CLIENT ADVISORY
TOP TEN FREQUENTLY ASKED
FAMILY INSURANCE QUESTIONS
The following information is intended to be used as a training guide for Family Office employees who serve as the “Point of Contact” for family members. All employees should be cautioned to forward questions to their insurance provider for a formal response.
1. Rental Car – Does my policy cover damage to a rental car, due to my negligence? Should I buy the collision damage waiver from the rental car company?
Answer: Most insurance companies will insure, for a premium, damage to a rental car, whether it’s a replacement vehicle because your normal auto is in for repair or otherwise unavailable, or if on vacation. It is not automatic. What is not typically insured is the loss of revenue the rental company will charge you! Ninety days at $60 per day equals $5,400. To avoid having a hold put on your credit card, it is recommended that all clients purchase the collision damage waiver.
2. Mexico Car Rental – Is it necessary to buy Mexican auto insurance if I drive my car only two miles into Mexico?
Answer: Yes, with no exception, you must buy Mexican automobile coverage when operating an automobile in Mexico.
3. Permitted Domestic Employee Operation of a Vehicle – Is there coverage when:
- He/she drives my car on errands?
Answer: Yes, both he/she and you are insured.
- Drives his/her car on errands for the family?
Answer: No, your domestic employee’s Automobile policy would respond if sued, but he/she is not insured under your policy. Again, his/her Auto policy would have to respond for his/her negligent operation of his/her vehicle. Your policy would respond only for your interests if you are also sued.
- Is my employee insured if he is driving a neighbor to the doctor at my direction, in my car?
Answer: Yes. Caution: All employees who drive your car should have their driving record checked annually by your insurance company.
4. Friends – Am I insured operating my roommate’s car with permission?
Answer: Yes, your policy will respond if they did not have sufficient limits in their policy. Insurance follows the vehicle. The roommate’s policy would pay first and then your policy would pay if their coverage limit(s) were exhausted.
5. Can I remove my child from my Auto policy and still keep them insured in my Umbrella?
Answer: Yes, as long as the child is a resident at your home and you have your child’s policy added as an underlying policy in your Umbrella policy. Call your agent.
6. National Flood Insurance – Are my non-residence structures and contents in those structures insured? Also, are the contents of my basement insured?
Answer: No, flood is limited to the primary residence structure and contents and excludes personal property in a residence basement or crawlspace.
The primary National Flood Policy covers the primary dwelling structure at the residence address for the 250,000 dwelling limit along with contents coverage in the amount of 100,000 or a lesser amount as shown on the policy (contents in a crawl space or basement would be excluded). If additional other building structures are needed to be covered for the peril of flood, i.e., pool house or detached garage, a separate flood policy would need to be written naming that particular structure. Also, any non-building other structure, i.e., docks, retaining walls, fences, seawalls, bulkheads, wharves, piers or bridges, would not be insurable for the peril of flood by the national flood insurance program. In addition, land, trees, shrubs, plants/landscaping would be excluded by the flood policy and those portions of walks, decks, driveways, patios and other surfaces, whether protected by a roof or not, located outside the perimeter of the exterior walls of the resident building would not be covered.
Recommendation: A special Flood policy needs to be obtained to cover contents in the basement and unattached structures, such as pools. Call your agent.
7. Roommate Property – Is my roommate’s property insured in my Homeowners or Condo policy?
Answer: No, they would need their own separate policy to cover their personal property or be listed as a named insured under your policy.
8. Domestic Employment Practices Liability – Does my policy provide coverage if a domestic employee applicant alleges discrimination? What about the employee who is terminated?
Answer: Not automatically. Some Homeowners policies can be endorsed to provide Employment Practices Liability, up to a limit of $500,000, subject to a $10,000 deductible, with a maximum limit of five domestic employees. Call your agent.
9. Does my Homeowners policy provide any coverage for liability arising from business activities?
Answer: Maybe. Many insurance companies limit coverage to your private investment business activities. Otherwise, any commercial ventures operated from the home such as, but not limited to, accounting, property management for others, and business consulting require special treatment. Call your agent.
10. Will my Homeowners liability respond to a work related injury claim from a domestic employee?
Answer: No, you must purchase Workers’ Compensation.
Please call as questions arise. Also, please feel free to refer to our updated website: www.legacyrisksolutions.com.
Sincerely,
Ken R. Butler
Ken R. Butler, CPCU, ARM
President & CEO
KRB/md
TopTenFAQ-FamilyInsurance
Ken R. Butler is the President & CEO of Legacy Risk Solutions, LLC. Mr. Butler is an entrepreneur and industry leader in the analysis of affluent family and business risk management needs and development of legacy preservation plans.
Fee Only – No Commissions – No Conflict of Interest
This article is a general discussion about the subject matter and should not be represented as applicable in any state in the United States of America. this document is for the exclusive use of Legacy Risk Solutions, LLC clients. It shall not be reprinted or portions reproduced in any form, by any other party, without the permission of the author. Author Contact: 330.659.6337 or 330.283.0952, or KenBLegacy@aol.com. The Legacy Risk Solutions website is: www.legacyrisksolutions.com.
