How to Buy Video Production Insurance
Insuring Your Video Production Business
Part I: What types of Coverage will you need?
Your own equipment
–A Crash Course in Liability coverage
–Watch out for Exclusions
–Types of Coverage for Photographers and Videographers
Part II: How to Boost Your Homeowners Policy to Cover Your Business
Start with your present policies
Add a rider
Add a floater
Purchase a home/office combination policy
Part III: How to Buy Business Insurance
Agent or Broker
How to Hire a Broker
Reducing Insurance Costs
Part IV: How to Buy Insurance for Your Video Shoot
Companies that Offer Video Production Insurance
Insuring Your Video Production Business
When producers think of insurance they often think of insuring their own equipment or rented equipment (which is usually a condition of the rental company). Video insurance can also cover liability, vehicles, props, copyright and clearances, errors and omissions and even a particular production shoot. Your business needs an insurance program that covers property loss, liability, and a few risks that apply specifically to videographers. Let’s look at the kinds of coverage you should consider, and how to go about getting it.
Part I: What Types of Coverage Will You Need?
If you are operating a small, part-time video business out of your home, you may think you are covered by your homeowners policy. Most homeowners policies will cover loss or damage of home office equipment, but limit the amount of coverage to $2,500. If you lose your computer, inventory, camera equipment and laser printer from your home-based office, that check will not put you back in business.
Homeowners policies can be enhanced by buying an endorsement, or rider, to the policy. These are add-ons to your policy that boost the amount paid in case of loss. For just a few dollars extra, you can increase the amount paid for loss of business equipment to $10,000. Some companies offer special computer policies to cover loss of programs and databases.
This may be a good solution for a small business, but does not cover you for liability related losses. As the business grows, you’ll want to expand to a home office policy or a business owner policy. Some of these will cover equipment used offsite, such as your camera and lighting equipment on a shoot.
Covering Rental Equipment
Video Equipment Rental houses
Sometimes you will need to provide insurance for equipment that does not belong to you. When you rent video equipment from a camera rental house, they will require you to have insurance coverage sufficient to protect their interest in the equipment. See this extensive list of camera rental houses http://videouniversity.com/directories/video-equipment-rentals-and-sales You can satisfy the rental house insurance requirement in one of two ways:
1. Have your insurance company fax proof of your existing insurance coverage to the rental house, or
2. Buy a floater from the rental company. This option will cost more so it is in your interest to provide your own.
The following is a list of the typical requirements from a camera rental house we’ve named Acme Video Rentals. These apply to any insurance that you provide for the equipment.
- Acme Video Rentals* must be named as Additional Insured.
- Acme Video Rentals must be named as Additional Loss Payee.
- The Insurance Certificate must provide coverage for All Risks.
- Equipment Coverage Must be at Replacment Cost.
- The Certificate of Insurance must be sent from the client’s insurance company rather than directly from the client.
- The Certificate of Insurance must be received and approved by Acme Video Rentals in advance of any rental.
- Deposit Requirement: Every rental requires a deposit, this deposit amount is based on your issued deductible listed on the Insurance Certificate under miscellaneous and/or rented equipment section. Once the equipment has been returned with no discrepancies or current balance due, the deposit will be refunded. Please allow a minimum of 48 hours.
(* Please note Acme Video Rentals is a fictional rental company)
Covering Video Equipment You Own
The place to start is by making a written list of the video equipment you plan to cover. Include the mfg. and model number, the price you paid and the date it was purchased. Keep in mind that in the event of a loss many companies pay the depreciated value or the market value of the equipment rather than the cost of new equipment. For example, if your camcorder was purchased in 2006 for $3500 and it was stolen in 2009, the insurance policy may pay you much less than $3500.
To make sure all equipment is covered and that the insurance company knows exactly what you have in your office or van, consider producing a video inventory of your equipment. Here is a very good link http://www.iii.org/individuals/business/ See their video on video inventories!
A Crash Course in Liability
If you decide that an endorsement on your homeowners policy will not provide sufficient coverage, consider a separate business policy. There are two types of liabilities, or risks, that your business insurance should cover. General liability is the risk of damage to other people’s property or injury to others. Your video business should carry general liability insurance in case a light stand falls during a shoot and breaks someone’s nose or damages their musical instrument.
Professional liability, often called Errors and Omissions, covers you for contract disputes, the costs of reshooting if something goes terribly wrong, and legal defense when the dispute goes to court. Even if you are conducting business in the most professional manner possible, and doing your best to please all clients, you may come across one who won’t be happy until he sees you in court. This is a risk in all businesses, and the right Errors and Omissions policy will cover the cost of your defense.
Professional liability insurance also covers you for copyright infringement cases. Why is this coverage important for video producers? Aside from the obvious risks of accidentally filming someone who doesn’t give permission, there is another risk for videographers: Music. Copyright laws apply as much to music as they do to the written word, with other complications. For instance, the songwriter may sell publishing rights to a music publisher, but a performance of the song can also be copyrighted. In addition, if the music is part of a video, you’ll also have to worry about “Synch” rights, which allow the music to be synchronized with the video images.
Your Errors and Omissions policy should cover you for mistakes in music clearance, because this is a significant risk for videographers. Take care to do what you can to clear the music, or use one of the royalty-free music services that take care of this issue (such as www.musicbakery.com). For more information on copyright risks and the use of music in your production, see http://videouniversity.com/articles/copyright-for-video-producers
Your insurance policy will exclude certain things. You must read the policy carefully. Among the list of exclusions may be countries where you are not covered. This can be a long list of countries with unstable governments and acts of terrorism. Here is an example of a list of excluded companies: “Afghanistan, Egypt, Jordan, Iran, Iraq, North Korea, Persian or Arabian Gulf and adjacent waters including the Gulf of Oman north of 24 degrees north, Angola, Israel, Lebanon, Syria, Libya, Eretria, Gulf of Aquaba, Somalia, Zaire, Liberia, Georgia, Haiti, Yemen, Sri Lanka, Estonia, Latvia, Lithuania, and the areas formerly known as the Union of Soviet Socialist Republics (U.S.S.R.)”–adapted from www.productioninsurance.com You can shop around for policies that will cover your international operations. As you can see, this exclusion covers roughly half of the world.
If you rent your equipment to others, there may be conditions or exclusions. Theft of your equipment from a vehicle may be covered if there are signs of forcible entry and you fill out a police report. If the equipment is damaged, the insurance company may elect to have it repaired, rather than replaced. Other exclusions may include the use of stunts or pyrotechnics. This doesn’t mean you can’t use them, just that you may have to consider buying a specialized insurance program that will cover the risks. See”How to Buy Insurance for your Video Shoot” later in this article.
If you hire helpers or have employees, you’ll also need to pay for Workers’ compensation insurance, which covers the cost of medical care and rehabilitation for workers injured on the job. It also compensates them for lost wages and provides death benefits for their dependents if they are killed in work-related accidents, including terrorist attacks.
Workers compensation systems vary from state to state. State statutes and court decisions control many aspects, including the handling of claims, the evaluation of impairment and settlement of disputes, the amount of benefits injured workers receive and the strategies used to control costs.
Workers compensation costs are one of the many factors that influence businesses to expand or relocate in a state, generating jobs. When premiums rise sharply, legislators often call for reforms. The last round of widespread reform legislation started in the late 1980s. In general, the reforms enabled employers and insurers to better control medical care costs through coordination and oversight of the treatment plan and return-to-work process and to improve workplace safety. Some states are now approaching a crisis once again as new problems arise.
See: The Ultimate Guide to Workers’ Compensation Insurance, published by Entrepreneur Press Entrepreneur Press; 1st edition (August 9, 2005), ISBN: 1932531505.
Types of Coverage for Photographers and Videographers
Now that we’ve covered the general types of insurance out there, let’s get specific. There are some specialized insurance programs for video businesses, photographers, and for the entertainment industry. Some of these coverages are quite pricey, so if your risks do not warrant such a high premium, don’t be talked into a policy you don’t need. (It’s like buying collision insurance on a beat up old car. You just don’t need it.) You should be aware of the coverage available, though, in case you have the opportunity to produce a high-budget project that can’t go forward without the right coverage.
The following are the types of policies that pertain to the video or photography business. This list is from <
- Annual Equipment Floater –Owned & Rented Equipment coverage for entertainment-related risks. This is described below as it pertains to your homeowners policy, but a floater can be purchased separately. An equipment floater is your first step. It is also part of what is known as DICE coverage, or Documentary, Industrial, Commercial, Educational Annual Production Insurance.
- DICE/Annual Productions Insurance. This type of policy covers the full spectrum of insurance needs for video production businesses including:
- Owned & Rented Equipment
- Props, Sets & Wardrobe
- Third Party Property Damage
- Negative & Faulty Stock
- General Liability
- Office Contents
- Workers’ Compensation
- Short Term Film & Video Production Insurance — Coverage for a single film or video production shoot without hazardous activities. Hazardous activities include stunts, fights, high scaffolding, boats, and pyrotechnics. This covers:
- Single Film/Video/Photography Shoots Up to 90 Days — General Liability
- Owned & Rented Equipment
- Workers’ Compensation
- Negative Film & Faulty Stock
- Third Party Property Damage
- Foreign Production Insurance Coverage for a single film or video production shot anywhere outside of the US and Canada. You may need special coverage if you are filming overseas. Many policies exclude certain countries. Foreign Production Insurance covers:
- Hired & Non-Owned Automobile
- Workers’ Compensation
- Travel Insurance
- Movie Boat Insurance? if you are filming on the water, you may need coverage for filming on boats, barges, platforms, marinas, docks, wharves and piers. This covers:
- Hull & Machinery
- Running Down Clause
- Protection & Indemnity
- Jones Act
- Excess Liability
- Charterer’s Liability
- Wharfinger’s Liability
- Tower’s Liability
- Multimedia Production– E&O Errors & Omissions coverage for media production, distribution and broadcast covering producers and distributors of Motion Pictures, Radio Programs and Television Programs.
These short term policies can cover your operations on a production in which you have invested considerable time and resources. Each project will have its own risks, and you should consult a qualified broker to be sure you get the required coverage.
Part II:How to Boost your Homeowner’s Policy to Cover Your Business
How to Boost your Homeowner’s Policy to Cover Your Business The place to start is with your existing insurance policies, such as your homeowners policy. If your home is insured, you already have coverage for equipment damaged in your home or stolen in a burglary or robbery. Remember that floods will not be covered. Ask your insurance provider if video equipment used for a business run out of the home is covered, and if you can purchase any additional insurance from them with a rider. Most homeowners policies cover your equipment, but limitations are often as low as $2500.
Ask your car insurance company what is covered if, for instance, your video equipment is stolen from your car. What is your coverage limit, and what are the exclusions?
Whatever you do, don’t try to fool your insurance company. The last thing you want to do is give them a reason NOT to pay when you file a legitimate claim. So, if you decide you want to boost your homeowners policy, what are your choices?
Add a Rider or Endorsement
This is the least expensive option for insuring a home-based business. For just a few dollars a month, sometimes as little as $25 a year, you can cover your business equipment up to $10,000 or more. There are computer equipment riders that will cover not only your computer hardware, but also the software. If a catastrophic fire occurs, both will be lost and the replacement of software can be significant. Be very sure that this will cover equipment that is used to make money. Your agent should understand that you are charging money for your services, as some homeowners policies will not cover equipment used in for-profit endeavors. Also be sure you are covered for replacing the equipment without depreciation. It is worth the extra premium to know you can recover your business when the claim is settled.
Add a Floater
A floater, or floating policy, is an insurance policy that covers the loss or damage to movable property, such as jewelry or video equipment, regardless of its location. This is a good solution for a small business that shoots at different locations and has to carry equipment. A floater policy was originally conceived for property in transit, but today it covers particular pieces of equipment, outlined in the policy document, wherever they are when damage or loss occurs.
A homeowners policy will not replace your diamond ring if you lose it while whitewater rafting. A floater policy will. (My friend Kay says she knows this from experience.)
Purchase a Home / Office Combination Policy
As your business grows, you will find that endorsements and floaters on your homeowners insurance no longer meet your needs. For one thing, these additions don’t offer liability coverage. (See A Crash Course in Liability, above.) There is a relatively new type of policy written especially for home-based businesses, called Home Office Policies. They are reasonably priced for those who need limited business coverage for a business operated out of the home.
While home office policies start with just $10,000 in equipment coverage, they often offer $100,000 of general business liability. This protects your home business from slip and fall accidents and other risks to others. A Home office policy will protect you if a meteor falls through your home office roof and impedes your ability to do business. While you are relocating or rebuilding, you will need supplemental income. These policies also offer supplemental theft coverage and high limits for off-site property such as your lighting equipment, a laptop computer, and the like. Specifically, these combination policies may include:
Home Office Contents
Cameras & Duplicating Equipment
Business Income Interruption
Errors and Omissions
Commercial General Liability
Two types of combination policies are:
Business Owners Package Policy
-This type of policy provides coverage for your home-based business, including property and liability coverage. It is referred to as a business owners package policy, or a BOP. It covers the structure that houses your home business, which can be an addition to your house, a studio on the grounds, or a garage office. This is relatively inexpensive for the small to modest operation.
In-Home Business Owners Policy
-This is the next step. Some insurance companies offer policies that combine homeowners and business owners coverage into a single policy. These policies are designed specifically for home businesses. These policies provide both business coverage such as business liability and replacement of lost income, and homeowners coverages such as fire, theft and personal liability. These policies eliminate gaps and duplications in coverage, and the rates reflect the in-home status of your business.
If you are concerned about your growing business, be sure to ask your agent about these policies. If you are ready to purchase real protection for an established business, you may need to hire a broker. See Agent or Broker, below.
Agent or Broker?
What is the difference between an insurance broker and an insurance agent? An agent works for one company and can only offer you the products of that company. An insurance broker has access to the products of several insurance companies and can find the best combination of coverage, price and service. In other words, an insurance broker works for you.
The following information is adapted from an informative web site, <http://www.cutcomp.com/> which is published by Advanced Insurance Management, Inc. They specialize in reducing worker’s compensation insurance, but their advice on hiring a broker applies to the purchase of any kind of business policy.
Choosing an Agent or Broker
When a business owner or manager needs to make a decision about purchasing a commercial insurance program, the first consideration is the choice of insurance agent or broker. Yet many business owners make this choice carelessly, relying on personal characteristics or other criteria that often don’t lead them to the best choice. Here are some suggestions for making the right choice in this risky decision. Who does the agent work for?
The first question to ask is, what is the agent’s relationship to the insurance company? That is, is he an independent agent, or does he work directly for the company that writes the policy? Agents of direct writing companies are employees of that company. An independent agent does not work for any one insurance company, but is rather an employee of an independent insurance agency which typically has contracts with a number of different insurance companies.
The independent agent normally can present your company’s insurance program to more than one insurance carrier, but remember that they do not have access to ALL insurance companies. The number of insurance companies that a particular agency has contracts with can vary significantly. Sometimes independent agents, in their zeal to acquire your business, may exaggerate the number of companies they can access for you.
An insurance broker is a licensed insurance producer who is not selling insurance for a company with which his or her agency has a contract. The difference between an agent and a broker is pretty technical, and most independent agents act as either agents or brokers, depending upon which insurance company they are dealing with. Many states have moved away from making the distinction between agent and broker, preferring the term insurance producer for anyone selling insurance in any capacity.
When choosing your agent, just keep in mind that an agent for a direct writer must live by what his employer-insurer is doing in the marketplace. This kind of agent normally can’t provide good alternatives if his or her insurance company isn’t competitive in pricing or coverage. An independent agent normally has access to more than one insurer, and can provide more alternatives in coverage. But the differences between one independent agency and another can also be significant in these areas. Evaluate the Agent/Broker
Insurance can seem like a commodity, with the only significant variable being price. But this is not entirely true. While there is considerable standardization in insurance policies, there are still many variables. You need your insurance agent to be your insurance adviser about coverage, companies, claims, and other aspects relating to how your company protects itself via insurance. To select that adviser wisely means looking past personality, and other considerations like who makes the best golf companion, or who provides you with the best free sports tickets. Sometimes it may even mean picking the agent who doesn’t have the lowest price.
Ask about what professional designations the agent has. A professional designation like CIC or CPCU doesn’t guarantee an agent is expert in all insurance aspects you require, but all other things being equal, a designation does mean the agent has made a commitment to pursue professional training. Just because a broker is licensed does not mean he or she has as much insurance expertise as you might need. Sometimes successful insurance agents are successful more for their sales skills than their insurance expertise.
When you’re choosing your insurance advisor, ask him or her for their personal resume. You want your agent to be experienced and knowledgeable in insurance coverage, not just in insurance salesmanship. Ask about the last insurance related seminar the agent attended. Or the last insurance book he or she has read. Make sure your agent is on notice that you expect him or her to be an active advisor. No one can be an expert in everything. It’s important that an agent know the limitations of his or her expertise, and be confident enough to tell you he or she doesn’t know the answer but will find out for you. Here’s one technique you might want to try. Ask an insurance related question about a certain kind of claim, or a certain property limit. Find out the right answer ahead of time. Ask your potential agent how he or she recommends coverage be handled to address that issue. This can tell you about the kind of agent you’re dealing with.
Remember, even a great agent may not know the answer off the top of her head. But a good agent will not make a wrong answer sound convincing. A good agent will either know the right answer, or will tell you he doesn’t know and will offer to find out for you.
When comparing policies, it’s important to get a written and detailed proposal of all coverages before you make a decision. The written proposal should detail costs, coverages, limits, payrolls, sales, rates and classifications that affect your particular coverage and its price. Ask the agent who quotes your coverage to make suggestions regarding alternatives, improvements, and corrections to your old policies. You should not use competing quotes exclusively as a free source of risk management advice. If you do, while allowing your coverage to remain with a less competent or less knowledgeable agent because of loyalty or other considerations, you’re making a mistake that may well come back to haunt you.
Consider How the Agent/Broker Is Compensated
Compensation for insurance brokers has been under scrutiny lately. In New York, the attorney general uncovered serious wrongdoing by some well known insurance brokers and insurers involving how insurance producers were paid. (Those who are licensed to sell insurance products are now referred to as producers. The distinction between agent and broker has become blurred.) The scandal in New York involved brokers who were being paid by their clients because they weren’t receiving any commission from the insurance companies.
These brokers would manipulate quotes from insurers in order to steer their clients toward insurers who were paying those brokers so-called “contingent commissions” behind the scenes. These brokers and insurers were giving the impression that the producer was shopping the clients’ business to get the best deal for the client, but in fact were collaborating to inflate other proposals to make the clients think that the insurer recommended by the broker was offering the lowest price. Actually the insurer was paying the broker commissions that provided the incentive for this deceptive practice.
As the client, you certainly have a right to know all the compensation that the producer will get from insurers if you place your business there. Full disclosure is something that a reputable producer shouldn’t object to, and is something you have a right to expect as part of your decision making process. The National Conference of Insurance Legislators (NCOIL) <http://www.ncoil.org/> developed guidelines on broker compensation.
After You Purchase the Policy
When examining the service given by your agent, ask yourself if he or she carefully reviewed your existing coverage and suggested improvements. Don’t assume the agent is doing this as a matter of course. You should also insist on an annual review of policies in writing. If the agent is unwilling, or unable, to provide this, it may be a warning sign that you are not getting the level of insurance expertise and service you need. When there is a serious claim, you don’t want to discover that your agent has been merely continuing your old coverage at a somewhat better price.
Make sure you old coverage is sufficient to cover any loss that might reasonably occur. Think of insurance as a parachute. You never know how well it’s been prepared until you really need it, and then it had better have been prepared right. Don’t assume your insurance parachute has been packed right, just because your agent seems like a nice person.
A good agent may well ask questions you can’t answer easily, but it’s important to address the issues raised if you want to make sure that “parachute” is going to work when you need it. Do you have enough property insurance to avoid coinsurance penalties? To rebuild your property in the case of a total loss? Are you covered for employment-related practices? How about for mistakes in administering your employee benefits programs?
Ask for your agent’s written input on a yearly basis regarding property limits, business interruption limits, adequacy of coverage, and alternative approaches to insuring your possible losses. If your agent seems unwilling to do this, it may be time to look around. Some agents are very good at giving the impression they are taking good care of your insurance needs, without actually working very hard at it at all. You, as an informed consumer, should insist that your agent put some effort into keeping your business. The agent should do the research and have the expertise to provide you the right insurance policy and the right level of coverage. If your agent doesn’t seem to be taking care of your insurance needs, it’s time to find another one.
Acknowledgment: This information is based on an article published by Advanced Insurance Management, Inc. Please visit the Advanced Insurance Management website for other helpful information on this topic: http://www.cutcomp.com/
Timing Policy Renewals to Fit Your Budget
If your business has predictable slow periods when you know the income will drop, this may be a bad time for the insurance policy renewal notice. You can change your renewal date so it comes at a better time for your business income.
Talk to your agent or insurance company and see if you could use an early termination and renewal of the policy. This can change the renewal notice to a time that is easier on your business. Another way to do it is to renew with a short-term policy just for one time and then return to the normal annual policy. Just be careful that there’s no lapse in coverage. Also check with your insurance company that this strategy does not incur a rate increase. It can take a while to get your policy renewal date to occur at a good time, but it can be worth the effort.
Reducing Insurance Costs
One important way to lower your insurance costs is to avoid buying insurance policies that you do not need. Because of the difference in individual risk, the list of unnecessary policies will be different for everyone. For example, someone who does not own a home would not need to purchase a homeowners policy because there is no risk of losing their home. That is an obvious example, but there are times when one’s risk is very small and suffering the consequences of the loss is a better risk than purchasing a policy.
Following is a list of insurance policies that most people would not need to purchase for various reasons (reasons are listed when applicable):
Insurance to Avoid:
- Comprehensive and collision coverage for automobiles that have little or no value
- Personal injury protection coverage (PIP) or just buy the minimum if you have a good health insurance policy
- Roadside assistance if you already belong to an organization that offers this
- Mechanical breakdown insurance if you currently own a new car or have a leased vehicle that is still under warranty
- Rental Car Insurance if you have a current full coverage policy or a credit card that already provides this insurance (check with your agent to see how much your current policy will cover)
- Life Insurance if you are single and have NO dependents (this includes avoiding life insurance for children!)
- Travel insurance if your current health insurance policy covers you abroad
- Extended Warranties on Appliances (this in the end may cost more than just buying a new one)
- Insurance on outstanding credit card balances (this type of insurance can be costly and has a lot of loopholes to go through before any benefit is paid)
- Credit Insurance, which is voluntary insurance on your mortgage (a typical life insurance policy would be a better option)
By avoiding the above policies, you will not reduce your risk and you still may experience a loss in any or all of the above categories, but the risk for most is so small it’s just not worth the price of the insurance.
Your small video business, which you operate as a sideline or extra income opportunity, is now covered with additions to your homeowners’ policy, an equipment floater, and professional liability coverage. Suppose you have an opportunity of producing a short-term, high-budget project. You don’t need an annual premium program, and your own equipment is covered. Now it’s time to consider short-term video production insurance.
There are many companies who deal in this type of insurance for the entertainment industry. These package policies cover the basic risks involved in video shoots and last from 60 to 180 days, depending on your needs. Restrictions are placed on the total budget of your project, typically up to $300,000. Here’s the coverage you may get in such a package:
- Rented equipment
- Owned equipment
- Props, sets and wardrobe
- Negative and faulty stock
- Third party property damage
- Extra expenses coverage
- General liability
- Errors & Omissions
- Automobile liability for non-owned vehicles
- Workers’ compensation
The attractive aspect of this policy is that it only lasts as long as the production schedule, although some coverage extends beyond that scope. So, if your business does not normally require coverage for rented cars, you are not locked in to the cost of that insurance. This is not meant to suggest that this type of policy is inexpensive, but if you are working with a large-budget production, it may be worth considering. Short-term production insurance answers the needs of film and documentary producers, similar to the DICE insurance described above but on a temporary basis. Do you have something valuable to add to this article? Please email us and be sure to include the address or title of this article. Thanks!
An insurance agent or salesperson who represents one insurance company and agrees not to submit business to any other company unless the policy is refused by the agent’s company. (See Captive agent)
An insurance agent who specializes in commercial insurance and acts as an intermediary between the client and an insurance company. Brokers typically work on commission, researching the market for the best coverage for their clients.
BURGLARY AND THEFT INSURANCE
Insurance that covers the loss of property due to crime such as burglary, larceny, or robbery. It is standard in both homeowners’ and business policies.
A combination policy for smaller companies that covers property, liability and business interruption losses. These policies are generally cheaper than buying separate insurance policies.
The ratio of complaints against an insurance company compared to the premiums written. Some state insurance departments use this as a measure to rate companies. Complaints are counted only if they are upheld, and can come from consumers or service providers against the company.
A 3-digit number used by credit bureaus as a measure of an individuals use of credit. The information contained in a credit report affects consumers in many ways, from getting a job, buying or renting property, borrowing money, and buying insurance. Credit history is reviewed by insurers before writing a commercial policy because businesses tend to cut back on safety when experiencing financial difficulty. Auto and home insurers may also use an “insurance score” based on credit ratings in underwriting and rating insurance policies. (See Insurance score.) See The VU article “How to Improve Your Credit Rating” <http://videouniversity.com/articles/how-to-get-good-credit>
A specified dollar amount or percentage of the claim amount that is paid by the policy owner. Some deductibles specify an amount of time that must elapse before benefits are paid. Larger deductibles result in lower premiums.
Almost all homeowners and commercial policies cover losses from fire, but be sure to check the policy’s provisions for smoke and water damage as well.
Flood insurance is provided by the National Flood Insurance Program, which is a U.S. Government program. It can be sold by licensed insurance agents. Flood damage is excluded under homeowners and commercial policies. Surprisingly, flood damage is covered under the comprehensive portion of an auto insurance policy.
A floater policy covers property losses wherever they occur. Among the items often insured with a floater are expensive jewelry, stereo equipment, and furs. It provides broader coverage than a regular homeowners policy for items that may be transported or used outside the home or are not fully covered under the homeowner’s policy. Adding a floater assures the homeowner that the full value will be replaced in the event of theft, loss or damage.
HOMEOWNERS INSURANCE POLICY
A homeowners insurance policy covers the house and personal possessions inside, and structures on the property such as a garage. It protects the homeowner against a wide variety of damage caused by windstorms, fire and theft. The specific causes of damage are spelled out in the policy. An all-risk policy offers the broadest coverage. This covers all types of damage except what is specifically excluded in the policy.
Homeowners insurance may also cover living expenses in the case of loss. Known as Loss of Use, this provision in the policy covers the extra cost of living elsewhere while the house is being restored. The liability portion of the policy covers the homeowner for accidental injuries caused to others and/or their property, such as slipping and falling down on an icy walkway. Coverage for flood and earthquake damage is not available in a typical homeowners policy and must be purchased separately. (See Flood Insurance)
INLAND MARINE INSURANCE
This type of coverage is for shipments in transit by all forms of land and air transportation as well as bridges, tunnels and other means of transportation and communication. It does not include ocean shipments. Floaters that cover expensive personal items such as fine art and jewelry are included in this category. (See Floater)
Insurance scores are rankings similar to credit scores, and are based on credit information. It includes information about whether the consumer has made timely payments on loans, the number of open credit card accounts and whether a bankruptcy filing has been made. An insurance score is a measure of how well consumers manage their financial affairs, not of their financial assets. It does not include information about income or race.
Studies have shown that people who manage their money well tend also to manage their most important asset, their home, well. And people who manage their money responsibly also tend to handle driving a car responsibly. Some insurance companies use insurance scores as an insurance underwriting and rating tool.