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"Full Coverage" does not mean "Everything Situation is Covered"

Over my 23+ year career as an insurance broker I've heard the general consumer of insurance policies say, "I have full coverage". There is no such term in an insurance policy. Remember, an insurance policy is a contract. It says what the insurance company will do when a loss occurs. It also defines when the insurance company will not make a payment. These are called exclusions or conditions. Here are some examples:

  1. Business Personal Property On-premises and Off-premises. Let's say you have a limit of business property coverage (camera equipment, computers, etc) of $40,000. There is always a limit of coverage for on-premises (in this example $40,000). On premises means the address listed on the policy. Well, there is an off-premises limit too - say $15,000. You need to know what the policy says so you can purchase the proper coverage limits. You should read the policy. (You can also ask me because I have read the policy.)

  2. Off-premises Location Exclusion. The off-premises limit applies to everywhere in the "covered territory". Covered territory is usually the U.S. and its territories, and Canada. Here's the exclusion. Coverage is excluded if there is a loss at another location (other than the address on your policy) that you own, lease, or occupy. Here's an example - you operate your business out of your home, BUT you also lease (month-to-month or longer term rental) a studio in town. Because you lease the studio, coverage is excluded at your studio because it is a second location that you lease and is not listed as a "premises' location. Interesting Huh?

  3. Equipment That Is Waterborne. If you suffer a loss on water - it is not covered. Unless it is incidental to the land portion of your journey on inland waterways. Here's one more and then I will stop.

  4. Business Personal Property - Replacement Cost Coverage. Most policies these days cover equipment at Replacement Cost; however, not all. Some are Actual Cash Value. Actual Cash Value is an inferior claim settlement. Anyway, if your policy is Replacement Cost - that's good. There is one exclusion - equipment that you don't own but is in your "care, custody, and control" is settled Actual Cash Value, unless there is a governing lease agree requiring a Replacement Cost settlement. Example 1, you borrow a camera from a friend and there is no contract requiring Replacement Cost coverage - this will be settled actual Cash Value if a loss occurs. Example 2, you rent a camera from a rental house and their contract requires Replacement Cost - this will be settled Replacement Cost if a loss occurs.

Well, this gives you a brief sampling to illustrate the Value of a GOOD policy and the importance of understanding your policy.

Howard Burkholz

Reminder - This article is for educational purposes only. It does not guarantee coverage. Please read and understand your policy for coverage limit, exclusion, and conditions. Each claim situation is reviewed to determine the correct coverage.

We are licensed in over 40 states. Please request a quote and we can help you with the best coverage for you.


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