As licensed public adjusters in the state of Florida, we’re all too aware of the complexities of property insurance policies. We also understand that these complexities aren’t limited to our field; they extend to property managers tasked with ensuring adequate coverage for their managed properties. This blog post aims to unravel some of these complexities and give property managers a more profound understanding of property insurance policies. So, let’s dig in!
Know Your Coverage Types
The first thing any property manager needs to understand is the different types of coverage offered under a property insurance policy. In Florida, insurance companies typically provide the following coverage types:
Dwelling Coverage: This covers the physical structure of the property, such as walls, roofs, and attached structures like garages.
Personal Property Coverage: This applies to personal items within the property, like furniture, electronics, and appliances.
Liability Protection: This covers legal expenses if someone is injured on the property and decides to sue.
Loss of Use: This kicks in if the property becomes uninhabitable due to a covered loss. It covers additional living expenses, such as temporary accommodation costs.
Understanding Limits and Deductibles
Each coverage type comes with its own limit, which is the maximum amount the insurance company will pay for a covered loss. Property managers must ensure these limits adequately reflect the property’s value and the potential costs of rebuilding or replacing lost property. In some cases, the policy you are considering may not have a high enough policy limit to cover the losses should a catastrophic loss event occur. In such cases, you should consider getting additional policies to protect yourself in a major loss that exceeds your policy limits should occur.
Alongside limits, we have deductibles. This is the amount the policyholder must pay out of pocket before the insurance coverage starts. As a general rule of thumb, higher deductibles translate to lower premiums and vice versa. Learn more about deductibles from the Insurance Information Institute website here.
Getting to Grips with Exclusions
Not all damage types are covered by property insurance policies. These are known as exclusions, and they can be a significant stumbling block if not appropriately understood. Common exclusions include:
Floods and Earthquakes: In Florida, damage from floods and earthquakes isn’t typically covered by a standard property insurance policy. Separate policies need to be purchased for these types of coverage.
Maintenance Issues: Problems resulting from poor maintenance or general wear and tear are usually not covered.
Intentional Damage: Damage caused intentionally by the property owner is not covered.
As a property manager, it’s crucial to understand these exclusions and inform your clients accordingly.
The Power of Endorsements
To counter the limitations of standard coverage and exclusions, we have endorsements. These are amendments to the original policy that broaden or limit the coverage. Endorsements provide an excellent way for property managers to customize coverage to meet their properties’ unique needs.
For instance, you might add an endorsement for flood coverage if the property is located in a flood-prone area, or a sewer backup endorsement if the property has a history of sewer-related problems.
An Ounce of Prevention…
With a solid understanding of property insurance policies, property managers are better equipped to protect their managed properties. But remember, having the right coverage in place is just one part of the equation. Regular property maintenance, routine inspections, and robust risk management strategies also play crucial roles in safeguarding properties and minimizing the risk of insurance claims.
“An ounce of prevention is worth a pound of cure.”
Benjamin Franklin, advising fire-threatened Philadelphians in 1736
Concluding Thoughts
Understanding property insurance policies is an essential skill for every property manager. With this knowledge at their fingertips, they can make informed decisions, ensure appropriate insurance coverage, and protect the interests of property owners. As public adjusters, we have a key role to play in helping them navigate this complex landscape and realize the full benefits of their insurance policies.
Remember, even though this landscape is complex, it’s not insurmountable. With the right knowledge, careful planning, and a little help from professionals like us, property managers can turn the intricacies of property insurance policies from a challenge into an advantage.
The insurance world may seem daunting, but knowledge is power. With this understanding, property managers can confidently navigate property insurance policies, ensure optimal coverage, and provide exceptional service to their clients. So, keep learning, keep growing, and continue to be the amazing adjusters you are!
