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You bought it because you loved it. Whether it's a precious piece of jewelry, a painting, sculpture, antiques, rare coins or memorabilia, it's important to protect the possessions you cherish the most.   Homeowners policies have limitations on the protection provided for valuable items. This is where personal articles insurance (also known as a valuable articles insurance policy or an insurance rider) can help.

Five things you may not know about valuable articles insurance

Homeowners coverage is limited for some valuables.

Your homeowners policy will protect the majority of your personal possessions (in fact, the personal property coverage on your homeowners policy is usually 70-75% of your dwelling coverage). But your high-value items like jewelry, artwork, silver and antiques are most likely not fully covered. Of course, if we’re talking about something that’s less than $500 in value, you’re probably sufficiently covered. Chances are you’ve invested time, passion and money into more than just one treasured possession, so what happens if your favorite item gets lost or stolen? A good personal articles insurance policy will protect you.

Personal articles insurance covers more than you may think.

• Computer Equipment
• Sports Equipment  (such as bicycles, golf clubs)
• Collectibles
• Jewelry
• Musical Instruments
• Furs
• Cameras
• Silverware/Goldware
• Fine Art (like oriental rugs and paintings)

You can insure your valuables for their actual worth.

You should insure your valuables in advance, before anything happens.  Dollar for dollar, an insurance value must be settled upon. If you still have the sales receipt, it can be based on what you paid for the item. Otherwise, it will have to rely on the item’s appraised value.  Keep in mind that most insurance companies require an appraisal be done within the last three to five years.

You have choices when it comes to your personal property coverage.

If your valuable items aren’t covered completely because they’ve fallen outside of the specific item coverage limits on your homeowners policy, don’t worry. You can customize your policy with additional coverage options to protect what you care about most. Available options include jewelry insurance, or coverage known as scheduled personal property (SPP), and extended coverage on specific items or collections.

With each policy, some things are covered, and some things are not.

Personal Property Protection

• This kind of coverage is subject to your deductible, it applies to the personal property used or owned by the named insured worldwide (restrictions apply).
• Except where limited or excluded in your policy, this covers accidental and sudden direct physical loss caused by a named peril
• If the property is located or stored anywhere other than your primary home, your personal property coverage is limited to a smaller percentage of your homeowners dwelling coverage that regular personal property.
• A resident employee or guest’s personal property is covered while that property is in the residence where the named insured lives.

Extended Coverage on Jewelry, Watches and Furs

• When added onto the policy, this coverage applies to, gold, watches, platinum, jewelry, precious and semi-precious stones, gems and furs, and is subject to the policy’s deductible.
• While there are some specified exclusions, this extended coverage covers accidental and sudden direct physical loss, such as mysterious disappearance.
• There are coverage limitations based on the number of occurrences as well as a per-item limit.
• Typically, the amount of coverage isn’t added to amount of personal property coverage.
• You may choose blanket or item coverage.  Item coverage is written for a set dollar amount and is typically for high-value pieces like a wedding ring. Blanket coverage lets you insure a specific category like gold jewelry for an overall dollar amount.  This is what you want if you have many items of lesser values (e.g. $25,000 of gold jewelry with no one piece worth over $2500). 

Scheduled Personal Property (SPP) Endorsement

• This coverage is outside the limit of personal property on the rest of your policy
• Coverage must be 100% of current market value; this insures items against all risks.  A recent appraisal or sales receipt is usually required to establish the item’s value.
• While restrictions and limits may apply, this covers damage to or loss of an insured person’s personal property as scheduled for all risks, including direct physical loss worldwide and mysterious disappearance. But coverage on firearms, fine arts and business personal property is limited to within the United States and Canada
• You may write this policy with higher deductibles, and it can be different than the deductible amount on your policy. SPP isn’t subject to the policy's deductible unless written as such.
• SPP coverage typically costs more than Extended Coverage but it offers more specific coverage for your protection
• When it comes to sets and pairs (like losing one earring), if the item has been listed on a scheduled personal property insurance policy, it can be either replaced or repaired so its value is restored to the pre-loss value. The policy may pay the difference of the value of the property after and before the loss.

As you can see, personal property coverage can be complicated. Do you know what you need and what you don’t?  Everyone could use some advice when it comes to our cherished possessions, so why not call up your insurance agent and get some pointers? They can help customize a personal articles insurance plan that covers you when the unexpected happens.

Be sure to look for our blog series on insurance reviews. As always, hope to hear your questions and suggestions on the insurance topics that interest you.  

Most people don't give much thought to their home owners insurance coverage until a tree destroys their roof or a basement transforms into an indoor swimming pool. The fact is, a periodic checkup on your house insurance coverage can make for a healthier policy and a healthier wallet. Home insurance coverage is more expensive than ever thanks to a rising number of claims – but every year just passively renewing your policy could cost you more than it needs to. 

Here’s why, when and how you should review your home owners insurance coverage:

Why? To make sure you have what’s right for you before you have a loss

When? Periodically (at renewal) or whenever you know there’s been a significant change such as a remodel, purchase or sale of an expensive item

How? Set up an appointment with your agent to go over your policies.

10 Questions to Ask During a Home Insurance Coverage Review

1. Is our dwelling coverage adequate? The amount of dwelling coverage should be enough to cover the cost of rebuilding your home in the event of complete loss. This insurance is based on replacement cost of dwelling not market value and it does not include land. If the dwelling is underinsured, you may get penalized.  Does your insurance agent know about your home addition, or newly renovated kitchen or bathroom?

2. Do we have an all-risk or a named peril policy? When choosing disaster insurance, you basically have these two choices. The primary difference between them is that a named peril policy covers what is "named" (included) in the policy while an all risk covers everything except what is excluded. Typically, an all-risk policy offers much more comprehensive coverage.

3. Do we have replacement cost or actual cash value coverage on our dwelling and contents? Replacement cost coverage and actual cash value insurance refer to the amount of money your provider will pay out if your home or its contents are damaged or destroyed. Replacement cost coverage doesn’t deduct for depreciation while actual cash value insurance does.

4. Do we need building ordinance or water sewer backup coverage? In the event of a claim, your insurance company may deny paying for increased costs or demolition expenses incurred due to local building ordinances that call for the destruction of a dwelling. This coverage is particularly important for homes older than 25 years. You’ll also want to consider coverage for water and sewer backup.

5. Do we have or need a property inflation adjustment on our policy? While most insurance companies automatically adjust your policy to keep pace with building cost inflation, you should check into this. You probably have seen your premiums go up to cover the rising cost of replacement but the annual increase for this is usually minimal.

6. Do we have or need special coverage for other structures on our property? Most policies automatically provide this coverage. However, if you have a swimming pool, tool shed or detached garage on your property, you need to double-check that they are adequately covered.

7. Do we have adequate contents coverage? The value of your clothing, furniture and other belongings adds up quickly. These items are typically insured as a percentage (50% to 75%) of your dwelling coverage. It is very important to understand how much and what is and is not covered.

8. Do we have or need special coverage for any of my personal items? What kind of coverage limits does your policy have with regard to jewelry, fine art, musical instruments, etc.?  Is an appraisal required to get this special home owners insurance coverage?  Without it, your engagement ring may not have enough, or any, coverage if the diamond falls out of its setting. 

9. Has our insurance company changed our policy coverages or added any new discounts?  While they are required to notify you of policy coverage changes, it’s a good idea to ask just in case you missed the notice.  There may be ways for you to save money on your house insurance coverage.  Whether it’s changing deductibles or installing protective devices, you’ll want to find out what you’re missing.

10.  Is my liability coverage adequate for what I need to protect?  Your home owners liability coverage protects you against the financial uncertainty arising from injury (or property damage) caused by you or a resident family member.  Usually, your liability coverage will apply if the injury or property damage occurs on or away from your property. If you don’t have enough liability insurance, then your assets could be at risk. The liability coverage on your home owners policy can help you protect your retirement accounts, investments in stocks and bonds, checking/saving accounts, home and other real estate equity. It is very important to discuss the assets you need to protect with your agent to determine the level of liability coverage that is right for you.

When it comes right down to it, one of the best ways to stay educated about your home owners insurance policy is to ask the right questions of your insurance agent. Don’t assume that just because you have home insurance coverage that you’re fully covered. 

Stay tuned for part two of our blog series on insurance policy reviews.  We look forward to questions and/or suggestions on the insurance topics that matter to you most. 

With many aspects of our financial lives, it’s quite common to just “set it and forget it.” This can work out well when we’re setting up a savings plan that automatically transfers money from a checking account to a savings account, but in the case of insurance, this strategy can end up working against you. Just because you have insurance doesn’t mean you’re covered.  So much can change within the span of a year, and unless you take some time to review your coverages, you may be surprised when it comes time to use them. 

This topic is so important that we’re writing a series of blogs on what to look for when reviewing various kinds of insurance policies.

What to Do When Reviewing Your Insurance Policies

Review Coverage

Do you understand what your policy does and doesn’t cover? 

Assess Your Situation

Is this policy appropriate for your lifestyle today?  Your insurance agent can’t insure what they don’t know about, so help them help you minimize surprises when you have to file a claim.

Need Help Reviewing Your Policies?

Keep yourself ahead of the game by partnering with a qualified insurance agent to help you with your insurance planning.  Insurance might be considered a commodity by some, but advice is not.  With in-depth product knowledge and experienced-based insight, a professional insurance agent can help you build a custom plan that works best for your situation.  

Our blog series will start with what to look for when you review your home owners insurance coverage.  Next, we’ll explore how to review your auto policy coverages.  In the coming months, we’ll look at the important aspects of other kinds of insurance.  Let us know your questions, and feel free to suggest additional insurance coverages you’d like us to target. 

Are you a contractor that runs a business out of your home? Whether it’s just you getting out in the field fixing a roof or painting a house, or you have a couple of employees or subcontractors helping you each day, contractor insurance is something you must consider buying. In fact, you’ll find it pretty difficult to get work without some form of business insurance coverage. A thorough plan with protection including business owners or commercial general liability insurance and workers compensation insurance is the only true way to protect yourself and your business from risk.

While you may think your contracting business is too small to require contractor insurance, the truth is, you face similar risks as the largest corporations. Anything can happen on the jobSomebody’s property can be damaged or someone can get injured. And any accident that happens can find you liable. That’s why it is so important that you protect yourself properly.

Top 5 Contractor Insurance Considerations

Any company involved in construction work, building and general contracting – even independent contractors in fields from IT to consulting – needs protection. To determine your business risk, an insurance underwriter will need to know what your business does. Using that information, they can customize a coverage plan that minimizes your risk.  You may need a customized business owner policy (BOP) while another company may require a commercial general liability policy (CGL). Both may or may not need a commercial auto policy and both may need workers compensation coverage. It depends on your type of business.

If you’re a plumber, painter, electrician or other type of tradesperson who runs a home-based business, here are the top five things you should consider as a contractor looking for business insurance coverage:

1. General Liability Insurance
   As a contractor, you can be held accountable for injuries or property damage caused by you or one of your employees or sub-contractors, ownership of property, manufacturing operations, contracting operations, sale or distribution of products and the operation of machinery.  General liability insurance will cover you if you find yourself in a lawsuit alleging that your negligence has resulted in bodily injury, property damage and personal/reputation injury to someone else. Such lawsuits can arise while the job is ongoing or many years after is finished.  Two important issues to make sure you’ve reviewed with your insurance agent:  1) the types of work you’re doing and 2) where you’re doing the work.  Some insurance companies have restrictions on certain types of projects and certain out of state locations.  As an example, some insurance policies for New Jersey-based contractors carry restrictions on work performed in the boroughs of New York City.
2. Subcontractors Insurance
   Make sure your subcontractors are insured with business insurance for both commercial general liability and workers compensation. If you’re doing business with a subcontractor year after year, routinely ask for current certificates of insurance. Confirm that you’re named as an additional insured on their liability policy, and check that the limits of liability match yours.  Too many contractors overlook workers compensation certificates of insurance for their subcontractors, so request a certificate of insurance for that as well.  Most insurance companies consider undocumented subcontractors to be employees, and they use the amount you pay them as payroll. Since payroll plays a big factor in the cost of your workers compensation insurance, your premiums could increase dramatically if you can’t provide the documentation. Don’t find yourself in this position.
3. Commercial Auto Insurance
   Just as you’d never go on a job without your tools, you should never drive your business vehicles without the proper insurance coverage. While many home business owners use one vehicle for both business and personal use, you’ll want to talk to your insurance agent about this mixed use. Your personal auto policy may not cover your business risk. Insuring all of your personal vehicles through your business can also carry significant risks, so be sure to review that with your insurance agent as well.
4. Workers Compensation Insurance
   Unless you’re a one-man operation (and even then it may still be required), you need workers compensation insurance. New Jersey state law requires you to carry workers compensation insurance (WC) for your employees, and regulates WC benefits within the contractor-subcontractor relationship. Employees of a subcontractor must be provided WC benefits if an injury occurs on the job. Benefits will be paid either by the insurance for the injured employee's direct employer (the subcontractor) or the insurance for the contractor that hired the subcontractor.  The good news is that workers compensation insurance also protects your business against lawsuits due to employment related injuries or illnesses.
5. Builder’s Risk
   This form of property insurance protects against the loss of material and labor costs during construction. In addition to insuring the materials and labor already incorporated into the building, builders’ risk insurance covers the cost of materials stored on site that are damaged or lost due to most circumstances outside your control. A separate policy typically covers loss due to theft.

Even if you operate under the most professional standards and provide the highest quality service, a client can perceive that you did them wrong. Are you protected with contractor insurance? New Jersey insurance agents at Sharer and Associates Inc can help you learn what all successful business owners know about business owners insurance, commercial general liability insurance, and workers compensation insurance.

When the weather outside is frightful, the roads can be terrifying. Depending on where you live, winter can bring along a barrage of snow, sleet and ice, which make for some seriously unsafe driving conditions. The best way to stay safe from slick roads is to stay off of them. But if you can’t, here are some winter driving safety tips to keep in mind before you get behind the wheel.

Safe Winter Driving Tips

When it comes to winter weather safety tips, preparation is key. 

• Do a car maintenance check 

The Insurance Information Institute (III) says having a well-maintained vehicle is one of the first crucial winter driving tips.

-       Make sure the tread on your tires is in good shape and the tire pressure meets manufacturer’s recommendations

-       Check your brakes, battery, hoses, defroster/heater

-       Make sure your windshield wipers are in good condition and your fluid reservoirs are full

-       Keep gas tank at least half full

• Carry a winter emergency kit

Stash a small shovel, rock salt, ice scraper, snowbrush, flashlight, blanket, first aid kit and jumper cables in your trunk all winter long

• Drive with headlights on

While you may be driving in daytime, headlights do wonders for helping you see and be seen.  Some people aren’t privy to winter driving tips, so anything you can do proactively will help everyone on the road.

• Clear snow and ice from your vehicle

You’ve probably been stuck behind someone who didn’t bother to clear the snow off their roof and ends up leaving a trail of blizzard-like conditions behind them.  Don’t be one of them.  Clear snow and ice from windows, lights, mirrors and roof before you get on the road.

• Manage your time

When going out for a drive in the winter, leave adequate time for your travels and make sure your cell phone is completely charged.  Depending on where you are traveling, consider taking along tire chains, which will help you better navigate the dangerous road conditions.

• Protect teen drivers

New drivers need extra help when it comes to winter driving safety.  Make sure teen motorists are exposed to the snow and ice driving experience before they go out on their own. Practice with them in a safe environment like an empty parking lot.

Still have questions? You’re not alone. According to NJ insurance agency Sharer and Associates, motorists often ask the following questions regarding safe winter driving tips:

Do snow tires make a difference?

Absolutely. Putting snow tires on your vehicle could very well be the single most important recommendation for winter driving safety.  Not only will they help your vehicle perform better in snowy conditions, they will transform a rear wheel drive car into a veritable snow mobile that stops, corners and changes lanes without the back end sliding. Typically lasting about three seasons, snow tires usually cost less than an insurance deductible, and using them will help your summer tires last longer. In fact, your local repair shop will likely store your summer tires for you over the winter months!

What should I do if my car starts skidding on a slippery road?
First off, go a slower speed on winter roads. If your vehicle begins to skid, look where you want your car to go, not where you are heading, and turn your steering wheel toward that area. Don’t over-steer your vehicle.

What is the best way to drive uphill in wintery weather?
While you should drive slower in winter weather, it’s easy to get stuck spinning your wheels on a hill when you drive too slowly. Maintaining momentum is key.  Approach the hill with enough speed, and keep light and balanced pressure on the gas pedal. Once you reach the top of the hill, slow your speed and descend as slowly as possible.

Do I need additional insurance for winter?
No extra insurance is required for the winter months. Quality car insurance covers you all year round.  However, winter safety tips include making sure your policy has "Loss of use" coverage so you can get a rental car if you get into an accident.

Protection and defensive driving techniques are crucial to winter driving safety.  Before you hit the road this winter, be sure to follow the winter weather safety tips above. No matter how old you are when you are behind the wheel, the unexpected can happen in a split second. Knowing the facts about safe winter driving can help prevent an accident.

You’ve figured out how to find a contractor. You’ve gotten multiple bids, and scrubbed references and referrals, but did you check for contractors insurance?  Maybe not.  So, why bother?

When hiring a contractor, it is very important that you check their insurance and how it extends to employees or potential sub-contractors. If the contractor doesn’t have adequate insurance protection and one of the workers gets injured on the job at your house, they could end up suing you and you might be held responsible.

Looking for Contractors? Here Are Some Tips and Questions to Ask a Contractor

Protect yourself. Only hire licensed contractors. And don’t take their word… perform a contractor license check by asking to see the insurance policy so you can make sure that it’s up to date and that the limits are adequate. It’s absolutely acceptable to ask for an insurance certificate (or binder) from your contractor. The contractor and his/her insurance agent should happily provide it. The problem is that not many people are aware of this right to see their contractor’s policy when they have questions for contractors, and therefore don’t ask for it. Any hesitation, delay or pushback from the contractor about providing a binder is a red flag signaling problems with their coverage.  To further protect yourself, you should request to be added to the contractor’s policy as an additional insured for the duration of the project.

Okay, now you have the policy. What do you look for?  Following are the three key coverages in a contractor’s insurance policy:

When you’re looking for contractors, it’s always a good idea to call the insurance company or agent listed on the binder to verify that the coverage is current and in effect.

During the contractor license check, you should also confirm your contractor’s licensing status with the New Jersey State Labor & Industries Department.  All home improvement contractors must register with the state of NJ via the Home Improvement Contractor’s Registration Act & Home Improvement Contractor Regulations. This requires home improvement contractors to register their business with the state so their insurance coverage and any complaints against them can be monitored. 

Contact the State Division of Consumer Affairs at 973-273-8090 to confirm the person is a registered home improvement contractor. And most important, if you feel you have been cheated or scammed by a business, you can file a complaint with the State Division of Consumer Affairs online or by calling 1-800-242-5846. 

If you need further information regarding how to find a contractor, or would like suggested questions for contractors, contact your local insurance company.

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NJ Comprehensive Insurance Covers Broken Glass

It’s likely to happen at some point in your driving career. A rock gets kicked up by someone else’s tire on the highway, and CRACK! It hits your windshield. Pretty unfair, right?

It’s actually a very common occurrence. On average, 13-14 million windshields* are replaced each year.  And a recent windshield damage study** found that stressors like extreme temperatures, driving and fatigue will cause existing windshield chips and cracks to spread quickly.

Once you’ve gotten over the shock of a stone flying toward you at 50 miles per hour, you’ll probably start worrying about how to pay for the damage. “Will my insurance cover the cost? Is there such a thing as auto glass insurance, and if so, do I have it?” Unlike other states, New Jersey does not offer a separate glass coverage deductible. All auto glass related claims are handled through the comprehensive coverage portion of your auto policy. But the full answer depends on a few key points related to the coverage you purchased. Here’s the rundown on what you need to know with regard to auto glass claims.

What is comprehensive insurance?
Subject to your deductible, comprehensive insurance covers you against "non-collision" car damage including fire, vandalism, theft and animal strike. In New Jersey, chipped, cracked and broken glass is also covered. That means your local insurance company can provide auto glass insurance coverage if you carry comprehensive insurance.  

Should I file an auto glass claim?

Before filing an auto glass insurance claim under the comprehensive coverage on your policy, you should first consider if the damage can be repaired or if the auto glass must be replaced. Many insurance companies will pay to have certain windshield chips repaired at no cost to the insured.  If the auto glass must be replaced, you should compare the replacement cost with the amount of your comprehensive insurance deductible. For example, if you have a $1,000 deductible and the estimated replacement cost is $750, it’s not worth filing a claim as the deductible is more than the cost of the windshield. New Jersey insurance company Sharer and Associates suggest that you contact your professional insurance agent to discuss your options and your coverages before filing a claim.  

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We want to hear from you!  If you have a suggestion for blog topic, send them to info@sharerandassociates.com. If your topic is selected, we will send you a $10 gift card.

• *Stat Info from http://www.carwindshields.info/ 
  ** Stat info from http://www.safelite.com/Official20Effect20ofStressesonAutoGlassStudy.pdf

Protection. It’s what helps make your life stable. And if you’re not protecting yourself based on the advice of professional insurance agents, you’re taking a risk. Think about it. You trust your health to your family doctor. You rely on your real estate broker to find you the best home. You believe your car salesperson is putting you behind the wheel of a safe automobile. So, given all that you have to protect, your home, your auto, your life, your family, shouldn’t you have a knowledgeable insurance professional to advise you?

The best insurance agents will get to know you and your situation.  They will make coverage recommendations based on their knowledge. Sure, we’re all tempted to go for the cheapest coverage available. You know… those sweet-talking, 1-800-do-it-yourselfers with low-cost promises. This is your future and the future of your family at stake. You deserve the quality advice provided by a professional. And the best insurance coverage for your money.

The Personal Touch and Service Advantage
Unlike large impersonal call centers where you rarely speak to the same person twice, you have a personal relationship with professional insurance advisors at independent agencies.  They will know you by name, learn your history and tailor a policy that best meets your needs and the needs of your family.  When your situation changes or when you have questions, you have someone to call who can advise you.  It’s a personal touch that isn’t offered by those bigger companies.  By working with an agent to coordinate all your policies, you can be sure you are adequately covered and not paying for any unnecessary coverage. You can expect personal attention and customized services like annual coverage reviews that will address your ever-changing needs and keep your policies up to date. After all, life can change at the drop of a hat.

Save Time & Money
Professional insurance agents will advise you and eliminate the guesswork on coverage choices and claims questions. When it comes to settling a claim or changing your coverage options, you’ll find that having someone there to advise you is better - saving you time, money and headaches in the long run.  And unlike other insurance companies that tout saving you money in 15 minutes, your agent will actually take the time to consider your needs and lifestyle before making any recommendations.  The fact is that 15 minutes is often only enough time to reduce your coverage and increase your risk.

Knowledge
Sometimes the claims process can be frustrating, but having someone experienced and knowledgeable by your side can give you peace of mind. If you’re wondering how to get an agent, first you want to choose one who is a knowledgeable professional. As you know, there are infinite combinations of insurance options available to you.  Insurance agents are state-licensed and must adhere to state-regulated continuing education requirements. They can help narrow down exactly what you need and what amount of coverage is best for your situation. Whatever trauma led you to the claims stage was no doubt stressful enough. Your agent will know how to avoid the “red tape,” making headway through it quickly and efficiently.

Reputation
Reputation and stability are important in insurance. Insurance agents backed by a reputable, well-established insurance company will give you the assurance of reliability and excellent service. They’re more likely to be there when you need them.  After all, the more resources and support insurance advisors can draw from, the better they will be able to work for you. And word of mouth goes a long way when you’re figuring out how to find an agent. Ask around or research company and agent reviews online to get a good idea of whom you’re dealing with.

You’re out for a Sunday drive. Windows down. Breathing in the crisp fall air. Soaking up the sun’s rays. You arrive at a four-way stop. As always, you come to a complete stop, look left, right and left again. You ease off the break and start rolling forward.  CRASH!  A massive SUV clips the rear of your sedan sending you off the road in a tailspin. You finally stop, take a deep breath and think to yourself, “My first car accident! I don’t know what to do in a car accident.  What now?!”

Before you get behind the wheel, you need to be prepared for the unexpected.  Motor vehicle accidents happen every moment of every day. Are you up on car accident law and car accident insurance claims? Do you know what to do if someone is injured? If you’ve never been in one, you probably don’t know what to do after a car accident.   Here are the top five Dos and Don’ts.

What to Do After an Auto Accident (and What Not to Do Too!)

What Can You Do Before an Auto Accident? Prepare!

Now that you know what to do, car accident preparation should be your next step. Keep up-to-date insurance papers, a pen, paper in your car at all times.  For the ultimate in preparation, get your hands on a nifty auto accident report folder.   Contact our agency for your Auto Accident Report Folder. You can never be too prepared.

As a landlord, you may try your hardest to only rent your property to trustworthy and responsible tenants, but accidents can happen regardless of precautions taken to avoid them.  A pet can bite the delivery person, a leaky roof can cause a slip and fall, or a party can leave damage in its wake.  From major to minor accidents, landlord building insurance is the only solution to protect yourself from a hefty bill or worse, a lawsuit. 

If you’re a responsible rental property owner, you probably already have landlord liability insurance.  But are you fully covered? When it comes to landlord liability, are you leaving yourself exposed to avoidable risks?

Know the Risks

Beware…Personally owned properties put your personal assets at risk. If you find yourself in the midst of a legal claim, your savings, your equity in a business or other property, even a portion of your future earnings can be taken to pay for it. And if you have a partner, you’re at risk for the entire amount of the claim regardless of your partnership “percentage.”  While you may be thinking that your landlord protection insurance would cover you if you end up forced to pay a lawsuit award, the fact is, it just may not be enough. The dollar limit of your policy can leave your personal assets exposed to the uncovered portion of that award.

Limit the Risks

One of the best and most cost-effective ways to reduce the landlord liability risks of rental properties is to form a limited liability company (LLC), corporation or other limited liability entity to hold your property.  According to Michael Gutman, an experienced business and property attorney, “When you hold property as a sole proprietor or in a general partnership, you’re dealing with risks each and every day.  And eventually, you’re going to find yourself in trouble.”

Can You Require Tenants Liability Insurance?

You absolutely can make tenants liability insurance a condition of the lease. When it comes to protecting yourself and tenant, it’s really a win-win.  Many tenants don’t realize that the landlord building insurance only protects the physical building not personal losses. If your tenant’s home is burglarized or vandalized, you run the risk of losing a good renter who can’t afford the rent after replacing their belongings.  And you also run the risk of wasted time and money in small claims court if they try to recoup their losses.  There’s no doubt about it, tenants liability insurance can be a lifesaver.

“Not only can landlords insist that tenants maintain various types of insurance coverage, they can require those policies to cover the landlord, said Michael Gutman. “A thorough lease agreement and appropriate insurance coverage will best serve the interests of both the landlord and the tenant.”

Your Tenant, Your Lawsuit

The actions (or inactions) of your tenants can put you in the middle of a lawsuit.  It’s quite common for a tenant to simply not communicate issues going on with the rental property.  Other times, an innocent situation can lead to injury. Like a sprinkler near the sidewalk tripping a walker-by.  You could be held liable if that walker-by gets injured, even if it wasn’t your sprinkler.  Or let’s say your tenant snuck in a pet in spite of a no-pet clause in the lease. You’re also responsible for any harm that pet causes to other tenants or guests. But there is a fine line between tenant liability and landlord liability.  

According to Michael Gutman, “Victims tend to sue everybody to protect themselves. It’s imperative for a landlord to have the appropriate coverage because a trial can result in significant legal fees.”

Reach Out to Your Insurance Agent

Don’t assume you’re protected just because you purchased a landlord liability insurance policy. Speak to your insurance agent, go over the landlord building insurance coverage line by line and make certain you’re getting the best level of protection for the best price.