Courtesy of iii.org

You probably make a checklist for performing home repairs, a shopping list before hitting the grocery store, or perhaps a to-do list for work assignments—but do you have a checklist for reviewing your insurance coverage? The start of hurricane season is right around the corner (June 1 – November 30). So now’s the time to check your homeowners or renters insurance—and this handy list will make it easy to be sure you’re well-prepared in case a storm comes your way.

HOMEOWNERS COVERAGE

Check your policy limit; is it enough to rebuild your home?

Make sure to have enough coverage to completely rebuild your home in the event it is severely damaged or destroyed. And, remember, the real estate value of a house is not the same as the cost to rebuild.

Consider these homeowners coverages to help protect against the costs of rebuilding after a hurricane:

• Extended Replacement Cost Policy – pays an additional 20 percent or more above the policy limits.
• Guaranteed Replacement Cost Policy – pays the full amount to rebuild your home whatever the ultimate cost.
• Inflation Guard – automatically adjusts the coverage limits to reflect changes in construction costs.
• Ordinance or Law Coverage – pays a specified amount for rebuilding to new building codes, should your community adopt stricter codes.

Do you know everything you own and how much it’s worth?

Imagine having to re-purchase all of your furniture, clothing and other personal possessions. Now think about what that would cost. Most insurers provide coverage for personal possessions—approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. Is this enough? The best way to determine what you actually need is to conduct a home inventory—a detailed list of your belongings and their estimated value. The I.I.I.’s free Know Your Stuff – Home Inventory tool can help.

Check what type of insurance you have for your belongings:

• Replacement Cost Coverage – pays what it would cost to replace your personal possessions at their current value.
• Actual Cash Value Coverage – pays to replace your personal possessions only at their depreciated value.

Does your policy provide enough Additional Living Expenses coverage?

Additional Living Expenses (ALE) coverage kicks in if your home is rendered uninhabitable as the result of a hurricane or other insured disaster. ALE covers the extra costs involved in living away from home—hotel bills, restaurant meals and other expenses, over and above your customary living expenses—incurred while your home is being repaired or rebuilt. If you rent out part of your home, this coverage also reimburses you for lost rental income.

Check that the coverage is adequate for your needs:

• ALE coverage is generally equal to 20 percent of the amount of insurance coverage that you have on the structure of your house; however, most insurers offer the option of higher coverage limits.
• Many policies provide ALE reimbursements only for a specific amount of time; make sure you’re comfortable with the time limits in your policy.

What is the percentage of the hurricane/windstorm deductible stated in your policy?

Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies. Unlike the standard “dollar deductible” on an auto or home policy, a hurricane or windstorm deductible is usually expressed as a percentage. It is clearly stated on the Declarations (front) page of your homeowners policy.

Hurricane and windstorm deductibles generally range from 1 to 5 percent of the insured value of the structure of your home. A hurricane deductible is applied only to hurricanes whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.

Keep in mind:

• If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage.
• Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.
• A deductible is basically the amount subtracted from an insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.

What disasters does your insurance policy cover?

Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and a host of other disasters. However, all policies also list exclusions—such as for flood or earthquake—which are NOT covered by the policy. Get to know the exclusions in your policy and either talk to your Insurance Professional about purchasing separate coverage, or be prepared to pay the cost of those damages out-of-pocket.

Important additional coverages to consider in hurricane-prone areas:

• Sewer Back-Up Coverage – Can be purchased either as a separate policy or as an endorsement to an existing homeowners policy. Sewer backups and damage from runoff water caused by major downpours are not covered under standard homeowners nor by flood insurance.
• Flood Insurance – Separate flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and from some private insurance companies.

But, wait, what about your flood insurance policy?

People tend to underestimate the risk of flooding, but 90 percent of all natural disasters include some form of flooding—especially hurricanes! If you live in a flood zone, or a hurricane-prone area, a separate flood insurance policy is a must. But it’s equally important to understand what it actually covers.

An NFIP flood insurance policy provides coverage for up to $250,000 in replacement cost coverage on the structure of the home and $100,000 in actual cash value coverage for personal possessions. Coverage for basements is limited, so make sure you understand what is considered a basement, as well as what is and is not covered in that area of the house. The NFIP policy also does not include coverage for ALE.

Additional tips about flood insurance:

• There is a 30-day waiting period for a flood insurance policy to go into effect so don’t wait until a storm is imminent to apply for coverage.
• The NFIP offers a range of deductibles; the deductible you choose will affect the cost of the policy and the amount of money you would receive if you file a claim.
• If you require a higher amount of coverage than is offered by the NFIP, consider getting excess flood insurance which is available from private insurance companies.

Courtesy of iii.org

At tax time people are looking to find every possible deduction they can—so what about writing off your home or auto insurance premiums? The answer mostly comes down to one easy question: personal or business?

If you’re buying personal coverage for your home, car or another purpose, the Internal Revenue Service considers it a regular living expense, which isn’t any more deductible than buying toothpaste or kitty litter.

If you’re in business for yourself—even if it’s just moonlighting—the answer may be different. And if you participate in the “gig economy” (e.g. renting your home on Airbnb or driving for Uber) you also can deduct some part of those costs against your business income—as long as you’re also willing to declare the money you’re earning as income.

Deducting Your Premiums

It takes some extra effort to directly deduct either your auto or home insurance payments on your taxes. First, you’ll have to itemize and fill out an entire Form 1040, not the abbreviated 1040 A or the quickie 1040 EZ. If you typically only take the standard deduction on your taxes, you may not have enough other items to write off in order to make this worthwhile. You’ll also have to file Schedule C Profit or Loss From Business. Second, to maximize your deductions you’ll need to calculate how you’re going to claim your insurance premiums—for both auto and home deductions you have the option of using a simplified method or calculating your actual insurance expenditure.

Auto

The IRS allows for a simplified method of deducting the business use of your car or other vehicles, at 54 cents per mile. That’s designed to cover payments, fuel, repairs, depreciation, maintenance and insurance costs. To take your actual expenses, you must calculate the percentage of total car costs for the year based on the number of total miles driven vs. miles driven for business.

Home

For homeowners, the simplified home office deduction is $5 per square foot for the space that’s dedicated only to office use, up to a maximum of 300 square feet, or $1,500.

The more complicated method is to add up all your home-related expenses—mortgage payments, maintenance, property tax, insurance, utilities and so on—and then deduct the percentage of total space in the home occupied by the home office space. So, if all your home expenses for the year totaled $8,000, that 96-square-foot office in a 2,000-square-foot home would allow you to deduct $384. Of course, you’ll need to have good records of all the expenses.

Are Insurance Payments Taxable?

Insurance payouts you receive after damage to your home or an accident involving your car are generally not taxable unless you’ve come out way ahead financially. Generally, a payment to reimburse you for repairs or replacement isn’t going to be taxable unless the payment exceeds what you originally paid for the property, an unlikely situation since most things lose value over time rather than gaining it. And, if you receive dividends from a mutual insurance company, those aren’t taxable unless they total more than the insurance premiums you paid to that company during the year.

On the other hand, if there is a really big gap between what your insurer paid out and your actual financial damage, you might be able to take a deduction for the loss. Deductions on the Casualties and Thefts schedule can be written off only to the extent that they exceed 10 percent of your adjusted gross income, minus $100 and any insurance payments. Your adjusted gross income, or AGI, is your taxable income after tax credits, exemptions and deductions—the amount of money you actually pay tax on. If your household made $80,000 in 2016, and your AGI was $60,000, you’d need a loss of more than $6,100 before you could deduct a single dime. Even then, the amount is limited to the part of the loss that’s more than $6,100 so you would need to have a significant loss to be able to write anything off..

These are both fairly rare and complex situations that should be reviewed with a financial professional.

Courtesy of iii.org There are more than a half-million professionals employed within the U.S. property/casualty insurance market. And, if you ask many of them how they got into the industry, most will call it a lucky break. My such stroke of luck occurred decades ago. I was working for a real estate developer, the housing market took a(nother) crash, so I needed to find work. A survey of the marketplace introduced the tremendous opportunities in the insurance field and brought me a wonderful, rewarding career. I highly recommend it!

The insurance field brings a meaningful job. This is an industry that helps protect people and their finances. Insurance makes things happen. You need it to drive a car, build a home (or rebuild one after a disaster), to leave loved ones financially secure, to borrow money to build a business – and so on. Check out InsureMyPath for insight into the profession and a review of the types of career roles.

For a student considering a college curriculum, there are universities with a risk management and insurance curriculum throughout the U.S. Among them is the insurance program at Florida State University.

What do young professionals think of the insurance field? The view themselves as “secret saviors” because they help people rebuild after disaster. There are a lot of jobs, and room for self-development and advancement. Join us!

Courtesy of iii.org. Homeowners and businesses in California’s Butte, Sutter and Yuba counties who have flood insurance will be covered if the Lake Oroville Dam’s auxiliary spillway fails, according to the Insurance Information Institute (I.I.I.). Revised forecasts call for about 10 inches of rain heading to the area according to the LA Times.

Roughly 50,047 single- and multi-family residential homes could be damaged with an estimated reconstruction cost value of $13.3 billion if the Oroville Dam in California were to fail completely, according to new data analysis from CoreLogic that included the six primary counties in that area.

“The potential for flooding poses a significant threat to life and property in these northern California counties and forced the evacuation of almost 200,000 of residents,” said Janet Ruiz, the I.I.I.’s California Representative. “Standard homeowners, renters and business insurance policies do not cover flood-caused damage. A separate flood insurance policy is needed.” Lake Oroville Dam is in Butte County.

Flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies. NFIP policies have a 30-day waiting period before the coverage is activated. Excess flood insurance policies are also available from some private insurers if additional coverage is needed above and beyond the basic FEMA NFIP policy. To learn more about flood insurance, visit the FloodSmart.gov.

If your home or business is near a river, lake, stream, creek, dam or other body of water, the I.I.I. recommends taking these three steps in order to assess your property’s flood risks.

• Contact your insurance professional. Take the time to ask questions and be sure you understand all of your insurance options. It will help you make informed decisions about your insurance coverage.
• Prepare an emergency plan. The I.I.I.’s free mobile app, Know Your Plan, makes it easy to be ready when disaster strikes. Preparedness information is also available from FEMA’s Ready.gov and the National Oceanic and Atmospheric Administration’s (NOAA) Weather Ready Nation.
• Conduct a home inventory. Documenting your belongings will help you buy the right amount, and type, of insurance. A home inventory also makes claim filing easier and can be used to document financial losses when filing tax returns or applying for post-disaster financial assistance. Using the I.I.I.’s Know Your Stuff app will ensure you have an updated home inventory, accessible anywhere, any time.