Homeowners Ins in corporate name

[Brownfieldman]

What is the name of your state?New Jersey

We just purchased a house to be used by one of our employees and titled the property in a corporation. Our insurance agent now says it the underwriters do not wish it to be added to our regular commercial policy, and to write a seperate policy will cost about 4 times what a typical homeowners policy costs. They claim that this is because it is in a corporate name, even though it is still a single family home to be occupied by the residential tenant under a long term lease. Does this make sense to anyone?

Additionally, the policy apparently has a "80% coinsurance clause" The agent says that this means that we need to insure for at least 80% or the replacement cost, or there will be penalties upon a loss. Doesn't 'co-insurance' imply additional coverage is required from somewhere?

Thanks

 

[testedmonkey]

Might be relevant

It doesn't look like anyone from your state is going to respond, so I'll put in my 2 cents from a California stand-point:

A homeowner policy can only be written in the name of an individual. If a property is owned by a corporation or company, it has to be written as a commercial property. The only exception to this is property owned by certain trusts, which is not the case here. Your agent isn't doing this to pick up extra money off your company, he simply has to abide by the underwriting rules of the homeowner carriers.

Co-insurance means is that if you don't insure the property to value, the carrier will only pay a percentage of a total loss. Example: The home is only insured for $100,000. It burns down. Total cost to rebuild the home is $200,000. The carrier adjusts the claim payment based on the fact that they required the home to be insured for at least 80% of the replacement cost, and it was actually only insured for 50%. Loosely speaking, the client has retained a portion of the loss by not properly insuring the home, which means they've co-insured the home themselves.

Carriers do this so that clients don't under-value their homes to avoid paying the proper premium.

My disclaimer to this is that I'm in CA, not NJ, so NJ may be different. Laws and underwriting rules vary from state to state, but I'm assuming that basic insurance principals are fairly uniform.

 

[Brownfieldman]

Thanks for the reply!

We didn't think the agent was doing this to grab a larger premium (go figure, we actually like our agent!) but we were surprised that since the use was the same as if an individual owned it, the risks should be the same also (and thus a closer premium).

In any event, thanks again