Typically, insurance policies (e.g., homeowners, automobile, and watercraft) include initial limits of “primary” liability that responds to legally based judgments against you or your family members. However, these are commonly limited to $300,000 or $500,000, making them inadequate in today’s litigious society where multi-million dollar judgments are all too common: these judgments are based on current and future earnings. In that event, an Excess Liability or “Umbrella” policy kicks in when a lawsuit judgment exceeds the limit on your homeowner’s and auto policies.
A key strategy in wealth preservation is the maintenance of comprehensive personal liability protection. That’s why we urge our clients to consider the maximum net worth they are willing to risk should such lawsuits occur. Our agency has the ability to place up to $100,000,000 in personal umbrella policies, and our recommendation is to maintain Excess/Umbrella Liability protection at a minimum limit of $5,000,000.
We believe there are two key components that, whenever possible, be included in a comprehensive Excess/Umbrella policy:
Uninsured/Underinsured Motorist – This important protection is provided under most primary Automobile policies. It ensures that a household member will be covered for injuries he/she receives from a negligent driver. In the event of a qualifying accident, the insurance company will pay the difference between what the uninsured/underinsured driver can pay and what the injured driver would be entitled to as if the uninsured motorist had proper insurance in effect (covered also applies in “hit-and-run” accidents). We encourage every client to purchase additional limits of protection, which are available as an endorsement to the Excess/Umbrella policy. This additional protection covers the bodily injury damages they cause you or a family member.
Ensuring a Proper Defense – Most clients are unaware of how their defense would be managed by their insurance company in the event of a lawsuit brought against them or a family member. Three specific items to request include:
- Outside the Limits – All covered defense costs are “outside” the limit of Excess/Umbrella coverage, thus preserving the full Excess/Umbrella coverage limit for judgments against you.
- Expanded Defense – A sub-limit of coverage will apply to the reasonable expenses for your preferred law firm to review and consult on the defense offered by the policy.
- Reputational Damage – Some policies will also provide a sub-limit to cover the fees of a public relations firm to protect your reputation within your community.
Our clients’ needs evolve over time so we want to reinforce the following coverage options that could be critical to maintaining a proper Personal Liability Program. Please make your insurance advisor aware of any related exposures that you or a family member may have to any of the following:
- Trusts, Estates, & LLC’s – If your properties, vehicles, watercraft, or aircraft are owned in the name of an entity created for tax or liability purposes, be sure the entity is named on your Primary and Excess/Umbrella policies as an Additional Insured.
- Non-Profit Director’s & Officer’s Liability – Protects unpaid board members or trustees of charitable organizations against lawsuits involving a variety of wrongful acts such as sexual harassment, discrimination, libel, slander, invasion of privacy, wrongful termination, and plagiarism.
- Family Trust Liability – Covers damages resulting from a negligent act, error/omission, or breach of duty while serving as a trustee of a family trust.
As we see time and time again, no home is completely safe from the risk of flooding. Flood insurance can be the difference between recovering or being financially devastated. Just one inch of water in a home can cost more than $25,000 in damage—why risk it?
Do You Need Flood Insurance?
- FACT: Homeowners and renters insurance does not typically cover flood damage.
- FACT: More than 20% of flood claims come from properties outside high-risk flood zones.
- FACT: Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.
- FACT: Most federal disaster assistance comes in the form of low-interest disaster loans from the U.S. Small Business Administration (SBA) and you have to pay them back. FEMA offers disaster grants that don’t need to be paid back, but this amount is often much less than what is needed to recover. A claim against your flood insurance policy could, and often does, provide more funds for recovery than those you could qualify for from FEMA or the SBA — and you don’t have to pay it back.
It’s easy to see that having flood insurance provides important recovery help. The most common flood insurance is offered through the federally regulated program known as the National Flood Insurance Program (NFIP) with options for your home only or home and contents.
- The maximum available coverage limit for the dwelling is $250,000.
- The maximum available coverage limit for contents in your home is $100,000
What if you need more than $250,000 worth of coverage for your home or more than $100,000 of coverage for your contents? Excess Flood insurance is available through private companies.
Federal Flood Insurance – What is Covered vs. What is Not
What Qualifies as a Flood?
Water has to cover at least 2 acres of land that’s normally dry, or has to have damaged two or more properties (one being your home). Also, the water has to come from:
- Overflowing inland or tidal waters
- Unusual, rapid accumulation or runoff of surface waters from any source
- Mudflow (that’s mud carried by a flow of water, creating a river of mud)
- You’re also covered when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
*Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is not considered a flood. Wind driven rain is not covered.
Please do not wait for an impending storm to purchase federal flood insurance. There’s usually a 30-day waiting period. Some private policies offer a 15-day waiting period.
Gulfshore Insurance is proud to announce that Andrea Pelletier, Client Advisor and Partner, is now Chartered Private Risk and Insurance Advisor (CPRIA) certified. The CPRIA designation is given to individuals who successfully complete the CPRIA curriculum, comprised of six segments with corresponding exams offered through the Private Risk Management Association.
“This prestigious designation is a testament to Andrea’s eagerness to provide her clients with expert service,” said Brad Havemeier, President and CEO of Gulfshore Insurance.
This certification shows the dedication Andrea has to the insurance industry, as well as, her commitment to serving our high-net-worth clients, who have a unique set of property and liability exposures created by their assets and lifestyle.
The most significant change to the 6th Edition of the Florida Building Code is that it now requires the minimum elevation of newly constructed homes in Flood Zones A or V to be 1+ foot above the base elevation. The base elevation is the height shown on the Flood Maps as the required level to build homes, and is what flood insurance premiums are based upon. Previously, new homes were required to be built equal to the base elevation. Now, builders must add an additional foot to raise the lowest floor to at least 1’ above the base flood elevation.
This is important for all homeowners in Zones A and V to be aware of when reviewing their current Homeowner Policy. There is coverage on the Homeowner Policy entitled “Building Law or Ordinance,” which pays additional monies to bring your home up to code should you need to rebuild it in the event of major damage. Under this policy provision, homeowners can select 0%, 10%, 25%, or 50% of the dwelling coverage shown on the policy.
Should a home sustain damage equal or greater than 50% of the home’s market value, Collier County, in accordance with FEMA’s Substantial Improvement/Substantial Damage Rule, will mandate that the remaining structure be demolished and rebuilt to the current building code. As such, homeowners will likely see an increased cost to rebuild and raise the foundation a foot above base elevation per the new code. Homeowners may have chosen a low limit of “Building Law or Ordinance” coverage if their home was built recently since it met building codes. Now is the time to review the policy for proper coverage on the “Building Law or Ordinance” provision.
When advising buyers who are new to Florida or inexperienced with hurricanes, here are 10 important reminders:
- For homes with a replacement value over $1 million – their insurance agent should be reviewing package insurance policy options that give them an opportunity to purchase their insurance from one of the premier insurance carriers such as Chubb, AIG, or Pure. These carriers do the best job with paying claims and covering the loss assessment claims from their associations and golf clubs.
- Insure the home to its full replacement value; this is different than market value. Full replacement value is what it would cost today to rebuild the home as new.
- Be sure that the homeowner policy covers wind driven rain.
- Be sure that coverage for the screen enclosure is added by endorsement if it is excluded under dwelling for losses as a result of hurricane.
- Purchase full limits for mold coverage – the maximum is $50,000.
- Purchase flood insurance for the main house and the detached guest house, even when the home is in a non-flood hazard area.
- Review options for a second layer flood policy which will allow you to insure the home to value against the peril of flood.
- Have a reliable home check representative in place to be sure that the home is checked regularly and that necessary measures are taken at the time of a loss to prevent further damage that could have been avoided.
- Consider installing high impact windows/shutters if they are not already in place. Also, having a permanently installed generator is of upmost importance.
- Recommend they consult with a qualified insurance professional with a comprehensive understanding of the Florida insurance marketplace, and one who has access to the premier carriers, such as Chubb, AIG and Pure along with other reliable insurance carriers that hold A ratings by AM Best. Also, agent selection should include the agency’s roll in the claims process. In other words, does the agency have a claims advocate working on the homeowner’s behalf?