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Understanding Coinsurance Penalty in Homeowners Insurance: It’s a Contract, Not a Promise

Homeowners insurance is essential to protecting your property, but it’s crucial to understand the details of your policy to avoid unexpected costs, particularly regarding the coinsurance penalty. Many homeowners may not realize that insurance is a legally binding contract, not a mere promise to pay based on subjective expectations or feelings. This misunderstanding can lead to significant financial surprises, especially regarding the coinsurance clause.

What is Coinsurance?
Coinsurance, in the context of homeowners insurance, is a policy provision that requires you to insure your property for a certain percentage (typically around 80%) of its total value. This ensures that homeowners carry a fair amount of insurance for their property.

The Coinsurance Penalty
The coinsurance penalty comes into play when a homeowner fails to insure their property to the required percentage. For example, if your home is worth $100,000 and your policy has an 80% coinsurance clause, you should have at least $80,000 in coverage. If you only have $60,000 in coverage, you’re underinsured by 25%. In the event of a partial loss, the insurance company will only pay a proportionate amount of the loss minus your deductible. So, if you have a $10,000 claim, the insurance company may only pay $7,500 (75% of the claim), leaving you to cover the remaining $2,500.

Insurance as a Contract
Understanding that an insurance policy is a contract between you and the insurance company is vital. This contract outlines the responsibilities and expectations of both parties. It’s not based on unilateral decisions or subjective feelings but on the terms and conditions agreed upon when you purchase the policy.

Key Contractual Aspects:
Policy Declarations: This part of the contract specifies the coverage details, including the coinsurance percentage, coverage limits, and premiums.

Insuring Agreement: This section outlines what the insurance company promises to cover in exchange for your premium.

Exclusions and Limitations: These are the conditions under which the insurance company won’t provide coverage.

Conditions: You must follow these rules for the insurance company to uphold their end of the contract.

Why Understanding Your Policy Matters
Failing to understand these aspects can lead to assumptions that the insurance company will cover any loss, regardless of the policy terms. This misconception can be costly, especially when a coinsurance penalty is applied.

Tips to Avoid Coinsurance Penalties
Review Your Policy: Understand the coinsurance clause and other policy conditions.

Ensure Adequate Coverage: Regularly assess the value of your property and adjust your coverage accordingly.

Seek Professional Advice: If you’re unsure about your coverage needs, consult with an insurance professional.

Update Your Policy: Inform your insurer about significant changes to your property that might affect its value.

Homeowners insurance is more than just paying premiums and expecting coverage. It’s a contract with specific terms, including the coinsurance clause, which can significantly affect your financial responsibility in the event of a loss. Understanding these details ensures that you are adequately protected and not caught off guard by penalties like the coinsurance penalty. Always remember insurance is a mutual agreement, not a one-sided promise.

vacant home for sale

Understanding Vacant Property Insurance: Protecting Your Unoccupied Home

The Critical Need for Specialized Insurance for Your Vacant Property

In the realm of property insurance, a commonly overlooked aspect is the coverage for vacant properties. As a homeowner, you might be under the impression that your regular homeowner’s policy adequately covers your property at all times. However, this crucial misconception can lead to significant financial risk.

The Limitation of Regular Homeowners Policies

Regular homeowners insurance policies are designed with the assumption that the property is occupied. This occupancy plays a vital role in the level of risk the insurance company is willing to take. Typically, if a home becomes vacant, most standard policies limit how long the home can remain unoccupied – usually around 30 to 60 days, depending on the insurance carrier. Beyond this period, if your home is vacant and something happens, you might find that your coverage is voided. This coverage gap is where the importance of vacant property insurance becomes evident.

Introducing Virgil Smith Insurance: A Leader in Vacant Property Coverage

At this juncture, it’s vital to introduce Virgil Smith Insurance, a professional and premier insurance agency with over 30 years of experience. As a female-owned and operated agency, Virgil Smith Insurance stands out in the insurance landscape, championing diversity and empowerment in the industry.

Why Choose Virgil Smith Insurance?

  1. Extensive Experience: With three decades in the insurance industry, Virgil Smith Insurance deeply understands the unique needs of homeowners with vacant properties.
  2. Wide Range of Markets: Our agency has access to numerous markets, enabling us to find the right coverage for your vacant property. We understand that every property is unique, and our extensive network allows us to tailor a policy that suits your specific requirements.
  3. Exceptional Customer Service: Virgil Smith Insurance prides itself on providing top-notch customer service. We work tirelessly to ensure that your experience is smooth, informative, and tailored to your needs. Our team is committed to guiding you through the process of securing the right insurance for your vacant property.

The Benefits of Vacant Property Insurance

Vacant property insurance is specifically designed to address the risks associated with unoccupied homes. These risks include vandalism, theft, and damage from environmental factors that might not be covered under a standard homeowner’s policy once it becomes void due to prolonged vacancy.

Here are a few key benefits:

  • Comprehensive Protection: This type of insurance offers more comprehensive coverage for unoccupied properties, ensuring you are protected against various risks.
  • Flexibility: Policies can often be tailored to the duration of vacancy, whether short-term or long-term.
  • Peace of Mind: Knowing that your vacant property is adequately insured provides immense peace of mind, especially during periods of extended absence.

Conclusion: Safeguarding Your Investment

Vacant property insurance is an essential aspect of property ownership that is often overlooked. With regular homeowners policies having limitations on vacancy periods, seeking specialized insurance for extended vacancies is crucial. Virgil Smith Insurance, with its extensive experience, comprehensive market access, and exceptional customer service, stands as a beacon of reliability and professionalism in providing vacant property insurance.

Remember, safeguarding your property with the right insurance is not just about complying with legal requirements; it’s about protecting your investment and ensuring peace of mind. Reach out to Virgil Smith Insurance today and secure the future of your vacant property.

Virigl Smith Insurance

Understanding Homeowners Insurance in Galveston County: The Virgil Smith Insurance Advantage

The Importance of Homeowners Insurance in Coastal Areas

Living in Galveston County, Texas, homeowners understand the unique challenges posed by the coastal environment. From unpredictable weather to the ever-present risk of flooding, the importance of having a robust homeowners insurance policy cannot be overstated. A good insurance policy not only offers peace of mind but also a safety net for your most valuable asset: your home.

Why Choose Virgil Smith Insurance?

When it comes to choosing an insurance provider in Galveston County, Virgil Smith Insurance stands out as a professional and premier agency. With over 30 years of experience in the industry, they have established themselves as a trusted name in homeowners insurance.

Female Owned and Operated

One of the unique aspects of Virgil Smith Insurance is that it is female-owned and operated. This brings a refreshing perspective to the insurance world, often dominated by male-centric views. The agency prides itself on understanding the needs of diverse homeowners and offering tailored solutions that cater to a wide range of requirements.

Wide Range of Markets

Virgil Smith Insurance is not limited to a single insurance provider. Instead, they have access to many markets, allowing them to place coverage that fits each individual’s specific needs. This flexibility ensures that homeowners in Galveston County can find the best possible coverage at the most competitive rates.

Top-Notch Customer Service

At the heart of Virgil Smith Insurance is a commitment to providing top-notch customer service. They understand that dealing with insurance can be daunting, and they work hard to make the process as smooth and stress-free as possible. Their team of experts is always ready to offer personalized advice, answer any questions, and help clients navigate the complexities of homeowners insurance.

Navigating Homeowners Insurance in Galveston County

Assessing Your Needs

The first step in finding the right homeowners insurance is understanding your specific needs. In Galveston County, this might include considering the risks of coastal living, like flooding and hurricanes. Virgil Smith Insurance excels in helping homeowners assess these risks and find policies that offer adequate protection.

Understanding Coverage Options

Homeowners insurance can cover various aspects, from the structure of your home to your personal belongings and even liability protection. Virgil Smith Insurance can guide you through these options, ensuring you understand what is and isn’t covered under your policy.

The Benefit of Experience

With over three decades in the business, Virgil Smith Insurance brings a wealth of knowledge and experience. This experience is invaluable in a place like Galveston County, where homeowners face unique insurance needs and challenges.


Choosing the right homeowners insurance in Galveston County is crucial, and Virgil Smith Insurance offers the expertise, range of options, and customer service to ensure you’re well-protected. Their dedication to understanding and meeting the needs of their clients makes them a standout choice for homeowners in the region. Remember, the right insurance policy is not just about meeting legal requirements; it’s about securing peace of mind in the face of life’s unpredictabilities.

Freezing Temps and your swimming pool! What to do…..


  1. Turn the pool equipment off
  2. Turn off the main breaker. That way, if anything is frozen, once power comes back on, it’s not going to try to run the pool equipment.
  3. Open the air relief on the top of the filter (water in the tank will start going down)
  4. Remove pump lids and remove all debris from the pump basket. (Starts draining water lines back to pool)
  5. Remove the freeze plugs in the pump pot (where the basket is). I personally put the freeze plugs in the pump basket so you do not lose them. I would also leave the lid off of the pump. That way, any water left has room to expand. Most Pumps will have two freeze plugs in them. Sometimes, a pressure gauge will be in one of the places.
  6. Remove the freeze plug from the heater manifold.
  7. Put all valves in the open position. If you have POOL & SPA with automation, to open the 3-way valves without power. You will need to remove the valve actuator. (Remove the handle, then 4 Philips head screws, remove the actuator, put a handle on the valve, and open.
  8. Remove the Drain plug from the filter. (Removes the last of the water in the tank)
  9. Go get you something warm to drink and grab a blanket

After doing this, you will have introduced air into the system allowing all of the water in the lines to drain back to the pool. Removing the freeze plugs removed a majority of the water out of the equipment.

Some of this stuff might be a little difficult for the average homeowner. If you can get the water out of the main pool equipment, that very well can be enough if you keep you safe, Pipe and vales are much cheaper than Pumps, Heaters and Filters. However, the pool industry still is not 100% caught up on the equipment demand caused from Covid and the 2021 storm. So protect what you have.

If you have a pool under construction and have your equipment installed, reach out to your builder. Chances are the lines are full of water from the pressure test. If your builder says you are fine, I would follow the NO POWER instructions. But open the spigot on the pump first. Once water is done spraying out, then proceed the other directions.

Four Questions to Get the Right Auto Insurance

Using the right tool for a job is key to success in any profession.

Experts say the same principle applies when selecting an auto insurance policy. Having the right type of policy can help ensure that you, your employees and your business are all protected in the unfortunate event that one of your vehicles is involved in an accident.

Continue reading “Four Questions to Get the Right Auto Insurance”

Seven Commercial Vehicle Insurance Myths Debunked

1. Myth: It’s cheaper to cancel your insurance if you have a seasonal business. Fact: Not necessarily. If you cancel your insurance policy, your stored vehicles won’t be protected. A Comprehensive-only policy provides coverage for a business that doesn’t need liability coverage during certain months, but needs basic protection against incidents, such as vandalism, theft, falling tree branches, hail, etc. This is ideal for vehicles that sit for long periods during off-season. Plus, a Comprehensive-only policy provides continuous insurance which may save you money in the long-run. If you drop your insurance completely, you may pay significantly more to purchase a new policy when your peak season rolls around because most insurance companies ask for proof of continuous coverage to get you the best rate. Continue reading “Seven Commercial Vehicle Insurance Myths Debunked”