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How does flood coverage work in home insurance?

The climate and poor quality of the facilities in your home are not the only reasons why a claim can be caused. © Pixabay

There are many reasons that can make you find your house flooded by water from one day to the next. However, do not be overwhelmed because many home insurance includes this coverage in their policies. So that you have everything clear, today, we tell you what they are about and how they work.

One of the main causes of accidents inside a home corresponds to damage caused by water.

Indeed, there is a long list of situations in which this type of accident can occur. One of the most common are floods caused by poor construction or a house breakdown.

Leaks from rain, moisture in the walls, pipes or leaks in the pipes can be just some of the problems that cause your home to flood.

However, the climate and poor quality of the facilities in your home are not the only reasons why a claim can be caused.

Human failures, such as forgetting to turn off the tap or letting the bathtub run, also represent a significant percentage of the causes of damage caused by water inside domestic homes.

Water damage can range from minor damage to complete flooding of the home. For this reason, having Home insurance that includes this type of coverage can be very convenient when facing a situation of this type.

Let’s take a deep dive into what these policies propose and how far their coverage goes.

Water damage: what do they contemplate?

Before reviewing the coverages that a water damage policy can include in Home insurance, it is important that you find out if your contract includes these types of incidents.

Indeed, there are different types of home insurance and each one is different, therefore, yours may not have flood coverage.

On the other hand, the corresponding compensation and replacements will depend on the type of policy you have previously contracted.

Among the most common coverages that can be found in this type of insurance are:

Rain damage

In case of heavy rains or that they produce some type of accident in your home, the insurer may compensate you as long as the intensity of the same exceeds that established by the company.

Damage caused by meteorological phenomena

In addition to rains, some home insurance policies include water damage caused by meteorological phenomena such as strong winds, storms, among others, among their coverage.

Damage caused by floods

In the case of floods, the policy may stipulate that compensation will be made on the damage produced, provided that the origin is breakage of channels or ditches on the surface.

Damage caused by extraordinary floods

It may be the case that the magnitude of the flood is such that the insurance company declares the loss as an extraordinary flood.

How far does the coverage of this type of policy go?

flooded kitchen
These types of policies include exclusions that you should know. 
© Pixabay

As with other types of insurance, coverage will depend exclusively on the policy you have taken out.

While some insurances will cover only the continent of your homes, such as ceilings, floors, and walls, others will also cover the content, that is, appliances, furniture, etc.

In turn, the vast majority of Home insurance with water damage coverage includes Third Party Liability.

Are there any exclusions in water damage coverage?

Indeed, there are some situations where, although there is a loss caused by water, the insurer is exempted from any obligation to make payment for the damages produced.

Among the most common exclusions are:

  1. Exclusion of damages caused by public pipelines
  2. Exclusion of damage caused by water if the apartment is rented and the use of the house has not been communicated to the company.
  3. Exclusion of water damage if pipes are exposed.
  4. Exclusion of water damage coverage due to forgetting to turn off the tap when the insured home has been uninhabited for more than 72 consecutive hours.
  5. Exclusion of damages due to leaks that have occurred through roofs, walls, and/or walls from adjoining or superior homes.
  6. Exclusion of damages derived from the freezing of water if the house has been uninhabited for more than 72 consecutive hours and it is shown that the necessary precautionary measures have not been taken.

Guide on electrical damage in Home Insurance

Electrical damage represents 11% of the coverage granted by insurers. © iStock

Domestic accidents caused by electrical failures represent the third cause of loss in Home Insurance. The companies have reacted by including in their policies a special guarantee for this type of breakdown. Let’s review what your coverages are and the exclusions they may include.

Everything works fine and, from one moment to another, something happens in the electrical system of your home and one or another device is affected.

Indeed, and despite what happened some time ago, today electrical damage claims have grown significantly, reaching 11% of all domestic accidents that insurance companies must reimburse.

In this sense, the electrical appliances most affected by this type of breakdown are washing machines, refrigerators, and televisions.

How does Home Insurance work in the event of a claim of this type? Let’s review everything you need to know about this coverage in the following article.

Electrical damage: definition

Electrical damage is the damage that your electronic equipment can suffer as a result of a breakdown or accident in the home system.

Generally, these damages are caused by voltage spikes and drops, short circuits, lightning strikes, electrical storms, abnormal current, or arcing.

Electrical damage coverage

If you already have a multi-peril policy , you may not have even realized that it includes special coverage against electrical damage. However, you must be careful, as this guarantee is not always contracted automatically.

Generally, electrical damage coverage covers the damages that your installations and electrical appliances may suffer as a result of the claims that we have mentioned above.

A large part of the insurance companies offer a guarantee for damages that occur both in the container and in the content of the home.

Regarding the content, if you have this type of coverage, your insurer should be responsible for the damages caused to your electronic devices.

Some insurers include in their coverage of electrical damage the reimbursement for the loss of power supplies stored in the refrigerator at the time of the accident.

Exclusions in electrical damage coverage

As with the vast majority of coverage in Home insurance, the electrical damage guarantee includes some exclusions where the insurer will not grant any type of reimbursement in the event of a claim.

Among the most common are:

  1. Age of appliances: generally, all electrical appliances and electronic appliances that are more than 10 years old will be excluded from the coverage. In the case of computer equipment, this time will be reduced to five years. The insurer will have, in most cases, an expert to determine if the breakdown was caused by electrical failure or due to the age of the device.
  2. Cover cap: not all insurance companies establish the same caps for compensation for electrical damage.
  3. Appliances with a valid warranty: in the event that the loss has caused damage to an appliance that is under warranty, the cost of repair or replacement will be borne by the manufacturer.

Electrical damage? Learn what to do

© iStock

If after a strong storm some of your devices are damaged and you don’t know what to do, we advise you to follow the following steps:

  1. Take a count of damaged electrical appliances.
  2. Make sure it is not a fault caused by the poor condition of an appliance or its age.
  3. Contact your insurance company to inform them of the situation. It may be that the company directly sends an expert or other professional to assess the nature of the damage.
  4. If the insurance company enforces the coverage, it will compensate you for the value of the devices or replace them with another model with similar characteristics.

Insurance fraud: a common practice

For some time now, insurance companies have been the victims of a fairly common type of fraud when it comes to claiming reimbursement for an appliance for electrical damage.

Unfortunately, many people apply to their respective insurers for repair or compensation for an appliance damaged by misuse, arguing a different cause such as a short circuit or a lightning strike.

This situation has given rise to the fact that each day insurance companies have more experts specialized in electrical damage to analyze each case and resolve whether it is a fraud or not.

However, and despite the fact that it is a preventive measure on the part of the companies, this only delays the reimbursement of damages from those who have acted honestly.

See what criteria to adopt to choose your life insurance

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See what criteria to adopt to choose your life insurance

All coverages have exclusions and specific conditions that you must carefully analyze.

To purchase life insurance, you must assess your real needs so as not to hire complementary coverage that will not be used. It is a survey that takes time, moves emotions, because nobody, in fact, would like to use this insurance.

But it is important to do so even so as not to underestimate the financial needs of you or your dependents if they can no longer count on your support. It is good to remember that all coverages have exclusions and specific conditions that you must carefully analyze. If the insured is a self-employed professional, for example, it may be important to hire coverage known as the Temporary Disability Rate (DIT), which guarantees payment of the contracted rate for the period when he is unable to work due to sick leave or covered accident for insurance.

The main one, which is mandatory, is death coverage, which will pay the insured capital (indemnity) defined in the policy to the beneficiaries, in the event of the death of the insured (natural or accidental).

The life insurance structure can distinguish between basic and additional coverages, and the insurance must contain at least one of the basic coverages (natural or accidental death). However, instead of approving insurance plans with basic and additional coverage, many insurers have chosen to offer independent insurance plans for each coverage.

Thus, it is possible to contract an insurance plan only for death coverage (natural or accidental), only for accidental death, just for accident disability, only for functional disability due to illness, only for work disability due to illness, etc. It is very important that all situations that you want to be compensated to your beneficiaries are clearly provided for in the contract you sign with the insurer.

The most common coverages are:

• Death
• Accidental death
• Total or partial permanent disability due to an accident
• Total permanent disability due to an accident
• Major permanent disability due to an accident
• Total permanent functional disability due to illness
• Total permanent working disability for Illness
• Medical, Hospital and Dental Expenses
• Temporary Disability
Fees • Hospital Admission
Fees • Serious Diseases

Based on the combination of these coverings, there are specific products, among which insurance: credit life, education, travel, housing, and endowment stand out.

What is the difference between personal accident insurance and life insurance

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What is the difference between personal accident insurance and life insurance

Personal accident insurance generally costs less than life insurance.

The basic difference between death coverage in life insurance and personal accident insurance is that the first guarantees compensation for natural or accidental death, while this coverage in personal accident insurance, as the name says, will be paid only in the event of death from a covered personal accident.

Exactly because it has less comprehensive coverage, personal accident insurance generally costs less than life. In addition, the amount paid for personal accident insurance usually does not differentiate between young and old, while the calculation of the price of life insurance varies according to the age of the insured.

Both, however, have a common advantage. The indemnity received by family members and/or beneficiaries does not enter the inventory and is not responsible for any debts left by the insured. The indemnity amount (insured capital) is paid directly to the beneficiaries, completely exempt from taxes.

Who is recommended for personal accident insurance?

Those who work for themselves, entrepreneurs, and professionals depend on good physical conditions to carry out their activities. An accident can force them to stop working temporarily, meaning a disruption in their income.

This is a condition in which it is certainly worth having this insurance. It is also recommended for those who work with a formal contract in a company that does not provide the employee with the option to adhere to a collective personal accident policy.

A young, single person, without children, independent and in good health represents a low risk of death, due to the natural order of life. But, if you still do not have the financial security that can guarantee the payment of your expenses in case you are forced to leave work due to an accident, you will also have a good motivation to take out insurance.

The cost of personal accident insurance is one of the lowest in the market, making it possible to contract complementary coverages. Among them, the non-monthly payment of insurance, in case the insured becomes unemployed, and the payment of school fees for the insured’s children.

Is it possible to contract several life insurance policies at the same time

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several life insurance policies at the same time

Each insurer will pay the indemnity according to the insured capital contracted.

You can buy as many life insurances as you want, at the same time, from different insurers or at the same. There is no limit on the payment of compensation. Each insurer will pay the indemnity according to the contracted insured capital.

However, the insurer may limit the maximum values ​​for buying, respecting its technical acceptance limit. When you sign the insurance proposal or make changes to your policy in relation to the indemnity amount, the insurer may ask you to inform if you have other life insurance. However, the insurer will not be able to compel you to report the purchase of other life insurance if they are taken out after your policy starts.

The form of payment of insurance premiums will be at the discretion of the insured, according to their convenience and defined at the time of contracting. It may be monthly, bimonthly, quarterly, quarterly, half-yearly, or annually.

Life insurance on a pay-as-you-go basis is not an investment, so it does not allow you to redeem or return the amounts you paid. By taking out this insurance, you will be looking for compensation for a harmful event in your life, in the event of a claim (death, disability, illness, loss of income, inability to exercise the activity, etc.). If there is a claim, the insurer will pay the indemnity corresponding to the insured capital, according to the coverage contract. In general, insurance plans follow the pay-as-you-go financial regime, which does not allow redemption or refund of premiums paid, either to the insured or to their dependents.

When you receive the individual insurance policy, check that the coverage and the amounts of the insured capital are the ones that you contracted so that there are no doubts when paying the indemnity.

Do not pay insurance in cash or with bearer checks or provide your details or make payments to people who come to you in person or by phone, on the grounds that the information is necessary to release the claim. Insurers don’t do that. It is advisable to look for a qualified and trusted broker to mediate the contracting of the insurance, which should be the same one who will take care of the settlement of the claim.

Find out how much life insurance costs and how it is calculated

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Find out how much life insurance costs and how it is calculated

There are several characteristics that are considered to define the price of life insurance.

The price of insurance varies according to the value of the insured capital that is intended to receive indemnity, the age of the insured, and the risk that it represents in view of the possibility of the risk covered by the policy. Healthy lifestyle habits, sports (provided they are not radical) or physical activities, the balance between weight and height, not being a smoker, and having a less stressful and less risky profession contribute positively to the price of insurance.

The cost of life insurance will also be higher or lower according to the amount of indemnity (insured capital) intended for the additional coverages you hire. In the natural process of life, the probability of death increases with increasing age, which increases the risk of indemnification for the insurer.

Thus, it is very common for the premium for plans structured by age or age group to be recalculated each year or each age group change. Another reason for the premium to rise is the increase in the value of the contracted insured capital.

Age range

It is noteworthy that in plans structured by age or age range, the increase in the amount of insured capital (indemnity) does not follow, in the same proportion of periodicity, the premium adjustment (insurance price).

However, premium and insured capital are updated each year, according to the inflation variation index that appears in the general conditions of the contracted insurance plan. In an individual policy, life insurance tends to cost more, due to the personalized coverage. The collective plan, on the other hand, is usually more affordable, as it dilutes the risk in a group of people.

The drawback is that the insured capital values ​​may be lower and the coverages less comprehensive. This is because the definitions of values ​​and coverage of the collective policy are previously negotiated by the representative of the company, institution, union, association, etc. and it is not always possible to establish different criteria per insured.

Insurance industry: career for those who like to deal with risks

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Insurance industry: career for those who like to deal with risks

Understand how the insurance industry works and the challenge of protecting your customers from unpredictable events by turning this into a profitable activity

The insurance market constitutes a multi-million dollar industry worldwide, made up of companies and people who develop insurance policies and work in the sale, administration, and regulation of these services.

Today, there are very few items of value that cannot be insured, although the most common types of insurance involve business, vehicles, real estate, rent, and health problems.

What is behind the success of this industry is the risk management activity. This is because insurance is nothing more than a risk transfer service, in which the insurance company protects people and companies against the risk of unpredictable events occurring and which would represent great financial losses for them.

To offer this guarantee, the company receives a fee from all its customers, charged from time to time. In industry jargon, this fee is called a ‘premium’, while the customer is treated as a ‘policyholder’ (the document that formalizes the contract between the insurer and insured). If the event specified in the policy occurs, the customer receives compensation from the insurer.

To be successful, the insurer must make sure that it has earned enough money from the premiums to offset the expenses it will have to reimburse customers for damages and losses while maintaining a profit. It may seem like a simple procedure, but it is an extremely sophisticated analysis and calculation mechanism.

Calculation of risks The final account only closes when the risk that each individual or company represents is calculated with great precision. A banal example: wooden houses, for example, have a greater risk of fire than those made of bricks, in the same way, that a customer’s history of fines says a lot about the chances of him getting involved in an automobile accident.

This process of analyzing whether the risk is worth it or not is called underwriting and is one of the most crucial activities within an insurance company. This is an in-depth study, which takes into account several factors to try to establish what are the chances of this client needing to call the insurance company to reimburse losses in a certain type of insurance.

It is the analysis made by the underwriting team that will determine whether or not the insurance company will close the contract, and under what price plan. The lower the risk, the lower the premium.

If the risks are poorly calculated, the value of the premiums will not be sufficient to cover the company’s expenses. In other words, if underwriters (also called underwriters) assume that the probability of an event happening is very low, the fee charged to each customer will also below. If the event, contrary to what was predicted, occurs for many customers, the insurer comes out at a loss.

Crisis situations: scenario that took insurers by surprise occurred during the 2008 financial crisis. The American International Group (AIG), the largest insurance company in the United States, recorded a loss of more than $ 99 billion in the year and needed financial support from the Federal Reserve (FED – kind of central bank of the United States) to not go bankrupt.

To understand what happened, an initial explanation is worth: AIG’s main business is selling insurance, but not just the more traditional types, such as real estate or health insurance. The company also provides more complex services to meet the demand for large companies, especially banks.

To protect their large operations, banks often hire insurance companies to help them in case their business goes wrong, and they pay a high price for it. In this way, AIG insures financial institutions worldwide against risks.

Virtually no insurance company was able to predict the risks behind subprime real estate loans, a type of loan practiced by several banks that were AIG customers. When this type of credit triggered the financial crisis, the banks lost a lot of money and started to activate the contracts they had signed with AIG, forcing the insurance company to pay huge refunds. The account, in this case, clearly did not close, leading the company to a state of technical bankruptcy that was only overcome through government aid through the FED.

Industry workers, It’s not just underwriters who deal with risk management within an insurance company. In the company, professionals are known as actuaries also play an important role in this activity.

It is up to them to look at the latest trends and statistics for a specific occurrence (be it fire, theft, death, car accidents, etc.) and use this information to build probability and risk prediction tables. These professionals, who constantly calculate risks, are involved in several processes in the insurance company, including the subscription itself, but also the definition of pricing policies, product development, investments, and customer claims.

Professionals in the actuarial field must appreciate solving problems through data analysis and modeling and are often motivated by working with computers and formulas.

The truth is that, in an industry built around the idea of ​​risk, all professionals must have an affinity with this theme. From executives in managerial positions, such as directors and presidents, to the other end of the organization chart, where sales agents are located – the objective, in the latter case, is to sell insurance policies, and these professionals must know how to assess risk associated with each customer and recommend a product that adapts to their needs, while at the same time not making the insurer take unnecessary risks.

What is important to know before Purchasing life insurance

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Life insurance is not just a service for older people.

Life insurance has the main objective of guaranteeing the financial protection of those you would like to see supported in your absence. This protection does not only work in the event of the death of the provider, it can also be used in other situations such as serious illnesses, accidents, and other unforeseen events that may harm your financial security and that of your family.

Insurance protection can be for a lifetime or for a fixed period of time, with coverage for five to 30 years, for example. In the case of temporary insurance, when the contract ends, protection ends.

The product, however, cannot be confused with an investment, warn experts. The correct thing is to understand life insurance as financial protection in case of unforeseen circumstances.

life insurance for …..

Life insurance is not only a service for older people, in fact, but it can also be taken out by young people and this earlier hire can even be a favorable point.

But what would be the ideal time to take out insurance? Now. You never know when unforeseen events can happen and, taking out insurance as soon as possible can bring more peace of mind to your decisions and plan your future and those you intend to protect, in addition to a more attractive price.

In the event of unforeseen events, insurance can pay compensation in the diagnosis of a disease, avoiding, for example, that you need to sell your assets or use your applications. In other cases, life insurance can offer liquidity to the heirs, facilitating the inventory process.

Because of this, when hiring life insurance keep in mind that it is important to map all your needs and / or the needs of those you want to offer financial security in the case of your early absence, preferably with the help of a specialized professional.

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