By Michael O’Neill

Let’s be honest, its human nature to think a severe claim will never happen to you.  Nobody wants to picture themselves on the evening news watching their investment property or home go up in flames.  But whether it’s a tree toppling over in a windstorm, a faulty electrical system causing a fire, or a tenant’s family member slipping on ice in an apartment’s stairwell; you need the proper insurance coverage in place to protect the assets you’ve worked so hard to accrue.

Picture this scenario:  You’re jarred awake in the middle of the night by one of those dreaded late night phone calls- it’s your apartment complex- there’s a fire- and the authorities are on the scene.  You throw on your clothes and drive out to the property, only to find the tenants on the street watching the structure glowing, smoldering, and smoking in the darkness.   Of course, you’ve never read your insurance policy.  The policy has been in force since you bought the property- and you’ve always assumed that your insurance agent has kept the policy up to date.  You leave a message with your insurance agent.  Ultimately, a few days later you find out:

• There isn’t coverage to remove the charred rubble.
• The insurance carrier will only pay for 70% of the structure’s replacement cost.
• The insurance carrier won’t pay the increased cost to build the new structure up to the current building codes.
• Even more shocking, the policy does not have coverage for the loss of rental income that you will incur during the rebuilding process!

The claims adjustor is throwing terms at you like: “Debris Removal Coverage,” “Co-Insurance Penalty,” “Loss of Income Coverage,” and “Building Ordinance Coverage.”  What if there was another insurance product available that provided these coverages, what if it was available for a lower premium than what you’d been paying?

To avoid some of these coverage pitfalls, Beach & O’Neill Insurance Associates, Inc. seeks to take a common-sense approach to your risk management needs: Get you the proper coverage at the lowest pricing.  It’s not your job to be a licensed insurance agent.  Let us do our job for you: Educate you on the key things you need to know, and work consultatively with you to make sure your exposure to loss is addressed.  And with our in-depth knowledge of the insurance marketplace, finding the best pricing is the easiest part for us.

Claims scenarios are real- we help our clients through them every day.  Having a basic understanding of insurance terminology will allow you to assess the quality of your current coverage.  This knowledge will let you gauge how your coverage could be impacted when a claim occurs.  This knowledge will also enable you to make informed decisions when shopping your insurance coverage, to avoid the “low price/restrictive coverage” trap.

Basic Coverage Types

Here is a brief breakdown of the common coverage needs that most property owners have:

• Property Coverage– There is many different types of property insurance.  For the purposes of this guide, we will limit the definition to: insurance on a building’s structure and its contents.  Some would refer to this coverage as “fire insurance,” however the true extent of what is covered depends on whether your policy is “basic,” “broad,” or “special.”  The most restrictive coverage form is “basic” which only covers you for a finite amount of “perils” that are listed within the policy form.  On the other end of the spectrum is the “special” form which covers you for an unlimited amount of “perils” (aka all risks), other than a list of specific exclusions.  Let us explain in more detail by calling us at 1-800-640-0123.

• General Liability Coverage- When another person makes an allegation that you are responsible for the bodily injury or property damage they’ve suffered, your general liability coverage can be the source of your insurance protection.  A common misconception we hear is, “I don’t need this insurance, since I am careful not to do anything wrong.”  Keep in mind, once someone makes an allegation against you, there is a duty to defend yourself- whether it was your fault or not.  Liability coverage can provide protection in scenarios when you may have to mount a costly defense against an unfounded allegation from a tenant.  Does your liability insurance provide coverage for allegations of wrongful eviction?  What is defense-inside vs. defense-outside, employee benefits liability, or employment practices liability? Call us at 1-800-640-0123 for more info.

• Auto Insurance- Auto is a separate and distinct type of liability coverage from general liability, with additional coverage options for repair or replacement of your vehicle for certain losses.  Are you unsure whether your vehicle is a “commercial auto” or a “personal auto?”  Are you writing the vehicle off for tax purposes on your corporate entity, yet have it titled to your personal name?  What if you rent a vehicle for business purposes?  Or have an employee occasionally driving their own vehicle on company time?  We can clear up the confusion for you- 1-800-640-0123.

• Workers Compensation Insurance- Bottom line in California- if you have employees, you have to carry workers compensation coverage on them.  If you’re not sure if your worker qualifies as an “independent contractor” or an “employee,” you might be surprised at the answer- call us at 1-800-640-0123 to discuss.

• Flood & Earthquake Insurance- Most property insurance policies exclude coverage for earthquake and flood insurance losses.  Sometimes the flood and earthquake insurance policies are also restrictive in ways that need to be examined.  We can make sure this specialty-type of insurance coverage is properly placed for you 1-800-640-0123.

• Umbrella or Excess Liability– This coverage can serve to add extra layers of liability coverage over your primary auto, general liability, and other policies.  How much coverage do you need?  Let’s discuss your exposure to loss and the assets we’re trying to shield from costly liability allegations and litigation at 1-800-640-0123.

This is just a thumbnail sketch of some of the issues to consider when evaluating your insurance coverage.  It is important to note that policy types listed above can be significantly altered by policy language and endorsements that add, delete, and modify coverage.  Some of these coverage consequences were noted in the claims scenario that we described at the beginning of this article.  Call us to discuss “Debris Removal Coverage,” “Co-insurance Clauses,” “Loss of Income Coverage,” and “Building Ordinance Coverage.”  We’ll make sure you understand what coverage you need and make sure you get the best pricing available for it.  We’ll help you craft an insurance strategy with the right deductibles and coverage limits for your situation.  With over 50 years in business, and an active membership in the Rental Housing Association (RHA), we’re here to serve the insurance needs of property owners like you.  Ask for Michael O’Neill at 1-800-640-0123.