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Category: Home Insurance

Navigating Boat Liability: Why Your Home Insurance Might Not Be Enough

Posted on by Jon Blankenship

Article Overview: Understanding boating liability risks and insurance coverage options. Standard homeowners insurance provides severely limited coverage for boats and personal watercraft, leaving owners exposed to high liability risks. A specialized boat insurance policy is necessary to cover bodily injury, property damage, and environmental liabilities (like fuel spills).

Spending a weekend on the water is a staple of life in Sevier County. Whether you prefer waterskiing on Douglas Lake or taking a quiet fishing trip down the French Broad River, owning a boat offers incredible access to Tennessee’s natural beauty. However, operating a watercraft also introduces significant financial and legal risks.

As insurance professionals, we frequently speak with boat owners who misunderstand their liability exposure. Many assume their standard homeowners policy extends to their boat. Unfortunately, this assumption can lead to severe financial consequences. Here is what you need to know about boating liability and how to properly protect your assets.

Understanding Your Liability on the Water

When you captain a boat, you take on responsibility for your passengers, other boaters, and the environment. Boating liability refers to your legal obligation to pay for damages if you cause an accident. This risk generally falls into three main categories:

  • Bodily Injury: If your boat collides with another vessel, a dock, or a swimmer, you can be held responsible for their medical bills, lost wages, and legal fees.
  • Property Damage: Repairing or replacing another person’s boat, dock, or equipment can quickly cost tens of thousands of dollars.
  • Environmental Cleanup: If your boat sinks or sustains damage that causes fuel or oil to spill into the French Broad River, the law requires you to pay for the cleanup. Wreckage removal is another expensive liability that boat owners face.

The Limits of Homeowners Insurance

A common misconception is that a homeowners insurance policy provides a safety net for all personal property, including watercraft. While homeowners policies usually cover items located on your property, boats have completely different rules.

Homeowners insurance provides very limited protection for watercraft. Typically, a home policy only covers small, unmotorized boats like canoes or small sailboats, and even then, the liability limit is heavily capped. If you own a motorboat, pontoon, or personal watercraft, your homeowners policy almost certainly excludes liability coverage while you operate it on the water. Relying on your home insurance means you are likely navigating local lakes completely underinsured.

The Value of Specialized Boat Insurance

To bridge this massive coverage gap, you need a dedicated boat insurance policy. Specialized watercraft insurance is designed specifically for the unique risks of the water.

A standard liability-only boat policy is often highly affordable and covers the core risks: bodily injury and property damage you cause to others. More comprehensive policies will cover fuel spill liabilities, wreckage removal, and physical damage to your own boat.

When you navigate busy waterways like Douglas Lake during peak summer weekends, having a dedicated policy ensures that an unexpected accident does not jeopardize your financial security.

Actionable Advice for Sevier County Boaters

To ensure you have the right protection before your next launch, follow these steps:

  1. Read Your Current Policy: Never assume coverage. Check your homeowners policy specifically for watercraft exclusions.
  2. Purchase Standalone Boat Insurance: Secure a policy that matches the size, speed, and value of your vessel. Make sure it includes coverage for fuel spills and wreckage removal.
  3. Consider an Umbrella Policy: If you frequently host guests on your boat or own a high-value vessel, a personal umbrella policy provides an extra layer of liability protection above your standard boat and home limits.
  4. Take a Boating Safety Course: The Tennessee Wildlife Resources Agency (TWRA) offers safety courses. Completing one makes you a safer boater and can often earn you a discount on your insurance premiums.

Owning a boat should be a source of relaxation, not a source of financial anxiety. By understanding your liability and securing the correct coverage, you can enjoy Sevier County’s beautiful waters with complete confidence.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to get started!

Flood Damage vs. Water Damage: What Homeowners Must Know

Posted on by Jon Blankenship

Article Overview: Unsure about your coverage? Learn the key differences between flood and water damage to ensure your home is fully protected against unexpected water issues.

Discovering unwanted water in your house ranks among the most stressful experiences a homeowner can face. Whether it stems from a burst pipe or a heavy storm, the immediate focus is always on stopping the flow and mitigating the damage. However, once the water clears, a critical question emerges: will your insurance cover the repairs?

The answer depends entirely on the source of the water. The insurance industry draws a strict line between water damage and flood damage. Understanding this distinction is not just a matter of semantics; it determines how your policy responds to a claim and whether you face significant out-of-pocket expenses.

What is Water Damage? You May be Surprised…

In the context of homeowners insurance, water damage typically refers to water that originates from inside the home or from a sudden, accidental structural failure. It generally involves clean water that escapes from plumbing, appliances, or a sudden breach in your home’s exterior that lets rain inside. The defining characteristic of covered water damage is that the event is sudden, accidental, and originates from a localized source.

Common Water Damage Scenarios

Several everyday incidents fall under the umbrella of standard water damage. Understanding these scenarios helps clarify what a standard policy is designed to protect against.

  • Burst Pipes: A frozen pipe that bursts during winter and damages your drywall and flooring.
  • Appliance Failures: A washing machine hose that ruptures, or a water heater that suddenly fails and leaks across the basement floor.
  • Roof Leaks: A storm blows shingles off your roof, allowing heavy rain to enter the attic and ceiling.
  • Accidental Overflows: A bathtub left running that overflows and damages the ceiling of the room below.

How Standard Homeowners Insurance Responds

Most standard homeowners insurance policies cover sudden and accidental water damage. If a pipe bursts and ruins your hardwood floors, your policy will likely pay to repair the floors and fix the resulting damage.

However, insurance relies on the premise of sudden accidents. If a slow, hidden leak causes mold and rot over several months due to neglected maintenance, your claim will likely be denied. Insurance companies expect homeowners to perform routine upkeep. Gradual damage resulting from wear and tear or lack of maintenance falls outside standard coverage parameters.

What is Flood Damage? It’s Specific…

Flood damage is defined by the source and the behavior of the water. The Federal Emergency Management Agency (FEMA) and the insurance industry define a flood as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area, or of two or more properties.

Crucially, floodwater originates from the outside and flows indoors. It is an external event driven by nature or the failure of external infrastructure, affecting multiple areas simultaneously.

Common Flood Damage Scenarios

Flood damage events are typically tied to severe weather or large-scale geographical issues. Examples include:

  • Overflowing Bodies of Water: A river, lake, or stream breaches its banks after heavy rainfall and enters your home.
  • Storm Surges: Coastal flooding driven inland by hurricanes or severe tropical storms.
  • Surface Water Runoff: Heavy, localized rain that the ground cannot absorb, causing water to pool and flow into your ground floor or basement.
  • Mudflows: A river of liquid and flowing mud on the surfaces of normally dry land areas, often following heavy rain.

The Necessity of Flood Insurance

Here is the most critical fact regarding flood damage: a standard homeowners insurance policy almost never covers it. If an overflowing river destroys your basement, your standard policy will not provide compensation.

To protect against this specific peril, you must purchase a separate flood insurance policy. You can secure this coverage through the National Flood Insurance Program (NFIP), which is managed by FEMA, or through private flood insurance providers. Because standard policies exclude flood damage, failing to carry a separate flood policy leaves you entirely vulnerable to the devastating financial impact of natural flooding.

Key Differences Between Flood and Water Damage

To navigate your insurance coverage effectively, you must recognize the dividing lines between these two categories. Insurance adjusters evaluate claims based on these specific parameters.

The Rule of the Source

The primary differentiator is the source of the water. If the water originates from inside the home’s plumbing or appliances, it is generally classified as water damage. If the water touches the ground outside before entering your home, the insurance industry classifies it as a flood.

For instance, if heavy rain enters through a wind-damaged window, it is water damage. If that same heavy rain pools in your yard and flows under your front door, it is a flood.

Widespread vs. Localized Impact

Flood damage usually affects a wide area, impacting multiple homes, entire neighborhoods, or two or more acres of land. Water damage is typically localized to your specific property. A burst pipe ruins your living room; an overflowing river floods your entire street. This distinction of scale is a central component of FEMA’s official flood definition.

Practical Tips for Homeowners

Securing your home against water-related perils requires proactive planning. Waiting until you find standing water in your home is too late to review your insurance policy. Follow these practical steps to ensure you maintain robust coverage.

Review Your Policy Limits Thoroughly

Examine your current homeowners insurance policy to understand exactly what is covered and what is excluded. Look specifically for clauses related to water backup. Many standard policies do not automatically cover water that backs up through sewers or drains. You often need to add an inexpensive endorsement to your policy to secure this specific protection.

Assess Your Flood Risk

Do not assume you are safe from flooding just because you live far from the coast. A significant percentage of flood claims originate from moderate-to-low risk areas. Utilize FEMA’s online flood maps to determine your property’s specific flood zone. Even if your mortgage lender does not require you to carry flood insurance, purchasing a policy is a smart, forward-thinking strategy to protect your primary asset.

Install Smart Water Leak Detectors

Embrace modern technology to mitigate risk. Smart water leak detectors can alert your smartphone the moment they sense moisture near water heaters, washing machines, or under sinks. Some advanced systems can even automatically shut off your home’s main water valve if they detect a massive pressure drop, preventing thousands of dollars in sudden water damage.

Secure Your Water Damage Protection

Understanding the critical differences between flood damage and water damage empowers you to make informed decisions about your insurance strategy.

Contact Brandon Patterson from our team at brandon@ownbyinsurance.com to review your current water damage limits, inquire about sewer backup endorsements, and seriously evaluate the benefits of adding a standalone flood insurance policy to your portfolio.

Holiday Parties and Hidden Risks: Are You Covered for Potential Liabilities?

Posted on by Jon Blankenship

The holiday season is a time for festive cheer, warm gatherings, and creating lasting memories with friends and family. But as a host, holiday parties and hidden risks can ruin a good time. You are responsible for more than just the playlist and appetizers. Behind the celebration is a layer of personal liability risks that many people overlook.

Understanding these potential risks is the first step toward protecting yourself, your home, and your guests. This blog will walk you through common liabilities associated with holiday parties, offer practical tips for safe hosting, and explain how insurance can provide a crucial safety net.

The Uninvited Guest: Understanding Host Liability

When you open your doors to guests, you assume a degree of responsibility for their safety and well-being. This concept, often called “social host liability,” can have significant financial and legal consequences if something goes wrong. The risks are not just theoretical; a simple slip or an over-served guest can lead to serious problems.

Let’s explore the most common liability risks you face when hosting a holiday get-together.

Slips, Trips, and Falls

Your home can become an obstacle course during a busy party. Wet floors from snowy boots, a misplaced rug, a stray extension cord for holiday lights, or a poorly lit staircase can easily cause a guest to slip and fall. If a guest is injured on your property due to what could be considered a hazardous condition, you could be held liable for their medical bills and other damages.

Property Damage

More people in your home means a higher chance of accidental damage. A guest might knock over an expensive vase, a child could draw on your new sofa, or a fire could start from a candle left too close to the curtains. While some damage is minor, significant incidents could leave you with a hefty bill for repairs or replacement. Your liability extends to your guests’ property as well; if someone’s coat is stolen from the coat rack, you might be considered responsible.

Alcohol-Related Incidents

This is one of the most significant areas of risk for party hosts. In many states, social host liability laws hold you responsible for accidents caused by guests who became intoxicated at your party. If an over-served guest gets into a car accident after leaving your home, you could be sued for injuries or damages they cause. This includes DUIs, property damage, and even tragic fatalities. The liability doesn’t stop at the driveway.

How to Be a Safe and Savvy Holiday Host

Mitigating risk doesn’t mean canceling your party. It means being proactive and thoughtful. By implementing a few simple strategies, you can create a safer environment for everyone and reduce your personal liability.

Prepare Your Home for Guests

  • Clear the Way: Shovel and salt your walkways, driveway, and porch. Inside, secure rugs, tape down electrical cords, and ensure all areas are well-lit.
  • Create Safe Zones: If you have pets that are nervous around crowds, secure them in a separate room. Designate off-limit areas, especially if you have delicate items or potential hazards.
  • Fire Safety First: Check your smoke detectors. Use flameless candles when possible, and keep any real flames far from flammable materials like curtains, wrapping paper, and your Christmas tree.

Serve Alcohol Responsibly

  • Food is Your Friend: Always serve plenty of food, especially high-protein snacks. This helps slow the absorption of alcohol.
  • Offer Alternatives: Provide a fun and festive selection of non-alcoholic beverages like mocktails, sparkling cider, and flavored seltzers. Make sure water is readily available.
  • Don’t Play Bartender: Avoid pre-mixing drinks to be extremely strong. Consider hiring a professional bartender who is trained to recognize signs of intoxication and can politely cut off guests.
  • Set a Last Call: Stop serving alcohol at least one hour before you expect the party to end. Switch to coffee, tea, and water.

Plan for Safe Departures

  • Arrange Transportation: Encourage guests to use ride-sharing services or designate a sober driver. Keep the numbers for local taxi services handy.
  • Offer a Place to Stay: If a guest has had too much to drink, do not let them drive. Offer them your guest room or a couch for the night.
  • Be Firm: Be prepared to take away a guest’s keys if you believe they are unfit to drive. Their temporary frustration is far better than a potential accident.

Your Financial Safety Net: Insurance Coverage

Even with the best precautions, accidents can happen. This is where your insurance policies become your most important defense. Having the right coverage ensures that a holiday mishap doesn’t turn into a long-term financial disaster.

Homeowners or Renters Insurance

Your standard homeowners or renters insurance policy is your first line of defense. It typically includes personal liability coverage, which can help pay for legal fees, medical bills, and other damages if someone is injured on your property and you are found legally responsible. Check your policy to understand your coverage limits. Most standard policies offer between $100,000 and $300,000 in liability protection.

Personal Umbrella Policy

For an extra layer of protection, consider a personal umbrella policy. This is supplemental liability insurance that kicks in when the liability limits on your home or auto insurance are exhausted. For a relatively low annual cost, an umbrella policy can provide an additional $1 million or more in coverage. This can be invaluable in a major lawsuit, such as one resulting from a serious car accident caused by an intoxicated guest.

Event-Specific Insurance

If you are hosting a very large event, especially at a rented venue, you might need to purchase special event insurance. This type of policy can cover liabilities associated with the specific event, including alcohol-related incidents (liquor liability) and potential property damage to the venue. Some venues may even require you to have this coverage.

Host with Peace of Mind

The holidays should be about celebration, not stress. By taking practical steps to ensure your guests’ safety and verifying you have the right insurance coverage, you can protect yourself from unexpected liabilities. Before you send out the invitations, take a moment to review your insurance policies and speak with your agent. A quick conversation now can give you the peace of mind to enjoy the season and host a party that’s memorable for all the right reasons.

Still have questions? Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to get the answers you need.

Fall Flood Insurance Risks: Why the Right Coverage Matters Most This Season

Posted on by Jon Blankenship

As autumn arrives and leaves begin their colorful transformation, many homeowners focus on seasonal preparations like winterizing their homes and clearing gutters. However, one critical aspect often gets overlooked: flood insurance risks coverage.

Fall presents unique flooding challenges that can catch property owners off guard, making this season particularly important for evaluating your flood protection. The first thing to note is that most Home Insurance policies exclude coverage for flooding. So, what else do you need to know, and how can you get covered?

Why Fall Creates Perfect Flooding Conditions

Increased Precipitation Patterns

Fall weather systems bring distinct flooding challenges. As warm air masses collide with cooler temperatures, atmospheric conditions create more intense precipitation events. The National Weather Service reports that autumn accounts for approximately 25% of annual flood-related insurance claims, despite representing just three months of the year.

Rainfall patterns become less predictable during fall months. Unlike summer’s brief afternoon thunderstorms or winter’s steady precipitation, autumn storms often arrive as prolonged systems that saturate soil and overwhelm drainage systems. These extended weather events create cumulative flooding effects that can persist for days or weeks.

Hurricane Season Overlap

Hurricane season officially runs from June through November, with peak activity occurring between August and October. Fall hurricanes present unique risks because they often combine with existing weather fronts, creating compound flooding scenarios.

Recent data from the National Hurricane Center shows that 40% of hurricane-related flood damage occurs during September and October storms. These late-season hurricanes frequently interact with cooling air masses, producing extraordinary rainfall amounts over wide geographic areas.

Hurricane Florence in 2018 exemplifies this pattern. Despite weakening to a tropical storm, Florence dumped over 30 inches of rain across North Carolina during September, causing catastrophic inland flooding far from coastal areas. Many affected properties had never experienced flooding and lacked adequate insurance coverage.

Ground Conditions and Drainage Challenges

Autumn’s changing landscape creates additional flood vulnerabilities. Fallen leaves clog storm drains, gutters, and natural waterways, reducing their capacity to handle normal water flow. A single heavy rainfall event can quickly overwhelm compromised drainage systems.

Soil conditions also shift during fall. As vegetation dies back and root systems become less active, soil loses its natural water absorption capacity. Compacted ground from summer drought conditions may struggle to absorb autumn precipitation, leading to increased surface runoff.

Geographic Risks Beyond Traditional Flood Zones

Inland Flooding Patterns

Many people associate flood insurance with coastal properties or homes near major rivers. However, fall flooding frequently affects inland areas through flash floods and urban flooding scenarios. The Federal Emergency Management Agency (FEMA) reports that 20% of flood claims come from properties outside high-risk flood zones.

Inland communities face particular vulnerability during fall because they often lack robust flood preparedness infrastructure. Mountain regions experience sudden snowmelt combined with rainfall, creating flash flood conditions. Urban areas struggle with overwhelmed storm water systems as autumn precipitation exceeds summer design capacities.

The Insurance Coverage Gap

Standard Homeowners Policies Don’t Cover Floods

One of the most critical misconceptions about property insurance involves flood coverage. Standard homeowners and renters insurance policies specifically exclude flood damage. This exclusion applies regardless of flood cause – whether from hurricane storm surge, river overflow, or urban drainage failure.

Insurance industry surveys reveal that 85% of homeowners incorrectly believe their standard policies include flood protection. This knowledge gap leaves millions of properties financially vulnerable to fall flooding events.

National Flood Insurance Program Basics

The National Flood Insurance Program (NFIP) provides the primary source of flood coverage for American properties. Administered by FEMA, the NFIP offers standardized policies available through licensed insurance agents nationwide.

NFIP coverage includes two main components:

  • Building coverage protects the structure and permanently installed items
  • Contents coverage protects personal belongings and movable property

However, NFIP policies require a 30-day waiting period before coverage becomes effective. This timing requirement makes fall preparation particularly important, as you cannot purchase coverage when severe weather threatens your area.

Private Market Alternatives

Private flood insurance has expanded significantly over the past decade, offering alternatives to NFIP coverage. Private insurers often provide higher coverage limits, additional protection options, and sometimes more competitive pricing.

Companies like Neptune, Palomar, and Wright National offer private flood policies with features like:

  • Coverage amounts exceeding NFIP limits
  • Replacement cost coverage for personal property
  • Additional living expenses during displacement
  • Business interruption coverage for commercial properties

Review Current Coverage

Start by examining your existing insurance policies. Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to clarify exactly what flood-related coverage you currently have – or don’t have – and the options you can choose from to get covered.

A Homeowner’s Guide to Additional Living Expense Insurance

Posted on by Jon Blankenship

Life can be unpredictable, it’s one of the many reasons that insurance is necessary. But as a homeowner, it’s also essential to prepare for the unexpected. Whether it’s a fire, flood, or storm that temporarily renders your home uninhabitable, knowing your insurance covers more than just repairs can provide significant peace of mind. This is where additional living expense (ALE) insurance comes into play.

If you’re unfamiliar with ALE insurance or how it works, this guide breaks it down step-by-step, ensuring you have all the information needed to safeguard your family in challenging times.

What Is Additional Living Expense Insurance?

Additional Living Expense insurance is part of your homeowners, renters, or condo insurance policy. It covers the extra costs you’ll face while your home is being repaired or rebuilt after a covered event, such as a natural disaster or fire. These are costs you wouldn’t normally incur if you were able to live at home.

Examples of expenses covered by ALE:

  • Hotel accommodations or temporary rental housing
  • Increased food costs due to dining out
  • Storage fees for your belongings
  • Laundry services if you don’t have access to a washer and dryer
  • Pet boarding fees
  • Relocation or transportation costs

ALE coverage typically ranges from 10% to 20% of your home’s dwelling coverage limit. For instance, if your homeowners insurance covers $300,000 for your dwelling, your ALE coverage would likely fall between $30,000 and $60,000.

Benefits of ALE Insurance for Homeowners

Having ALE insurance ensures you and your family can maintain stability and comfort during tough times. Here’s why it’s essential:

  • Financial Relief: Covers unexpected out-of-pocket expenses, like paying for a hotel or temporary apartment.
  • Maintains Normalcy: Allows you to uphold your usual standard of living, even away from home.
  • Stress Reduction: Eases the logistical and financial burdens of displacement, letting you focus on getting your home back to normal.
  • Protects Your Budget: Home repair costs alone can be overwhelming; ALE ensures additional living expenses don’t add to the stress.

How Additional Living Expense Insurance Works

To better understand how ALE coverage functions, imagine this scenario:

A water pipe bursts in your home, causing significant flooding. The damage requires months of repairs, leaving your home uninhabitable. During this time:

  1. You move into a nearby hotel, which costs $150 per night.
  2. Since you no longer have a kitchen, you eat out, spending an additional $300 each week.
  3. You board your dog because pets aren’t allowed in the hotel, which costs $100 per week.

These expenses are above your usual budget, and ALE coverage reimburses these additional costs. However, you must keep receipts and documentation for all expenses as the insurance provider will need proof to process your claim properly.

Pro Tip: ALE insurance covers only the difference between your standard living costs and your temporary increased expenses. For example, if you usually spend $100 per week on groceries but now spend $300 eating out, only the extra $200 is reimbursable.

Key Differences Between ALE and Loss of Use Insurance

Though ALE and loss-of-use insurance are similar, they aren’t interchangeable.

  • ALE Insurance specifically covers the additional costs incurred due to displacement, such as food, lodging, and travel.
  • Loss of Use Insurance covers broader expenses, such as loss of income if you were renting part of your home to a tenant. It’s more commonly included in homeowners insurance policies.

Knowing the distinctions ensures that you aren’t left with gaps in coverage.

Common Exclusions to Be Aware Of

While ALE insurance is a valuable safety net, there are certain circumstances it typically won’t cover:

  • Vacant Properties: If your home wasn’t occupied at the time of the incident.
  • Maintenance Issues: Damage caused by gradual wear and tear or lack of maintenance isn’t covered.
  • Uninsured Events: For example, if flooding occurs and your policy doesn’t include flood insurance, ALE won’t apply.
  • Illegal Activities: Claims related to incidents stemming from unlawful behavior are excluded.
  • Government Actions: If you’re displaced due to government-mandated actions, coverage likely won’t extend.

To maximize your coverage, review your policy carefully and ask your provider about potential exclusions.

The Bottom Line

Additional Living Expense insurance is a crucial yet often overlooked aspect of homeowners insurance. It ensures your family can maintain a sense of normalcy during a crisis, covering extra costs when life circumstances temporarily uproot you.

While no one hopes to need ALE coverage, having it offers tremendous peace of mind. By being proactive, knowing your policy’s limits, and keeping meticulous records, you can protect your family and finances when the unexpected occurs.

For more helpful insurance tips or to explore coverage options that fit your lifestyle, contact Brandon Patterson on our team today at brandon@ownbyinsurance.com.

How Claims Impact Your Insurance Premiums

Posted on by Ownby Insurance Service

Your insurance premium is based on many factors, from the type of coverage you choose to your overall risk profile. But one aspect that often surprises policyholders is the impact of claims on their premiums. Whether you’ve recently filed a claim or you’re thinking about it, it’s important to understand how claims can influence the cost of your coverage.

Loss History: A Snapshot of Your Risk

Your loss history, or claims history, is a critical factor insurers use to determine your premium. This is essentially a record of all the claims you’ve filed in the past. Insurers view this as a representation of your risk level – policyholders who have filed multiple claims are generally seen as more likely to file additional claims in the future.

Each insurer has its own thresholds for how claims history impacts your premiums, but generally, past claims can lead to higher premiums.

Why Does Your Loss History Matter Impact Your Insurance Premiums?

Your loss history paints a picture for your insurer. For example:

  • If you’ve experienced multiple incidents, it could indicate a higher likelihood of future claims.
  • A long history of claims, even if they’re for relatively small amounts, can label you as a higher-risk policyholder.

While you can’t change your past claims, being aware of how your loss history is assessed can influence your approach to future claims.

Claim Frequency and Size Matter

Number of Claims

In insurance, the old saying “the fewer, the better” rings true. Filing multiple claims within a short time – even for small amounts – can signal a higher risk level to your insurer. Insurers often see frequent claims as an indicator of risk-prone behavior, even if the claims themselves are low-cost.

To manage your premium effectively:

  • Avoid filing claims for minor damages that fall close to or just above your deductible.
  • Consider whether the cost of repairing or replacing an item out-of-pocket is more affordable in the long run.

Claim Size

The size of the claim matters just as much as the number. Large claims require significant payouts from the insurer. When an insurer has to pay a big settlement for a loss, the chances are your premium will move upward to reflect the cost.

For instance, a single high-value claim – such as a major accident or property damage – might have a bigger impact on premiums than several smaller claims.

The Impact of Your Deductible Choice

Your insurance deductible – the amount you agree to pay out-of-pocket before your insurance kicks in – also plays a major role in claims and premiums. Filing claims for damages that barely exceed your deductible can lead to higher premiums in the future, meaning you’re left paying more overall.

The Value of a Claims-Free Credit

Insurance providers often reward policyholders who don’t file any claims over a certain period. This is commonly known as a claims-free discount or credit. Maintaining a claims-free record demonstrates a lower risk level, which insurers may reward with a reduced premium or special discounts.

Filing a claim could result in the loss of this credit, which can significantly increase your premiums in the long term. Depending on your provider, the impact of losing a claims-free credit can sometimes outweigh the benefit of filing a minor claim.

“Then Why Do I Even Have Insurance?”

All this doesn’t mean you should avoid filing claims entirely. Insurance exists to protect you in situations where the losses are too great to bear out-of-pocket. However, carefully evaluating the situation and considering the long-term implications can help you balance coverage with premium stability.

Smart Tips to Manage Insurance Claims and Premiums:

  1. Review Your Policy Carefully
    Understand your deductible amount, what types of incidents are covered, and how claims may impact things like claims-free discounts.
  2. Weigh Filing a Claim Against Out-of-Pocket Costs
    If the repair or replacement cost is close to your deductible, it may save you money long-term to pay out-of-pocket rather than file a claim.
  3. Keep Your Loss History in Mind
    Evaluate how additional claims could impact your overall risk profile and premiums.
  4. Focus on Preventative Measures
    Take steps to avoid future incidents, such as securing your home, maintaining your property, or installing safety features. Proactively reducing risks can help keep your premiums manageable over time.
  5. Bundle Your Insurance Policies
    Many insurers offer discounts for bundling, which can offset increased premiums due to claims.
  6. Ask About Claims Forgiveness
    Some insurers offer “claims forgiveness” features, where your first claim won’t impact your premium. Consider whether this add-on is available and worth adding to your policy.

When to File

Ultimately, balancing the cost of a claim versus the long-term implications for your premium is key. By thinking strategically and being proactive, you can ensure your insurance remains both effective and affordable. If you’re unsure, discuss the deductibles and potential impacts of filing the claim with our team and we’ll help you understand your options – but we won’t make the choice for you. That’s your decision!

On the Horizon: Cabin and Vacation Rental Insurance Trends as 2025 Draws Near

Posted on by Ownby Insurance Service

If you are a vacation rental owner, cabin rental owner, or rental property owner, understanding the current trends in the insurance market is essential to managing and protecting your investment. The landscape in 2023 is shaped by a series of challenges and shifts that are important to consider when evaluating your insurance options. Here’s a detailed look at the trends and challenges facing the cabin and vacation rental insurance market today.

The Market Trends

We’ve all heard talk of inflations impact on our economy, and although it is down from a peak of 9% in mid-2022, its effects continue, including homeowner and vacation rental insurance markets. Elevated prices for building materials and construction labor have persisted along with the timeframes for that works completion. This adds up to make rebuilding or repairing properties a costly endeavor. For rental property owners, this means higher expected costs and the need for adequate insurance coverage to mitigate potential financial impacts.

Increased Costs Due to Natural Disasters

Natural disasters and severe weather have become a prominent concern in the cabin and vacation rental insurance market. In 2023 alone, there were 28 severe weather events with estimated costs ranging from $1 billion to $10.5 billion. Unfortunately, vacation and cabin rental properties are frequently in areas with higher risk for natural disasters because of the correlating natural beauty of those areas. Forests, mountains, and coasts are amazing, but can also be inherently risky. Rental property owners, particularly those in high-risk areas, should assess their policies to ensure sufficient protection against these increasingly common events.

Challenges in the Insurance Marketplace

Insurance companies’ willingness to provide property insurance remains low, especially in regions with a history of significant losses. This cautious stance has led many insurers to exit markets deemed too risky, leaving property owners with fewer options. Consequently, those remaining in the market may face increased premiums or restricted coverage terms.

Growth of the Excess & Surplus Insurance Market

With traditional insurers pulling back, the excess & surplus (E&S) insurance market has expanded to fill the gap. While E&S insurers can offer more specialized coverage options, they often come with higher rates and/or reduced coverage compared to standard insurance policies. Additionally, different regulations governing E&S insurance can complicate decision-making for property owners unfamiliar with these policies and their restrictions or language.

What Rental Property Owners Can Do

Given these trends and challenges, vacation and cabin rental owners should take proactive steps to safeguard their assets:

  • Regularly Review Insurance Policies: Ensure that your coverage is up-to-date and accounts for current rebuilding costs and potential natural disaster risks.
  • Explore Additional Coverage Options: Consider E&S policies if traditional insurance is unavailable, but be mindful of the potential trade-offs in terms of cost and coverage.
  • Stay Informed About Market Changes: Keep abreast of news and developments in the insurance sector to anticipate and adapt to changes that may affect your coverage needs.

Talk with those that understand this market and can help guide you. Brandon Patterson and our experienced team can help you navigate the cabin and vacation rental insurance market. With knowledge, property owners can better position themselves to protect their investments and maintain financial resilience in the face of unforeseen events.

Reach out to Brandon today at brandon@ownbyinsurance.com for help with your coverage needs!

Steps Property Owners Can Take to Mitigate Natural Disaster Risks

Posted on by Ownby Insurance Service

Natural disasters can strike without warning, causing immense damage and disruption. For homeowners, commercial building owners, property managers, and real estate investors, understanding how to reduce risks and prepare for potential impacts is not only important for your investment – it’s important for safety. And while they can’t be completely prevented, the impacts from disasters may be lessened with the right measures.

Fire Prevention and Protection

Regular maintenance plays a crucial role in fire prevention. Ensure that electrical systems, heating equipment, and other potential fire hazards (e.g., fireplaces and chimneys) are routinely inspected by qualified professionals. Clear your property of debris, dead vegetation, and any flammable materials.

Your smoke alarms are your first line of defense in detecting a fire. Test them frequently to ensure they work properly and replace batteries at least once a year. Consider installing interconnected smoke alarms for enhanced safety.

Fire extinguishers should be accessible, fully charged, and inspected annually. Make sure everyone on the property knows how to use them effectively. Choose extinguishers that are suitable for different types of fires (e.g., electrical, grease) and placed in the spaces where these issues would be more likely to occur.

For commercial buildings, understand where sprinklers are required – but also where they could do the most good. A sprinkler protection system could mean the difference between fire damage and a total loss in a fire. Have them regularly inspected and tested by professionals. You might even save on your insurance premium if these measures are in place.

Understand Your Risks

Identify the specific natural disasters that could impact your property. Are you in a flood plain? The Federal Emergency Management Agency (FEMA) has flood maps available that identify zones of flood risk. Are you in a higher risk area for wildfires? FEMA has risk zone maps for that as well. What about earthquakes? Check out the info from the U.S. Geological Survey for that risk information.

Know Your Coverage

Ensure your insurance policies cover the natural disasters that pose the greatest risk to your property. Typically, property insurance policies do not include coverage for floods, earthquakes, or sinkholes, so additional policies might be necessary. Work with our agents to tailor your coverage to the specific risks associated with your property. Regularly review your policies to ensure they align with any changes in risk or property value.

Taking proactive steps to mitigate disaster risks can save property owners significant time, money, and stress. Implementing fire prevention measures, understanding specific risks, and ensuring adequate insurance coverage are key strategies for safeguarding your investments. By staying informed and prepared, you can strengthen your property’s resilience against natural disasters.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com for more information on risk reduction for your property.

Why Aren’t all Insurance Policies the Same?

Posted on by Ownby Insurance Service

It’s a reasonable question to ask. If I am looking at a home insurance policy with insurance company A versus one with company B – shouldn’t they offer the same coverage? Isn’t cost the determining factor in the difference? The answer, however, is much more complicated.

Insurance companies in Tennessee file policies and rates with the Department of Insurance. These policies contain the specifics of what they’re going to offer, and the rate schedule for what they intend to charge. They are based on specific calculations for each company, and are often very different. While many use “forms” from the Insurance Service Office (ISO) that are the same, changes and even proprietary forms are use across the industry. So, what do you need to know about how and why they’re different? Let’s review it.

The Key Policy Differences You Should Know

1. Limits on Amounts of Coverage

One of the fundamental differences between insurance policies is the limit on the amounts of coverage they provide. Coverage limits dictate the maximum amount an insurer will pay for a covered loss. For example, a homeowners’ policy may have different limits for dwelling, personal property, and liability coverages. It’s essential to review these limits and ensure they align with your needs and financial situation. Insufficient coverage can leave you vulnerable, while excessive coverage might result in higher premiums than necessary.

2. Policy Exclusions

Policy exclusions are specific conditions or circumstances under which the insurance company will not provide coverage. These exclusions vary widely between policies and can significantly impact the protection you receive. Common exclusions include natural disasters, acts of war, and certain high-risk activities. Understanding these exclusions is critical, as they can affect your claims process and financial recovery in the event of a loss.

3. Named Perils vs. “Open” Perils Coverage

Insurance policies generally fall into two categories regarding covered perils:

  • Named Perils: This type of policy only covers losses caused by perils explicitly listed in the policy, such as fire, theft, or vandalism. If a peril is not named, it is not covered.
  • Open Perils (or All-Risk): These policies provide broader coverage, protecting against all perils unless specifically excluded in the policy. While typically more expensive, all-risk policies offer broader protection.

Choosing between named perils and all-risk coverage depends on your specific needs, risk exposure, and budget considerations.

4. Options for Endorsements

Endorsements, also known as riders or add-ons, allow policyholders to customize their insurance policies by adding specific coverages or modifying existing ones. These options enable you to tailor your policy to better fit your unique circumstances. Common endorsements include:

  • Extended Replacement Cost: Provides additional coverage for rebuilding costs that exceed the policy’s stated limits.
  • Personal Property Replacement Cost: Ensures that lost or damaged personal property is replaced at current market value rather than depreciated value.
  • Water Backup Coverage: Covers damage caused by water backing up through sewers or drains.

Reviewing available endorsements and selecting those that address your particular needs can enhance your overall protection and peace of mind.

Why Do These Policies Change Over Time?

Insurance companies continually adapt their policies to address evolving risks and limit their exposure. These changes are often based on extensive data analysis, loss history, and actuarial studies. For instance, following a surge in natural disasters, insurers may revise coverage terms, exclusions, or premium rates to reflect the increased risk. Staying informed about these adaptations is essential, as they can impact your coverage and the affordability of your policy.

Navigating the world of insurance can be complex, but understanding the key differences between policies is crucial for making informed decisions. By considering coverage limits, policy exclusions, types of coverage, and available endorsements, you can select a policy that provides the protection you need. An agent can help you understand the coverages and options available to you. Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to get the support you need today!

Why Do Natural Disasters Elsewhere Impact Insurance Rates Locally?

Posted on by Ownby Insurance Service

A hurricane in Florida. A flood in New York. A wildfire in Colorado. What do any of these have to do with Tennessee’s insurance rates? It would be easy to say, “Oh, that’s just the insurance companies charging us for money they had to pay for other claims.” However, it goes much deeper than that, so let’s discuss why losses elsewhere impact premiums here.

To start with what you probably did know – yes – there is an impact in premiums when companies lose money elsewhere. But it’s not as simple as “greed” for insurance companies. The way these companies make a profit is measured through a “combined ratio” – a metric that calculates their loss ratio and expense ratio. In other words, the amount they’ve paid out for losses is added to their business expenses and divided by the amount of premium they’ve “earned” from insureds. A combined ratio over 100 means that the company – in the most basic sense – is losing money.

Companies that continually lose money typically cease to operate after some time. That is one reason why there is an impact on your insurance rates based on losses in other parts of the country, but it’s far from the only reason. Here are three more:

Actuarial Predictions

Companies rely on actuarial science – the discipline that applies mathematical and statistical methods to the systematic observation of natural events to assess the risk of events occurring and help formulate policies that minimize this risk and its financial impact on companies and clients – to measure future risk. When there are more disasters, these measurements increase future predictions of risk, in turn resulting in filings for higher rates.

Claims Costs

When there are significant natural disasters, especially multiple disasters across the country, there is a major impact on the supply chain. The cost of materials and labor can increase significantly, as can the time for mitigation and repairs. This all adds up to higher claims costs, which in turn lead to a need for higher rates.

Reinsurance Costs

Insurance companies buy policies of their own – called reinsurance – to share the risks they insure. As claims and costs go up globally, the price of reinsurance goes up as well.

You might ask why these companies don’t just focus on areas of less risk – but it’s not that simple. A practice called “spread of risk” lessens the concerns of one major natural disaster impacting all or most of a company’s insureds. And there is risk everywhere. We may not be impacted by a hurricane, but a hailstorm, tornado, or wildfire is certainly possible.

All these factors go into ratemaking decisions for insurance companies. As we progress through hurricane season and other natural disasters occur, just keep in mind that the impacts from these events are not always immediate and not restricted to where they are happening.

If you’d like to know more, contact Brandon Patterson on our team at brandon@ownbyinsurance.com.