Category: insurance tips

Keep your head above water—understand how to protect your seagoing vessel, yourself and your passengers.

What you need to know about

• Boat insurance basics
• Boat insurance coverage
• Boat insurance discounts
• Best practices for boat safety
• Additional resources

Boats afford recreation and adventure to their owners, but they come with risks, as well. Don’t let an accident or disaster sink you—understand how to insure your prized vessel.

Boat insurance basics

The size, type and value of the craft and the water in which you use it factor into what type of insurance you need and how much you will pay for insurance coverage. As with any insurance policy, make sure you understand exactly what perils are covered and what your policy limits are.

• Small craft may be covered under your standard homeowners policy or renters insurance policy. Most insurers provide limited coverage for property damage for small boats such as canoes, small sailboats or small powerboats with less than 25 mile per hour horsepower. Coverage generally includes the boat, motor and trailer combined. Liability coverage is typically not included, but it can be added as an endorsement to a homeowners policy.
• Larger and faster boats such as yachts require a separate insurance policy (as do personal watercraft such as jet skis).

Typical boat insurance policies cover physical damage to the boat itself. They also cover property damage, theft and medical payments, each with different deductibles. Your insurer may offer additional, optional coverage for trailers and boat accessories.

Boat insurance policies generally provide broader liability protection than a homeowners policy. However, depending on the assets that are at risk, boat owners may also consider purchasing an umbrella liability policy, which will provide additional protection for their boat, home and car.

Boat insurance coverage

Boat insurance is available in two types, each with different parameters and different premium costs.

• Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel’s approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.
• Agreed Amount Value policies are based on a valuation of your vessel that you and your insurer have agreed upon; in event of a total loss you will be paid the “agreed amount.” Agreed Amount Value policies will also replace old items with new ones in the event of a partial loss, without any deduction for depreciation.

Here are some of the common and optional boat coverages. Make sure you understand what exactly your policy will pay for and what the limits are.

• Physical loss or damage to the actual boat, including the hull, machinery, fittings, furnishings and permanently attached equipment. Physical damage exclusions might include normal wear and tear, damage from insects, mold, animals (such as sharks), zebra mussels, defective machinery or machinery damage.
• Theft of the boat.
• Bodily injury to persons other than the boat owner or his or her family.
• Damage caused to someone else’s property.
• Guest passenger liability—that is, any legal expenses incurred by someone using the boat with the owner’s permission.
• Medical payments for injuries to the boat owner and other passengers.
• Trailer or boat accessories.
• Loss or theft of belongings may or may not be covered. Your homeowners policy may provide some coverage and boaters should specifically inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered.
• Towing in the event of an accident.

Boat insurance discounts

If you’re thinking of obtaining boat insurance or changing insurers, inquire about discounts for the following:

• Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
• Coast Guard approved fire extinguishers
• Ship-to-shore radios
• Crew completion of boating and water safety education courses, such as those offered by the Coast Guard Auxiliary, U.S. Power Squadrons, or the American Red Cross.

• Multi-policies with the same insurer, such as a car, home or umbrella policy.
• Two years of claims-free experience

Best practices for boat safety

There are thousands of recreational boating accidents per year, which can be costly in injuries and damages. Contributing factors to boating disasters include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.

The best way to ensure your years of accident- and claims-free experience is to follow boating safety practices.

• Properly equip your vessel with required navigation lights and with a whistle, horn or bell. Have on hand plenty life jackets and emergency safety devices such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio. Carry one or more fire extinguishers, matched to the size and type of boat and keep them readily accessible and in condition for immediate use.
• Before you sail or launch, check weather forecasts before heading out to ensure good boating conditions. Let someone know where you’re going and when you expect to return. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
• When you have passengers and/or a load, pay attention when loading. Distribute the load evenly and don’t overload. In a small boat, warn passengers not to stand up or shift weight suddenly. Don’t permit riding on the bow, seatbacks or gunwales. Make sure that every person on board the boat gets and wears a life jacket.
• Know and obey marine traffic laws; learn distress signals and other boating signals.
• In shallow waters, keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
• Don’t operate the boat while under the influence of alcohol or drugs, or allow anyone who might be impaired to operate the vessel.

If someone sues you for damages above your primary liability limits, an umbrella policy helps pay what you owe.

Before we dive in, do you need umbrella insurance?

You may want an umbrella policy if you have lots of savings and other assets you could lose in a lawsuit. It may also be a good idea if you’re at a high risk of being sued — for example, if you have a teen driver in your household who might get into an expensive car crash. See more details below.

Three key takeaways from this article

• Umbrella insurance is extra liability insurance beyond what’s on your existing policies.
• An umbrella policy can pay what you owe if you’re at fault for someone else’s injuries or property damage.
• The cost of umbrella insurance usually starts around $200 per year for $1 million of coverage.

What is umbrella insurance?

Umbrella insurance is protection for your savings and other assets. It provides extra liability coverage beyond the limits on your existing policies, such as car or home insurance. If you’re at fault for injuries or damage and your other policies aren’t enough to cover the costs, an umbrella policy helps pay what you owe.

Umbrella insurance is similar but not necessarily identical to excess liability insurance. What’s the difference?

• Excess liability coverage typically provides a higher limit on the policies you already have.
• Umbrella insurance may also add coverage for scenarios your underlying policies don’t include.

For example, umbrella insurance may pay for legal fees and damages if someone accuses you of slander (a false spoken statement) or libel (a false written statement). A typical homeowners insurance policy doesn’t offer this coverage.

Umbrella and excess liability policies vary from one company to another. If you’re confused about your coverage, contact your insurance company or agent.Key terms in this article

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How umbrella insurance works

Umbrella insurance offers extra liability coverage if you reach the limit on an underlying policy. Here’s how it could work.

Example: You run a red light and T-bone another car. There’s major damage to the vehicle, and several people are hurt. The car needs $25,000 in repairs, and treatment of the injuries totals $275,000. Plus, the driver of the other car is an orthodontist who won’t be able to work for months due to a broken arm. She sues you for $200,000 in lost earnings.

In this example, you’re on the hook for a total of $500,000. If your auto policy has only $300,000 in liability coverage, the remaining $200,000 will come out of your pocket.

If you had umbrella insurance, it would pay the difference between what your primary insurance covers and what you still owe. An umbrella policy could also cover your legal costs in the lawsuit.

What does umbrella insurance cover?

Umbrella insurance usually covers claims involving anyone in your household, including kids and pets. Depending on your policy, it can cover the following types of liability claims.

Bodily injury

Bodily injury is when someone gets hurt on your property or because of something you did. Bodily injury claims may include things like medical bills, lost wages and even funeral expenses.

Example: A houseguest falls down your stairs and sues you for her medical bills plus pain and suffering, exceeding your homeowners insurance liability limit.

Property damage

Someone may file a property damage claim against you to recover the cost of repairing or replacing tangible items. These could include vehicles, household goods and more.

Example: Your teenage son drives off the road into someone’s house, causing hundreds of thousands of dollars in damage.

Personal injury

When it comes to umbrella insurance, personal injury typically refers to scenarios like:

• Slander or libel.
• False arrest or imprisonment.
• Wrongful eviction or entry.
• Invasion of privacy.

Example: A restaurant sues you for defamation after you write a negative review online.

Landlord liability

Landlords can use an umbrella policy to provide extra liability coverage beyond their underlying landlord insurance. However, you may want to speak with an agent about whether a personal or commercial umbrella policy would be better for your situation.

Example: A tenant slips on an icy sidewalk outside your rental property and sues you for failing to maintain the property.

Legal costs

In addition to paying damages up to your liability limit, your umbrella insurance will typically also cover associated legal costs. Say you have an $1 million umbrella policy, and someone sues you for that full amount. If a court finds you liable, your insurer could pay the $1 million plus provide your legal defense.

Did you know…

You might have to pay a “retained limit,” which is similar to a deductible. It’s an amount you may have to cover before your policy begins to pay.

What umbrella insurance doesn’t cover

Umbrella insurance doesn’t usually cover your own injuries or property damage. For that, you’ll need other types of coverage (such as health insurance or collision coverage on your auto insurance).

🤓Nerdy Tip

Some insurers allow you to add uninsured or underinsured motorist coverage to your umbrella policy. This gives you extra coverage beyond what you already have on your auto policy. It may be useful if you get into a serious accident with someone who doesn’t have enough insurance to pay for your injuries or vehicle damage.

Your umbrella policy also won’t typically cover:

Liability associated with your business. For this, you’d need a business umbrella policy rather than a personal one.

Liability related to the breach of a contract. Say a roofing company sues you because you haven’t paid for the work it’s done under the contract you signed. Your umbrella insurance policy is unlikely to help.

Crimes or deliberate injury. Umbrella insurance is generally designed for harm you do accidentally, not on purpose.

Some boating incidents. Umbrella policies may cover certain sizes or types of watercraft only. Other umbrellas don’t cover them at all unless you have an existing boat insurance policy.

Who needs umbrella insurance?

There’s no law requiring you to buy umbrella insurance. But if you have a lot of assets or a high chance of being sued, you might want an umbrella policy.

Consider buying umbrella insurance coverage if you:

• Own property.
• Have significant savings or other assets.
• Are worried about liability claims against you when traveling outside the U.S.
• Own things that can lead to injury lawsuits, such as pools, trampolines, guns or dogs. (Check with your insurer to make sure the policy covers your dog’s breed.)
• Are a landlord.
• Have an inexperienced driver in your household.
• Coach kids’ sports.
• Often host parties in your home.
• Serve on the board of a nonprofit.
• Regularly post reviews of products and businesses.
• Take part in sports where you could easily injure others (such as hunting, skiing or surfing).
• Are a public figure.

Nerdy takeaways

• An at-fault accident can increase your auto insurance rates for at least three years, depending on your state and insurer.
• A driver with a recent at-fault accident pays $1,117 more a year on average for a full coverage policy than a driver with no traffic violations.
• How much insurance increases after an accident depends on your insurer.
• Shop around and compare rates to find cheaper car insurance after an accident.

How an accident affects your car insurance rates

An accident typically affects your car insurance rates for at least three years, although this varies by state and insurance provider. Even if it was a minor crash, insurers perceive you as a greater risk and will almost always increase your rates.

NerdWallet did an analysis to see how much car insurance can increase after an accident. We compared average car insurance rates nationwide for 35-year-old drivers with a recent at-fault crash to those with no recent accidents, keeping all other factors the same. We used full coverage insurance policies for a 2023 Toyota Camry LE and a hypothetical accident that resulted in $10,000 worth of property damage and no injuries.

Type of policy	Clean record	One at-fault accident
Full coverage	$2,317	$3,434
Minimum coverage	$621	$908

Our analysis found that nationwide, a driver with an at-fault accident pays $1,117 more a year on average for a full-coverage policy than a driver with no traffic violations.

However, this is based on average rates. Your rate may differ depending on factors like your age, location and insurer.

Cheap car insurance after an accident by company

Car insurance companies have wildly different viewpoints on how much to raise rates due to a crash. In some instances, companies might not raise their rates after a small accident. In others, rates can go up an exorbitant amount.

NerdWallet’s latest analysis of some of the nation’s largest insurers found that average rates for a driver with an at-fault accident can go up as much as 61%, or as little as 26%.

That’s why it’s essential to compare car insurance rates from several companies to find cheap auto insurance after an accident.

To see how the largest insurers price policies after at-fault accidents, we looked at median national rates from each of these companies for drivers with an at-fault accident on their record.

Out of these companies, Travelers returned the lowest average rates for drivers who’d caused an accident. State Farm showed the smallest percentage increase in rates between drivers with a clean record and those with a recent crash.

Average rates from the biggest auto insurers after an at-fault crash

Company	Clean record	One at-fault accident
Allstate	$3,189	$4,947
American Family	$2,714	$3,535
Farmers	$4,047	$6,028
GEICO	$2,057	$3,491
Nationwide	$2,768	$4,516
Progressive	$2,059	$3,116
State Farm	$2,123	$2,689
Travelers	$1,664	$2,304
USAA*	$1,584	$2,250

*USAA is only available to military, veterans and their families.

For drivers who qualify, USAA frequently has some of the lowest rates we found, both before and after an accident. But in some cases, USAA is no longer the cheapest option once a driver has caused an accident.

So whether you’re insured with USAA or another company, it’s smart to compare car insurance rates after an accident.

Cheap car insurance after an accident by state

Wondering which companies are the most likely to offer cheap car insurance after a crash? Find your state below to see the cheapest car insurance rates after an accident on average based on where you live.

State	Cheapest company	Median annual rate after an accident
Alabama	Travelers	$1,573
Alaska	Umialik	$2,199
Arizona	Travelers	$2,215
Arkansas	Shelter	$1,895
California	CSAA	$2,041
Colorado	American National	$1,671
Connecticut	Travelers	$1,450
Delaware	Donegal	$1,032
Florida	State Farm	$2,717
Georgia	Donegal	$1,522
Hawaii	GEICO	$1,603
Idaho	Travelers	$1,103
Illinois	Hastings Mutual	$1,768
Indiana	Hastings Mutual	$1,632
Iowa	State Farm	$1,873
Kansas	Shelter	$2,302
Kentucky	State Farm	$2,502
Louisiana	Louisiana Farm Bureau	$3,317
Maine	MMG	$1,752
Maryland	Donegal	$1,536
Massachusetts	GEICO	$1,771
Michigan	Wolverine Mutual	$2,514
Minnesota	Travelers	$1,689
Mississippi	Shelter	$1,869
Missouri	Travelers	$2,104
Montana	State Farm	$1,965
Nebraska	American National	$1,154
Nevada	Travelers	$2,122
New Hampshire	MMG	$1,847
New Jersey	GEICO	$2,270
New Mexico	Central Insurance	$2,167
New York	Progressive	$1,287
North Carolina	Progressive	$1,174
North Dakota	State Farm	$2,060
Ohio	State Farm	$1,646
Oklahoma	American Farmers & Ranchers	$1,952
Oregon	State Farm	$1,643
Pennsylvania	Encova	$1,942
Rhode Island	Travelers	$1,770
South Carolina	American National	$1,172
South Dakota	Kemper	$1,724
Tennessee	Travelers	$1,644
Texas	State Farm	$1,914
Utah	Auto-Owners	$2,680
Vermont	Union Mutual	$989
Virginia	Virginia Farm Bureau	$940
Washington	Kemper	$1,500
Washington, D.C.	Erie	$2,446
West Virginia	Encova	$1,772
Wisconsin	American Family	$1,256
Wyoming	State Farm	$1,439

To find the cheapest insurer after a crash in each state, NerdWallet’s analysis looked at full coverage rates for all ZIP codes in all 50 states and Washington, D.C., for a 35-year-old driver with good credit and a recent at-fault accident. Although USAA is the cheapest option in many states, we didn’t include the company in this table since its policies are available only to active military members, veterans and their families.

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It’s possible to get a lower rate after an accident

Shopping around after an accident is the best way to ensure you are getting the cheapest rate, and our analysis shows why:

• Shopping for the cheapest car insurance after a crash could save you big. Our analysis shows that shopping for the cheapest possible rate after a crash could potentially save you thousands a year, depending on your state and insurer.
• No single car insurance company is cheapest for everyone. Your rate will be determined based on your personal characteristics and your specific situation.
• The cheapest insurer before an accident may not be the cheapest afterward. In some of the states we looked at, some drivers who were insured with the cheapest company available would need to switch insurers to continue getting the lowest possible rates after an accident.
• Big-name insurance companies aren’t always cheapest. Although the nation’s 10 largest car insurance companies together account for around 75% of the car insurance market, smaller companies sometimes offer the lowest rates after an accident.

How to find cheap car insurance after an accident

Shopping around is the best way to find the cheapest rate, but there are other ways to ensure you are getting the lowest rate possible. You may be able to avoid an insurance rate increase after an accident by:

• Raising your deductible, which is the amount reduced from a potential claim check from comprehensive or collision insurance. This will cause a greater out-of-pocket cost to repair your own car if you get into an accident in the future.
• Adding discounts to your policy. Discounts could help offset the increase in your rate from the accident. Check with your insurer or agent to see if any more are available to you.
• Improving your credit. While improving credit is a long-term strategy, a healthy credit report will likely result in a more affordable car insurance rate in most states.

Do insurance rates go up after a no-fault accident?

If you weren’t to blame for an accident, you might see an increase in your auto insurance rate anyway. A 2017 study by the Consumer Federation of America, the most recent data available, found that some companies raise rates 10% or more for not-at-fault accidents.

In no-fault states, everyone involved in an accident files a claim to their own insurer for injuries. Because of this, residents of those states may see rate increases after an accident, no matter who is at fault.

A few states, including Oklahoma and California, don’t allow insurers to increase your rates if a crash was not your fault. Some companies, such as USAA, even say they usually won’t raise rates if you aren’t responsible for an accident.

But regardless of whether the accident was your fault, it’s always a good idea to compare car insurance quotes to make sure you’re getting the lowest price.

Can I keep my car insurance rate from going up after a crash?

If you have accident forgiveness on your policy and this is your first accident, it’s likely that your rate won’t go up. Accident forgiveness is an optional coverage type many insurers offer that prevents your car insurance premium from increasing after your first accident.

This coverage typically costs extra, but some insurers offer free accident forgiveness to drivers who have gone without an accident for a certain period, often around five years.

Alternative car insurance for high-risk drivers

If you have multiple accidents or other serious marks on your record, you may be classified as a high-risk driver. High-risk drivers generally have a harder time finding coverage because they are considered risky to insure.

If no one will sell you a policy, you may need to look for a state-run assigned risk plan. To find an insurer, locate your state in the directory of the Automobile Insurance Plan Service Office, an industry organization, or ask your auto insurance agent for help. This is considered a “high-risk insurance pool,” in which the state assigns an insurer to you.

Frequently Asked QuestionsDo insurance rates go up after a no-fault accident?What happens if you get insurance after an accident?Will a hit-and-run claim raise my insurance?

Methodology

NerdWallet averaged rates based on public filings obtained by pricing analytics company Quadrant Information Services. We examined rates for men and women for all ZIP codes in all of the 50 states and Washington, D.C. Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.

In our analysis, “good drivers” had no moving violations on record; a “good driving” discount was included for this profile. Our “good” and “poor” credit rates are based on credit score approximations and do not account for proprietary scoring criteria used by insurance providers.

These are average rates, and your rate will vary based on your personal details, state and insurance provider.

Sample drivers had the following coverage limits:

• $100,000 bodily injury liability coverage per person.
• $300,000 bodily injury liability coverage per crash.
• $50,000 property damage liability coverage per crash.
• $100,000 uninsured motorist bodily injury coverage per person.
• $300,000 uninsured motorist bodily injury coverage per crash.
• Collision coverage with $1,000 deductible.
• Comprehensive coverage with $1,000 deductible.

In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:

• For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.
• We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit. In states where credit isn’t taken into account, we only used rates for “good credit.”
• For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.
• For drivers with a DUI, we added a single drunken-driving violation.
• For drivers with a ticket, we added a single speeding violation for driving 16 mph over the speed limit.

We used a 2020 Toyota Camry L in all cases and assumed 12,000 annual miles driven. We analyzed rates for drivers of the following ages: 20, 30, 35, 40, 50, 60 and 70.

These are rates generated through Quadrant Information Services. Your own rates will be different.

Insurance companies set rates by looking at numerous factors, such as your credit score, claims history, and location, as well as the replacement cost of the insured asset. But one important rating factor you may not know about is your CLUE insurance report. Insurers use these reports as part of their risk assessment process, and you have separate CLUE reports for your home and auto claims history.

It’s imperative to verify your CLUE report is correct; inaccurate information could keep you from getting the best rates, or even mean you’re denied a policy. Below, we’ll break down this report in more detail so that you understand how it affects you. We’ll also explain how to get your free copy.

What Is a CLUE Report?

CLUE stands for “Comprehensive Loss Underwriting Exchange.” It’s a claims-history database created by LexisNexis, a consumer reporting agency that uses data and advanced analytics to help its customers make informed decisions and better manage risk.

A CLUE report compiles your claims information to provide data about your home and auto insurance coverage and losses. It’s only available to you, your insurer, and the lender for your property. If you want to know what your report shows, you can request a free copy from LexisNexis (keep reading for instructions on how to do this).

What Your CLUE Report Includes

Your insurance company reports policy information to the CLUE database, including your:

• Name
• Birthday
• Policy number
• Claims information (dates and types of losses, amounts paid, etc.)
• Covered property’s description
• Property address (homeowners claims)
• Vehicle information (auto claims)

The CLUE database doesn’t store any other data sources like credit reports, criminal records, legal judgments, or civil lawsuits, and it only retains up to seven years of your home and auto claims history.

Note

Your report can include claims information even when a payout wasn’t made. That’s because insurance companies report all claims they paid money for, created a file for, or formally denied.

Only insurance companies that subscribe to CLUE can contribute or access CLUE reports, but it’s likely that yours does; LexisNexis reports that 99% of auto insurers and 96% of property insurers subscribe.

Note

CLUE reports only show actual claims you initiated. They do not display inquiries you made to find out about possible coverage or costs when you’re deciding whether to file a claim. However, if you’re calling about an actual loss, such as a broken water pipe, specify explicitly that you’re only making an inquiry and not a claim.

How Insurance Companies Use Your CLUE Report

Insurance companies and their agents only use your CLUE report to underwrite and rate a new policy. Most insurers won’t pull another CLUE report at renewal because their database already includes any claims you’ve filed with them since your policy started.

The Fair Credit Reporting Act gives LexisNexis the right to generate one when the information is used to underwrite a policy you applied for or when an insurance company requests it.

Getting a Copy of Your Report

It’s essential to request a copy of your report so you can check for inaccurate or irrelevant information that might negatively affect your insurance premium or eligibility. The Fair Credit Reporting Act was amended in 2003 by the Fair and Accurate Credit Transactions Act, and it allows you to request a free CLUE report for your auto and home claims history every 12 months. You can request your CLUE reports from LexisNexis by:

• Applying online
• Calling 800-456-6004 or 866-897-8126
• Mailing a request form to LexisNexis Risk Solutions Consumer Center, P.O. Box 105108, Atlanta, GA, 30348-5108

Note

Asking for a CLUE report will never hurt your credit score.

You can also get a free copy of your report if your insurer sent you an adverse action letter—a letter stating you were not given the best insurance rate, were denied coverage, or had your coverage limited. If the insurer canceled your policy or increased your rates, it will also send one. Regardless of the specific reason, contact LexisNexis Consumer Center at 800-456-6004 for your free CLUE report. Be prepared to provide basic personal information, Social Security number, driver’s license number, and your letter reference number (if applicable).

Note

If you’re interested in a property and want to know its claims history, you can ask your real estate agent to request a report from the property’s current owner. When a CLUE report is requested for a real estate transaction, the seller’s personal information is removed.¹⁴

How To Correct Mistakes on Your Insurance Report

If you notice an error on your CLUE report, call the LexisNexis Consumer Center at 866-897-8126 or 800-456-6004. LexisNexis will contact the insurer on your behalf, then the insurer has 30 days to provide LexisNexis with evidence that the information in question is accurate. If the company fails to respond on time or provide sufficient proof, LexisNexis will remove the data from the database.

You can also add notes to your CLUE report for other insurance companies to see. For example, if your home report includes a claim for damage from a fallen tree branch, you can note that the entire tree was removed. However, insurers aren’t allowed to add notations to your report or to the database.

What Is Vacant Home Insurance?

Vacant home insurance covers homes that aren’t being lived in full-time and have no belongings inside. You should consider this insurance if you own an empty house. It’s different from a standard homeowners insurance policy, which covers a home you or a tenant lives in. 

Vacant home insurance is sold as a standalone policy or an endorsement for an existing homeowners policy. 

Key Takeaways

• Vacant home insurance fills the gap when a home is empty and unoccupied. Standard homeowners policies often reduce or cancel coverage after 30 to 60 days of vacancy. 
• Vacancy insurance generally only covers structural damage from specific risks such as fire, wind, and explosions, with optional add-ons for theft, liability, and other structures.
• You can buy this insurance as an endorsement or a standalone policy. If adding as an endorsement, be sure to secure coverage before the vacancy clause in your current policy is triggered.
• These policies can be costly—sometimes as much as 60% more than a standard home insurance policy.

How Vacant Home Insurance Works

A house is considered vacant if it’s unoccupied and unfurnished. That means there’s no furniture or personal belongings inside and no people live there. It’s different from being unoccupied, which is when a house is furnished but no one resides inside.

Standard homeowners insurance policies typically have a vacancy clause that kicks in after the home has been vacant for 30 to 60 days. At that point, your policy’s coverage may be pared down to only protect the structure from specific perils. 

Depending on your contract, insurers can cancel your insurance or deny claims once the vacancy clause is triggered. However, they may not do this if you inform them beforehand and take precautions to secure the house. This could include making sure the heat or air conditioner is running, installing a security system, or having someone periodically pass by the house to check on it. 

Vacant policies can vary in length, depending on what the insurer offers. Some renew every three to six months, while others renew annually. If you cancel early, you may be able to get a prorated refund. Some insurers can change a vacant home policy to a landlord or owner-occupied policy once tenants move in.

When Do I Need Vacant Home Insurance? 

Vacant home insurance should be considered any time a home will sit vacant for a month or two, or long enough to trigger the vacancy clause in your policy. Many situations can cause this, such as if you:

• Move into a new home when you haven’t sold your old one
• Own a rental property but are between renters
• Are in the middle of a full-scale home renovation and have completely cleared out your house
• Move to an assisted care facility, emptying your home before selling
• Have a home you’re set to inherit tied up in probate after a parent passes away
• Are temporarily relocated for a job on a short-term assignment
• Are away on military leave, and your family moves with you to a base or nearby housing 
• Buy a home you plan on flipping and won’t be living in

What Does Vacant Home Insurance Cover?

Vacant home insurance typically covers the house’s structure from specific threats, such as fire and lightning. Exact coverage varies by policy, but other perils it may cover include:

• Explosions
• Windstorms
• Hail
• Smoke
• Water intrusion (sprinkler, leaky pipes)

These policies may provide named-perils coverage, so only perils specifically listed on the policy are covered. Some insurers allow you to customize your policy. Optional coverages that may be available as add-ons include:

• Vandalism and malicious mischief
• Theft
• Liability
• Other structures and assets (garage, surrounding land)

Important

Insurance for unoccupied homes may be covered under a vacant home policy, but not always. Make sure your home has the right coverage for your situation.

What Does Vacant Home Insurance Not Cover?

Vacant home insurance typically doesn’t cover anything beyond the home’s structure, unless you add additional coverage. As previously mentioned, insurers may also ask that you meet certain requirements to be eligible for insurance claims, such as keeping the home at a minimum temperature.

Note

You might be unable to add liability coverage if your home has certain risks, such as a swing set, trampoline, or swimming pool.

How to Get Vacant Home Insurance 

You can get vacant home insurance as a policy endorsement (if your insurer offers it) or as a standalone policy. The endorsement is sometimes called a vacancy permit. Endorsements can change some of your current policy’s coverage until people live in the home again. Your home will be insured for some, but not all, of the perils covered in the standard policy.

Important

You must request a vacancy permit endorsement before your policy’s vacancy clause kicks in.

If you need to buy a standalone policy, shop around and get quotes to compare prices. Companies such as Farmers, Foremost, and American Family Insurance offer vacant home insurance. 

How Much Does Vacant Home Insurance Cost?

Vacant home insurance policies could cost as much as 60% more than a standard home insurance policy. The latest report from the Federal Insurance Office showed the average national premium for an occupied home to be $1,737 after adjusting for inflation. Add 60% to that and it means an average vacant home policy could cost about $2,779—surprising, considering the home is empty of people and things. 

However, insurers see vacant homes as high risk. For instance, there’s no one there to turn off the water if a pipe breaks. Empty houses can also attract vandals and intruders who damage the property. 

The Bottom Line 

An empty house might look peaceful, but to insurers, it’s a magnet for trouble. Whether you’re flipping a house, relocating, or just in between life chapters, vacant home insurance can save you from financial problems arising from an unattended house. Most standard homeowners policies have a vacancy clause, making this insurance essential for continued home protection. 

If you know your home will be unoccupied for a while, talk to your insurer to see if they offer a policy endorsement and under what terms. If they don’t provide one, shop around for a policy, as they can be pricey.

Start investing in your 20s to build lifelong wealth.
Creating a budget helps identify smart saving methods.
Debt and credit should be used carefully to avoid financial trouble.
Compounding interest benefits young investors significantly.
Custodial accounts allow minors to begin investing early.


High school and college students should be on the road to financial success by learning some basics and following some guiding principles. This ultimate checklist will guide them on their way. And most importantly, time is on their side.

“Young people have perhaps the biggest advantage compared to other investors: time. The earlier you learn and apply key financial skills, the greater your rewards will be over the long term,” says Phillip Durbin, a financial planner with Generational Wealth Development.

Financial Checklist for Young Adults
Young people can build financial success by following the tips on this checklist:

Start by creating a realistic budget that takes into account wants and needs.
Start saving and establish an emergency fund to cover unexpected expenses.
Be smart about credit.
Don’t be scared of investing in the stock market.

1. Learn How to Budget
   Getting a handle on the money coming in and going out each month is the first step to building a solid financial foundation. So, tally up all bills and expenses as well as income each month and build a budget. Make note of monthly bills and monthly income. How much money is left over after paying bills? Rather than spending it all, this is a great opportunity to begin saving.

Understand Wants vs. Needs
As you build your budget, consider the difference between needs and wants. There are many ways people want to spend their money, but not all of them are essential—these are needs. Take care of needs first and then consider what wants will fit into the budget.

“Prioritize spending on things you need (housing, food, gas) before things you want (new phone, concert tickets, gas station junk). Budget for some fun, but learn to say no,” Durbin says.

2. Start Saving Efficiently
   “The sooner you learn to budget for your life, the better off you’ll be. Once you control where your money is going, you can start controlling how much you save,” Durbin says. “Pay yourself first by saving a portion of any money you earn or receive before spending it.”

One way to achieve that is to set up automatic savings into a high-yield savings account or a brokerage account.

Learn the Power of Compound Interest
Depending on the account you put your savings into, it’s important to ensure you understand how that money grows. When interest gets applied not only to the principal amount you invest in an account but also to the interest accumulated previously, this is compound interest. And it’s a sort of superpower, particularly when you’re young.

“Take advantage of compound interest by contributing to a 401(k) or Roth IRA as soon as possible. Even small contributions in your 20s can grow significantly over time,” says Daniel Milks, a certified financial planner and founder of the Fiduciary Organization.

Build an Emergency Fund
Not everything that happens to you will fall into a neat budgeting bucket. An unexpected expense, such as a big car repair or getting laid off from a job, can happen to anyone. Be prepared by building a savings cushion to cover these expenses.

“Aim to save three to six months’ expenses in a high-yield savings account. This provides a financial cushion for unexpected expenses like medical bills or job loss,” Milks says.

3. Manage Credit Wisely
   Be smart about your credit. Your bank will likely make it easy to set up automatic bill pay to ensure your credit card bills (and other recurring bills) get paid on time. Keep your credit card balances low. And only borrow money for essentials you need. These can help you create a credit history. And a good credit rating can go a long way as you map out your future.

“Build a strong credit history by paying bills on time, keeping credit utilization low, and avoiding unnecessary debt. Good credit helps with securing loans, renting apartments, and even job applications,” Milks says.

4. Invest in the Stock Market Early
   Investing early and often when you are a young person is one of the best financial moves you can make. Time and the power of compound interest are on your side. So don’t hesitate to begin investing.

“The stock market can be this big, scary beast, but it doesn’t have to be. You have the biggest advantage of anyone: time,” Durbin says. “Spend the time learning about it now, so it can benefit you for the rest of your life. This knowledge could save you millions of dollars over your lifetime; isn’t that worth the time to learn it now?”

TIP

People younger than 18 can get an early start on investing through a custodial account, but you’ll need a parent or guardian’s help to set it up. In a custodial account, an adult controls investments on behalf of a minor until the minor reaches 18 or 21 years of age, depending on the state.

To start, you’ll need to educate yourself about investing. Then, set up your investment goals before selecting your specific investments. Finally, select the right brokerage account for you.

The Bottom Line
These financial tips will set young people on the path to a bright financial future. All are important, so make sure to incorporate all the tips as you build your financial life. Learn to budget, use credit and debt wisely, save for emergencies and major expenses, and start investing in the stock market when you are young rather than waiting until your income grows.

You can build a lifetime’s worth of wealth by starting to invest in your 20s and taking advantage of compound interest. So don’t be frightened by the stock market and instead invest in your financial future.

There’s no income limit for marketplace insurance, but there are limits to qualify for subsidies to make them more affordable.

Marketplace insurance plans are health insurance policies available to individuals and families through a health insurance marketplace or exchange. Marketplace plans might also be referred to as Obamacare plans or Affordable Care Act (ACA) plans.

There’s no income limit for marketplace insurance, but there are income limits for marketplace insurance subsidies that can help make that insurance more affordable.

What are marketplace insurance subsidies?

Marketplace insurance subsidies can significantly reduce what you pay for a marketplace insurance plan:

• Premium tax credits help reduce the cost of marketplace insurance premiums. The credit is refundable, so you can get it even if you don’t owe tax to the government.
• Cost-sharing reductions help reduce out-of-pocket costs such as copays, coinsurance and/or deductibles for Silver marketplace plans.

What is the income limit for the marketplace premium tax credit?

Broadly speaking, you’re eligible for a premium tax credit if your household income is between 100% and 400% of the federal poverty level (FPL). There are non-income-related eligibility requirements, too.

For an individual in the contiguous U.S., that’s between $15,650 and $62,600 per year in 2025^[3]. For a family of four in the contiguous United States, the range between 100% and 400% of the FPL would be $32,150 to $128,600 per year. (Alaska and Hawaii have their own slightly higher income limits.)

🤓Nerdy Tip

The American Rescue Plan Act of 2021 created “enhanced” premium tax credit subsidies starting in 2021. The enhanced subsidies are more generous and make more people eligible for subsidies based on income.

Under the enhanced subsidies, eligible higher-income households can qualify for tax credits that reduce what they spend on premiums to no more than 8.5% of household income, even if their income is above 400% of the FPL.

Enhanced subsidies were initially set to expire after 2022, but Congress extended them through 2025. Unless Congress extends them again, enhanced subsidies will sunset at the end of tax year 2025.

The maximum possible premium tax credit — available to those with the lowest qualifying income — is equal to the premium for the second-lowest-cost Silver plan available to you through the marketplace^[1]. If you qualify, but your income is too high for that maximum level, the subsidy gets smaller on a sliding scale according to income.

What is the income limit for marketplace cost-sharing reductions?

People who qualify for the premium tax credit and have household income up to 250% of the FPL can qualify for marketplace cost-sharing reductions. These cost-sharing reductions can decrease the copays, coinsurance, deductibles and maximum out-of-pocket costs you owe with a Silver plan.

For an individual in the contiguous U.S., 250% of the FPL is $39,125 per year, for example. For a family of four, it’s $80,375 per year. (Alaska and Hawaii have their own slightly higher income limits.)

People with lower household incomes qualify for the largest cost-sharing reductions. Like the premium tax credit, cost-sharing reductions get smaller for people with higher household income.

Household income	Cost-sharing reductions
100% up to 150% of the FPL	Largest
Greater than 150% up to 200% of the FPL	Medium
Greater than 200% up to 250% of the FPL	Smallest

Cost-sharing reductions are available only with Silver plans. Plans at other metal levels, such as Bronze or Gold, aren’t eligible for cost-sharing reductions.

(The Silver restriction is only for cost-sharing reductions — so if you choose a plan with a different metal level, you might qualify for premium tax credits but not cost-sharing reductions.)

What if my income is too low for marketplace insurance?

If you make less than 100% of the FPL, your income is too low to qualify for marketplace insurance subsidies — both the premium tax credit and the cost-sharing reductions.

Having income too low for subsidies doesn’t mean you’re not allowed to buy marketplace insurance — but the cost of unsubsidized plans might be unaffordable.

In most states, people with income too low for marketplace insurance subsidies might qualify for Medicaid based on income. You can check your eligibility through your state’s Medicaid agency or at HealthCare.gov.

Catastrophic health plans might also be an option with more affordable premiums if you’re under 30 or qualify for an affordability or hardship exemption.

Catastrophic plans cover preventive services at no cost and at least three primary care visits per year before you meet your deductible. Other health benefits are covered only after you meet the high deductible.

What if my income is too high for marketplace insurance subsidies?

If your income is too high for marketplace insurance subsidies, you can still buy a marketplace health insurance plan — but you’ll have to pay full price. It’s a good idea to work with a licensed insurance agent or broker to find the best option for you.

Trees are pleasing features of many areas and homes, but what happens if a tree falls on your home and causes damage? Does insurance cover the removal of the fallen tree and the damage that comes along with it?

It all depends on what the cause of the damage is. Home insurance will cover many forms of damage caused by trees, but it might not cover all issues.

Key Takeaways

• Home insurance is meant to cover sudden and accidental damage. In most cases, it doesn’t cover damage that happens over time.
• Whether your plan will cover damage caused by a tree depends on the reason the tree fell.
• If someone else’s tree damages your property, your insurance company will attempt to recover the costs from the party at fault.

Tree Damage Covered by Insurance

Your homeowner’s insurance covers certain risks and perils. For example, lightning and windstorms are two common perils. The first step in knowing whether your home plan will cover tree damage is to determine whether the damage was sudden and accidental. You will also need to find out if the damage happened over time. Insurance is meant to cover sudden and accidental damage, not slow damage or home maintenance.

Accidental Damage vs. Gradual Damage

One example of sudden damage would be if a windstorm uprooted a tree and it came crashing down on your house.

An example of gradual damage is when the roots of a tree grow into parts of your home or plumbing. The damage where the roots of the tree have been growing into would not be covered because the tree roots did not grow overnight. On the other hand, if the damage caused another issue, such as your pipe bursting and water flowing into your home, then you might be covered for the water damage.

Types of Tree Damage Home Insurance Covers

Insurance plans have special limits and things they will and will not cover. Damage that happens as a result of weather and storm damage is often covered by insurance.

If you have an all-risk policy versus a named-perils policy, your plan will cover more events. If your home was damaged by a hurricane, tornado, or other named storms, your plan should have a claim deductible based on the total value of your home.

When a Tree Falls on a House or Property

Depending on the cause of the damage, a tree falling on a house may be covered or not. If the tree was healthy and it was not a maintenance issue, then there is a good chance you have coverage in your homeowner’s plan. If the tree was unhealthy and fell due to it not being taken care of, you may not be covered.

Sometimes It Matters to Whom the Tree Belongs

During a major storm, trees and branches from trees may be flying around and travel a long way. It may not always be clear who owns the flying debris that hit and damaged your home. You don’t have to worry about finding out where the branches or tree came from if you do not know. If you have damage, call your insurance and let them know what happened. They can help you with your home insurance claim.

Deductibles for a Fallen-Tree Claims

You should always know ahead of time the amount of your deductible. This is the out-of-pocket money you pay before your plan pays its portion of damages. When you have an insurance claim, you should be ready to pay that amount.

Often, the cost of damage from the fallen tree is less than the deductible or close to it, so you might decide not to make the claim in order not to lose a discount on your home policy. In a major claim, if the cost of the damage is very high, there may be a large loss deductible waiver.

If the cause of the damage to your property is not your fault, you may still need to pay the deductible, but you may be able to get it back. For instance, if a neighbor’s tree fell on your home, your insurance may require you to pay the deductible but may try to get the money back from your neighbor’s plan to pay you back. This concept is called subrogation, and it is quite common.

Coverage for Tree Removal

Fallen trees not only cause damage to homes but also must be removed once they have fallen after a storm. Most homeowner’s insurance plans offer limited coverage for the removal of fallen trees and other storm debris. There may be a maximum dollar limit on your policy, such as $500 or $1,000. Your plan also might not cover the removal of trees if no structure was damaged. Each policy is different, so ask before you need to file a claim.

Root Damage Coverage

Many people will end up having damage to their building structures, pipes, and property from tree roots. One common problem is when the roots of a tree grow into the foundation of a home or the water entry pipe.

This damage can be very costly to repair. Always call your insurance to ask if the damage is covered because every policy and event is unique. The concept of tree roots growing does not fit the definition of sudden and accidental because roots grow very slowly. This explains why damage caused by roots would not be covered in most cases.

Getting a Tree Replaced After a Claim

Getting a tree replaced after filing a damage claim would fall under the landscaping section of your home policy. Your plan may limit or not cover a new tree even if the damage and removal of the tree were covered.

When Someone Else Is at Fault

Even though it’s not your fault, when the neighbor’s tree falls on your house, your plan will pay to fix your home right away. Your insurance company wants to make things safe and right for you, but they also know someone else caused the damage. If they feel a third party, such as a neighbor, is responsible for the damage, they will take care of you first. Then they go after the party at fault. This is what is meant by “subrogation.” If your plan is able to recoup the costs of the claim in subrogation, they may be able to pay you back for the deductible after the matter is settled.

Homeowners insurance now costs more in the Midwest than in disaster-prone states like California and Florida. Here’s what to do about it.

The East Coast has hurricanes, and the West Coast has wildfires. But in the middle of the country, homeowners face a different kind of disaster: baseball-sized hail. “The damage is just catastrophic,” says Avery Moore, owner of Oklahoma-based independent insurance agency ECI Insurance.

As insurers scramble to keep up with record losses from hail and the storms that produce it, homeowners in the “hail belt” pay the price. The highest U.S. home insurance rates are now in the middle of the country, with Oklahoma, Nebraska and Kansas leading the pack at more than double the national average, according to NerdWallet data.

To put that into perspective: The average homeowner in hurricane-prone Florida pays $2,845 per year for homeowners insurance. The average Oklahoman pays $7,255.

Why hail is breaking the market

Shifting storm patterns are at least partially to blame. According to Jeff Schmidt, a meteorologist and vice president at reinsurance broker Guy Carpenter, research suggests that the part of the atmosphere that can produce this baseball-sized hail is expanding both eastward and northward.

But it’s not just that storms are moving. There are also more homes in their way.

This is called the “expanding bull’s-eye effect.” Picture a city as a target, with a dense urban center surrounded by rings of suburbs and rural land. In fast-growing cities like Dallas, those rings are pushing outward.

“Cities are bursting at their seams,” Schmidt says. “If we’re shooting something at the target — whether it’s a bow and arrow or a dart or … a weather event — now you have a bigger target.” A single hailstorm that might have hit an empty field 50 years ago could now result in thousands of totaled roofs.

Paying more for less coverage

In addition to raising premiums, insurance companies can respond to losses by adjusting policy details like coverage amounts and deductibles.

For example, it’s common for policies to include a separate wind and hail deductible set to a percentage of the home’s insured value instead of a flat rate. So, instead of a typical $1,000 deductible, repairs for hail damage might be subject to a 1% to 5% deductible. If you have $300,000 of dwelling coverage, that’s $3,000 to $15,000 you have to pay out of pocket before a single shingle is covered.

Insurers are also moving away from offering replacement cost value (RCV) coverage — which pays for the full cost of repairing covered damage — toward actual cash value (ACV) for older roofs. Under an ACV policy, the insurer pays out the depreciated value of an aging roof, leaving you to cover the gap. While Moore recommends pushing for full replacement coverage, she says many carriers simply won’t offer it once your roof hits the 10-year mark.

“If your roof is insured at actual cash value and it’s 15 years old, you’re not going to get a lot of money back,” Moore says.

The non-renewal dilemma

Insurers can also drop homeowners entirely if they’re seen as too risky. You can receive a non-renewal notice for a number of reasons, and making too many claims is one of them.

Take one of Moore’s clients who lived in a 7,000-square-foot home. After discovering a roof leak, she hired a roofer to do a temporary fix to avoid filing a claim. The roofer found extensive hail damage, so she ended up having to file a claim anyway. It was denied. When the quick fix failed during the next hailstorm, she filed another claim, along with a claim on her auto insurance.

“We’re looking at three claims within the three-month period,” Moore says. “And guess who got non-renewed?”

This can leave homeowners in a bind. Paying for small repairs out of pocket can protect your insurability, but Moore’s client did just that and ended up losing her policy. For some, it can feel impossible to win.

How to lower your ‘hail tax’

Whether you can’t afford your premiums or you just want to lower your rates, here’s how to stack the odds in your favor.

Shop around

If your homeowners insurance is too expensive, shop for other options before your coverage lapses. An independent agent who knows the local market can help you find carriers you might miss on your own.

The deductible you choose for your policy could also lower your bill. NerdWallet data shows that increasing a deductible from $1,000 to $2,500 leads to an average premium decrease of 9%.

Finally, check the financial ratings for any insurers you’re considering through AM Best, an independent agency that rates an insurer’s ability to pay out claims. “Even though B is good in school, B is not great in insurance,” Moore says. Look for an “A” rating to ensure the company can survive a catastrophic storm season.

Think carefully before filing a claim

NerdWallet’s editorial team found that premiums are 10% higher, on average, for homeowners who have made just one claim compared to those with a clean record.

For minor repairs that fall near your deductible, paying out of pocket might save you more in the long run — as long as the job is well done. Make sure to protect your home from further damage right away, or you could face a denied claim in the future for failing to mitigate the loss.

Avoid ‘storm chasers’

After a big storm, salespeople will often go door-to-door in affected neighborhoods offering to inspect or fix roof damage. Don’t answer the door, Moore says.

“We deal with a lot of fraud where they take the money for the down payment or they do a shoddy job, and just as soon as they blew in here with the storm that brought them, they’re gone.”

Instead, look for local, licensed contractors with liability insurance and good reviews. Ask to see proof of insurance and a license number. You can verify the license with your state’s licensing agency.

Invest in your roof

Roof-related damage accounts for up to 90% of residential catastrophic losses, according to the Insurance Institute for Business & Home Safety (IBHS).

Upgrading to the Fortified roof standard — a system developed by IBHS that involves sealing the roof deck and reinforcing its edges — can lead to discounts of up to 55% on the wind or hail portion of your premium in some states.

If you replace your shingles, know that just because they’re marketed as “hail-resistant” or “impact-resistant” doesn’t mean they’ll stand up to baseball-sized ice. Several leading brands received a “marginal” rating from the IBHS. Aim for shingles rated “good” or higher.

What is umbrella insurance?

Often referred to as excess liability coverage, umbrella insurance is a type of personal liability insurance that provides an additional layer of coverage beyond what standard homeowners, auto, or other vehicle coverage might provide.

An umbrella policy kicks in when you reach the limit on the underlying liability coverage for these policies. It may also cover risks that those policies often do not, such as libel or slander.

Should I purchase an umbrella insurance policy?

You may want to think about umbrella insurance as an extra layer of protection for your assets. If someone sues you, your standard homeowners or auto policy will provide some liability coverage to pay for judgments against you and your attorney’s fees–up to the limit set in your policy. However, you may want to have the extra coverage of umbrella insurance in case a judgment against you exceeds your policy limits.

Other reasons to consider umbrella insurance include certain activities and lifestyle risks that can attract the risk of someone suing you, such as:

• owning a swimming pool and having pool parties
• renting out a property you own
• having a dog or a teenage driver in the house

Since a personal umbrella policy goes into effect after the underlying policy coverage is exhausted, certain limits usually must be met to purchase umbrella coverage. Most insurers will want you to have at least $250,000 of liability insurance on your auto policy and $300,000 on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.