PROPERTY OWNERS AND RENTERS INSURANCE COVERAGE QUESTIONS
BY ALAN PLAFKER, PRESIDENT & CEO
MEMBER BROKERAGE SERVICE LLC
A MELROSE CREDIT UNION SERVICE ORGANIZATION
NOT ALL PROPERTY IS EQUAL WHEN CHOOSING THE RIGHT INSURANCE
We recommend treating your "very important property" differently than the rest of your property. Lumping your "very important property" in with all other property doesn't give it the respect it deserves. That's why you should consider scheduling it under what we call an inland marine or "floater" form of insurance. Allow me to give you four good reasons to elevate the protection for this type of property:
Often, your "very important property" consists of property that is out of the ordinary such as stamp and coin collections, fine arts, jewelry, silverware and furs. The value of these items can be difficult to assess when the property is available for inspection let alone when the property has been lost or damaged. By scheduling this property you will be compelled to clearly identify the property and its value before a loss. That means fewer disputes and a more fair settlement after a loss.
Some of your "very important property" is subject to limitation in your general homeowners coverage. Typically, you will receive no more than $200 for coins, $1,500 for stamps, $1,500 for the theft of jewelry, $1,500 for the theft of furs, and $2,500 for the theft of silverware. By scheduling this property you can override these limitations.
Your general homeowners policy has a deductible applicable to each loss which may be $250, $500, $1,000 or greater. However, those deductibles do not apply to scheduled property. By scheduling them you can be compensated for the full insured value of the item.
Finally, scheduling your "very important property" covers it for more causes of loss. Instead of the limited list of covered perils under your homeowners policy, scheduled coverage expands protection to include all risks of loss that are not otherwise listed as excluded. By scheduling this property you can now be covered for breakage, mysterious disappearance, flood, earthquake, dropping your camera over the side of the boat, losing your wedding band down the drain, pet damage and so on.
Let your agency show you how to give your "very important property" the VIP treatment it deserves. You will be surprised at how little it costs to get the best. Some of these items may need appraisals to properly determine their actual worth, but wouldn't you rather have it that way instead of trying to guess its value when it's too late? Call your agent now for details; they're standing by with the red carpet.
EARTHQUAKE COVERAGE NOT INCLUDED IN HOMEOWNERS INSURANCE POLICIES
Am I covered if an earthquake damages my home?
Unless you've purchased earthquake coverage you are not covered by a standard homeowners policy. So, structural damage to the home and any loss of furnishings and personal possessions would not be covered.
How does earthquake insurance work?
You can purchase an endorsement to a homeowners, renters or business policy or as a separate policy to cover your losses from earthquakes and aftershocks. Since different building materials react differently to earth movement (brick versus wood, for example), premiums vary by the type of construction of the building.
Earthquake insurance deductibles are considerably higher than standard deductibles. Usually they are determined by a percentage of the building's value, generally from 5 percent to 25 percent for homeowners.
Can I buy earthquake insurance at any time?
The only time you can't buy the coverage for a home is within 72 hours after an earthquake, since there may be damaging aftershocks within that period of time.
With earthquake coverage am I covered for aftershocks?
Yes. With a homeowners earthquake endorsement any damage from the earthquake and from aftershocks that happen within 72 hours of the earthquake will be considered one occurrence so you will pay your deductible only once.
I belong to a condo association. What if the common property is damaged?
If you belong to a townhouse or condominium association that has inadequate earthquake coverage or none at all, you could be charged for repairs to common property.
If you have earthquake coverage and loss assessment coverage on your unit owners policy, you may be able to extend it to cover you for this liability to the association. Please check with your insurance agency for more information.
Do I really need earthquake coverage in this area of the country?
Small earthquakes occur frequently in the Northeast. In fact, according to the Weston Observatory at Boston College, in 2009 there were 82 earthquakes. Most of these had a magnitude in the 2 range, and some in the 3 range. Earthquake hazard maps (e.g., the National Seismic Hazard Map developed by the U.S. Geological Survey in 2008) generally show that in most parts of New England there is about a 2 percent chance, that in any given 50 year period of time, earthquake vibrations that are potentially damaging will strike.
REPLACEMENT COST COVERAGE: A WISE INVESTMENT
I just bought a home and would like to insure it against damage or destruction. How can I be sure I will be financially able to repair or rebuild in the event of a catastrophe such as a fire?
Insurers generally recommend you insure your home for its full replacement cost which means it is insured under a homeowners policy for 100 percent of the cost of repairing or rebuilding it at the time this becomes necessary. If you purchase a guaranteed replacement cost endorsement you would receive the full amount you need to rebuild, regardless of inflation.
Most insurers require you to insure your home for at least 80 percent of its replacement cost to receive full coverage on a partial loss. It is wise, however, to insure your home for its full replacement cost; insuring it for less could prove quite expensive should you incur a major or total loss.
If there is a fire in my living room will my homeowners or renters insurance automatically pay for the full cost of replacing my furniture?
No. Unless you have replacement cost coverage on your personal property and possessions, your furniture is insured only for its actual cash value which is its replacement cost at time of loss minus depreciation of its value, and any deductible applying to your policy. So, that sofa and love seat you bought three years ago for $1,200 might only have a depreciated value of $700 now, and if you had a $500 deductible your insurance company would only pay you $200 ($700-$500) toward new furniture even if those items cost you $1,400 today to replace.
If you have replacement cost coverage on your personal property and possessions you would receive the $1,400, or whatever it costs to replace the furniture with that of equal value (less your deductible, of course). Replacement cost coverage protects you from both depreciation and inflation. It usually is available at a nominal charge in addition to your homeowners or renters insurance and is well worth the investment.
What isn't covered under most homeowners and renters insurance policies?
The following items usually are not covered:
Special riders or endorsements often can be added to your insurance policy to cover some of these items. Additionally, many homeowners and renters policies do not cover perils such as nuclear accidents, earthquakes, war, floods, mud slides and certain acts of God.
How do I determine the replacement cost of my home and belongings?
Your professional insurance agent can help you with this. They have information and the necessary tools, including multiple types of questionnaires and personal inventory forms that can help you determine the replacement value of your home and possessions. Together, we can then select the best coverage for you. We can review your policy with you on an annual basis to assure it is kept up to date and adequate to meet your needs.
Is the replacement cost the same as the price I paid for the house?
Not necessarily. When you purchased your house you also purchased the land the house is on. Your homeowners insurance does not provide coverage for the land. Also, if you do suffer a total loss of your house, included in the replacement cost are items you would not normally think of such as excavation costs and architect fees.
When your house originally was built, the contractor probably built more than one house at a time and took advantage of the economies of scale. And, the increased volume allowed the builder to purchase many of the necessary materials at a lower rate. When your home needs to be re-built your builder will not have that luxury, so the cost for materials could be greater. Also, as mentioned earlier, excavation costs now are involved before a new home can be re-built. The old one must be demolished and removed. These are just a couple of reasons for the difference between replacement cost and purchase price. Contact your agency for additional information.
AFFORDABLE INSURANCE FOR RENTERS
I rent my home. Am I covered for losses under my landlord's homeowners or landlord insurance?
No. Your landlord cannot insure your personal property—your personal computer, clothes, stereo, television, jewelry, furniture, bicycle, artwork and other items—against destruction or loss. Renters insurance, however, will give you both property and liability insurance—and it's very affordable, typically costing less per month than a cable bill.
Is a renters insurance policy inferior to a homeowners insurance policy?
No. Renters insurance provides essentially the same coverage as homeowners insurance, but without coverage on the dwelling.
It covers personal property, protecting the renter against many causes of loss such as fire and smoke, lightning, vandalism, theft, explosion, windstorm and water damage from plumbing as well as offering
coverage for personal liability.
Does renters insurance cover all of my possessions?
It depends. Some possessions—jewelry, firearms, silverware—are subject to a per-category theft limit. Most renters policies set a $1,500 total limit on jewelry that is stolen, a $2,500 limit on firearms and a $2,500 limit on silverware or flatware. Many people feel that their pets are their prized possessions. Unfortunately, when it comes to insurance, their pets are not covered. Other items—money, securities, personal records, watercraft and others—are subject to special limits of liability. If your valuables exceed these limits you may want to consider purchasing a "floater" which provides additional coverage for some of your items.
What if my family and I cannot live in our home because of damage caused by a fire?
Your renters insurance will pay for your living expenses that exceed those normally incurred before the loss if an occurrence renders your home or apartment unfit to live in. This is a true benefit if you are required to live in a hotel for any length of time or pay for meals at a restaurant while your place is being renovated.
Will I be covered under my renters insurance if I am sued by someone who was seriously injured at my residence?
Yes. If a lawsuit covered by your policy is filed against you or against a relative living with you, your personal liability coverage under a renters policy will pay for legal defense costs and attorneys' fees. It will protect you if you accidentally cause bodily injury to others or damage someone else's property either at your residence or away from your residence.
OK—I'm convinced. What should I be on the lookout for in selecting a policy or in checking my existing coverage?
When purchasing renters insurance choose a policy wisely to be sure that all your possessions are covered. To begin, renters should take a home inventory noting the description and value of their belongings. A copy of this inventory should be stored in a safe place outside of the home such as a safe deposit box. The inventory will be of great assistance later if you need to file a claim.
Also, be sure to inquire about property not covered under renters insurance, theft limits and other special limits. We'll provide you with a list of standard coverage limits so you know whether you'll need to buy a floater.
If your apartment or home has a security system, smoke detectors or deadbolt locks, you may be eligible for discounts on your renters insurance. You also may be eligible for a discount on both your auto and renters insurance if they are placed with the same insurance carrier. Call your insurance agent today. Your agent will be happy to explain the many options available to you.
DON'T BE TRICKED BY HALLOWEEN FIRE HAZARDS
Halloween can be a fun filled time for children and adults alike. This Halloween, be sure to pay attention to certain fire safety guidelines to keep the trick-or-treaters safe and sound.
How can I keep my child's costume safe?
Whether buying one or making your own, be sure fabrics for costumes and decorative materials are flame resistant. Don't permit your children to go trick-or-treating with candles; instead, outfit each with his or her own flashlight. To be more festive, there are Halloween themed flashlights created just for this purpose. Costumes should be made without billowing or long trailing features that present a higher risk of igniting.
What hazards are in the home?
According to the National Fire Prevention Association, fires caused by candles have been soaring in recent years as many families use candles to decorate during this time of year. When decorating, keep in mind that dried flowers, cornstalks and crepe paper are highly flammable. Keep these items away from heat sources. Illuminate your jack-o-lanterns with small flashlights instead of candles. Keep exits clear in case evacuation becomes necessary.
Are there other safety issues I should consider?
Although Halloween can be a lot of fun for children certain safety precautions should be taken to ensure the festivities are safe as well as fun. Keep in mind these safety tips when sending your child out trick-or-treating:
Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.
Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves as Vice President on the Board of Directors the PIANY (Professional Insurance Agents Association of NY), serves on the Board of CIBGNY (Council of Insurance Brokers of Greater NY), and was appointed to the New York Independent Livery Driver Benefit Fund Board of Directors. His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082, or visit the website at: www.MemberBrokerage.com