Homeowners: Basic and Broad Coverages Explained

You found the house of your dreams, and you start the process of buying your home.  There are some things that are important and you want to look for. First, if the home is an older home, then you want to make sure that the electrical wiring and plumbing have been updated. Most insurance companies will not insure a home that has not been updated. Second, you want to make sure the septic and well are in good condition, as well as the roof and siding. A home inspection from a reputable company is a wise decision, but make sure they check everything thoroughly.

If the inspection comes back good, then you will start looking into homeowners insurance. Basically a homeowners can be a basic policy, also called an HOA; or a broad policy, also called an HOB.

An HOA (or HO2 policy) is a homeowners policy that covers the home on a "named perils" basis. That means that there are 11 perils that will be named in the policy and everything else is not covered. Most of the HOA policies give you a limit on theft coverage, and accidental discharge of water. Sometimes these type of policies will only cover your home for actual cash value, and not what the home would cost to be replaced. It may also only provide actual cash value against your personal contents of the home. The benefit of this type of policy is that it is cheaper, but also is less coverage.

An HOB (or HO3 policy) is a more broad form of coverage that would cover 16 perils unless otherwise excluded. This is a more common homeowner policy, because it gives more coverage than a standard policy, and provides coverage based on what the home would cost to replace it if there was a total loss. These type of policies include coverages like accidental discharge of water up to the coverage amount on the dwelling, glass coverage, replacement cost on detached structures (ie sheds, garages), and replacement cost on personal contents. This type of policy also offers coverage for loss of use, (also called additional living expense). This is an additional amount on the policy that can be given if the home is deemed uninhabitable after a loss.

Here are the coverage parts of a homeowner policy.

• Coverage A (Dwelling) covers the physical structure of your residence and any attachments--such as attached garages--but doesn't cover outlying structures, like sheds or fences.
• Coverage B (Other Structures) covers structures on your property not attached to your residence, including detached garages, sheds and guest homes.
• Coverage C (Personal Property) covers the contents of your home. Special limits are placed on valuables like cash or jewelry, which require additional, separate coverage.
• Coverage D (Additional Living Expenses) covers living expenses such as housing, meals and utilities, incurred due to loss from Coverage A, B, and C.
• Coverage E (Liability) covers injury and property damage incurred at your home and other covered locations.
• Coverage F (Medical Payments) covers medical payments for guests injured in your home and on your property.

The best way to find out what kind of coverage you need is to talk to a local agent that knows the location of where your home is. For example, if your home is located near a beach, you want to find an agent that knows the area, and knows what companies will take a home that is near a body of water.  There may also be certain requirements that the company has for the home to be insured properly.

Worker's Compensation: Good for employees and employers

Got hurt at work? Now what happens?

You and your employer need to discuss worker's compensation.  It is a good practice to find out if your employer carries this insurance before an injury occurs.

Workers' compensation is a state-regulated insurance program that pays medical bills and replaces some lost wages for employees who are injured at work or who have work-related diseases or illnesses.Workers' compensation will pay for the medical treatment of an injury or illness if:

• The injury occurred at work or the disease or illness is job-related; and
• The worker's employer has workers' compensation insurance or is certified by the Texas Department of Insurance, Division of Workers' Compensation to self-insure.

Workers' compensation will also replace some of the worker's lost wages if:

• The injury or illness caused the worker to lose some or all income for more than seven days.

Employers: Do I need worker's compensation insurance for my employees?

Texas employers who do not carry workers’ compensation insurance coverage are required to report their non-coverage status and work-related injuries and illnesses to the Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC).  Employers are also required to notify their employees if they do not carry workers’ compensation insurance.  Employers who do carry workers’ compensation insurance coverage are required to report any work-related injuries and illnesses to their insurance carrier.  Employers that fail to meet these requirements commit an administrative violation and may be subject to administrative penalties.

It is a good business practice to protect your employees and your business, by having worker's compensation coverage. Worker's compensation gets your injured employee back to work safely, and soon as possible. 

What is an SR-22?

SR-22 is a term heard a lot in the insurance industry. What is an SR-22 exactly?

In the United States, an SR-22 is a vehicle liability insurance document used by some state Department of Motor Vehicles (DMV) offices. It provides proof that a driver has the minimum required liability insurance coverage for that particular state.

Here in Texas, the state requires that you have an SR-22 when your drivers license is suspended or revoked due to a crash, conviction or judgement. Maybe you have had too many tickets, or a DWI. The state requires that you keep the SR-22 for two years after a conviction date to show that you have the state's minimum liability coverage. 

If the coverage for the SR-22 cancels, the state will be notified, and will take appropriate action. Most insurance companies will send the certificate to the state for you, however there are some companies that will hand you the certificate for you to provide to the state. You do not have to own a vehicle to get this coverage. You can get an SR-22 without a vehicle on a non-owners policy.

A non-owners policy is a document that states that you can drive any vehicle that you do not own. This type of policy is associated with the driver, and not a vehicle of any kind. It is recommended for those who don't own a car, but drive occasionally for a friend or family member, or when you rent a car. 

The dreaded "H" word

Here in Texas,  we are always talking about the weather. It can be hot and humid, or it could be raining with sunshine. Not a lot happens here weather wise,  unless you are talking about the dreaded "H" word: a hurricane.

A hurricane is a tropical cyclone, occurring in the North Atlantic Ocean or the Northeast Pacific Ocean, east of the International Dateline. A tropical cyclone is formed by warm atlantic or pacific waters, and produce high winds and heavy rain. Hurricane season is typically from June 1 to November 30th.

When there is damages from hurricanes, we know that there are two types of damages. The first part is the damage from the high winds. The second part is damage from the rising water of the ocean, or also called storm surge. Some people are only going to have damage from the high winds, and some people who live closer to the ocean are going to have the rising water. Since there are two types of damages that a hurricane can cause, there are two different types of insurance as well. We call this windstorm and flood insurance.

Windstorm insurance covers damages from wind and hail. Flood insurance covers damages from rising water of oceans, rivers, lakes and streams. If you live in a coastal county, these two coverages are very important to have. In fact, here in Texas, if you have a windstorm policy, and live on the beach, it is a requirement to also have a companion flood policy.

Hurricanes can be a very scary storm, because of the damage it causes. However, nothing is more scary than not having the adequate coverage, or no coverage at all when facing a hurricane. Don't wait for the hurricane season to begin to start checking your coverage. Better to be safe, than sorry.