an offsite location for use 
• Examples include construction equipment transported to a job site
• A wide variety of assets can be covered, from the property at a tradeshow to contractors’ equipment

Yes, insurance is a legitimate business expense and therefore tax-deductible.

Professional liability insurance is a good idea for anyone or any business that provides services to clients. This ranges from doctors and lawyers to business consultants, IT providers, electricians, plumbers…If you think you might need professional liability insurance, it’s a good idea to talk to an agent.

Generally, personal insurance will not cover incidents that occur while the vehicle is being used for business purposes, especially if that activity is regular or hazardous in nature. If you are using a personal vehicle for very limited or occasional business use, it’s possible that the personal policy will cover an incident, if you have sufficient liability coverage. If you think you might need commercial auto insurance, it’s best to consult an agent.

Ridesharing companies typically provide coverage for incidents that occur during a paid ride but it’s less robust while a driver is waiting for a ride. Many major insurance companies now offer rideshare insurance policies that are tailored to the specific needs of this new industry. If ridesharing is your vehicle’s only business use, rideshare insurance alone may meet your needs.

Yes, a visitor, passerby, or trespasser could sue you if they are injured on your property, even if their presence violates your guidelines or policies. An example of this might be a resident’s guest slipping near the pool and suing you for medical expenses.

If you face risks of lawsuits or want extra coverage just in case of an unforeseen mishap, umbrella insurance can be used to both increases the extent of your renter’s insurance and protect you from other liability (like lawsuits).

While umbrella insurance is designed as a sort of catch-all, there are some risks it will not cover:

• Damages arising from your business, or any commercial activity
• Malpractice lawsuits for lawyers, doctors, CPAs, or other professionals
• Workers compensation claims made against you as an employer
• Any intentional acts (damage that you or anyone on your policy intentionally caused)
• The rule of thumb to remember is that umbrella insurance will help with accidental or negligent damages that are not related to business activity.

Fifth wheel vehicles are campers or RVs that are pulled by another vehicle. The fifth wheel itself is a hitch that allows for the attachment of cargo or another vehicle to the back of a truck or other large vehicle. The fifth wheel vehicle refers to the vehicle that is attached to the hitch.

You will need the appropriate international coverage in place before you enter the foreign country. If international travel is in your plans, we can help you get covered beforehand.

A total loss is determined when the cost to repair the RV exceeds its replacement cost. The insurance adjuster will assess your vehicle after an accident and determine if it can be repaired cost-effectively. If not, it’s classified as a total loss, and in that case, you will be paid what the insurance company believes the car to be worth.