Insurance coverage and amounts needed

[David Edwards]

Morning BP, 

Shopping around for insurance for our first rental property and wondering what the typical coverage you all go in for? It looks like the difference in 300k and 1mil liability coverage is a difference if around $5. The rebuild costs will end up higher that what we are planning on purchasing the property for in our current quote but in this market rebuilding for that would be tough.

Just looking for some pointers on whats important vs extra for someone who has never bought homeowners insurance (there was a question about the property being a rental in the quote generator so i think this covers me in an investment property)

Thanks fir the help,

Dave 

[John Mocker]

Rick,

In Commercial Insurance the Liability coverages are usually shown as:

$_________  General Aggregate

$_________  Per Occurance

$_________  Products/Completed Operations Aggregate

$_________  Personal & Advertising Injury

$_________   Fire Legal Liability (sometimes shown as Tenants Legal Liabiity)

$__________  Medical Payments

Commercial Liability provides coverage to the insured for Bodily Injury or Property damage that the insured becomes legally liable for.  I've tried to give a quick & easy definition of the terms.  The policy is a legal contract and should be read in full.  All the coverage mentioned can have exclusion or limitation in the policy so you should not rely on these simple defintions.  Rather, you should review the actual policy as only it can be the determinor of what is covered.

1. Aggregate limit means the maximum that the company will pay for all covered claims in the policy term.   If you have a $1,000,000 aggregate limit and have 3 claims of $300,000 $500,000 and $500,000.  The company will pay the first two in full and pay $200,000 of the $500,000 for the last claim because the total exceeds $1,000,000.

2. Per Occurrence limit is the maximum they will pay out on any one covered claim.

3. Product/Completed Operations Aggregate is the maximum the company will pay out for all covered claims that fall within the Products or Completed Operations coverage area.  This section provides coverage for Liability arising out of the Insured's products or Services. 

4. Personal & Advertising Injury is the limit per covered claim that the company will pay in the Personal & Advertising Injury area.   Personal & Advertising Injury deals with Libel, Slander, False imprisonment, Copyright Infringement, etc.

5. Fire Legal Liability provides coverage if the insured negligence causes damage to a space rented to them.  An example would be if a beauty shop left a curling iron on and it started a fire.  The shop could be held legally liable for the damages from the fire since they caused it.  If the insured did not do anything to cause the fire (ie. wiring in the walls short out and cause a fire) it would not be covered in this section.

6. Medical payments coverage is provided to handle small injury claims where it makes more sense to pay them than determine who was at fault.   A vistor trips and falls and goes to the ER.  No ones sure why they fell.  The company may pay the ER & Doctor bills with out determining if the insured was at fault because they may determine it will cost less to pay it than investigate/fight it.

I hope that helps.