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HOMEOWNERS & RENTERS INSURANCE - BASIC QUESTIONS by Alan Plafker, President & CEO
How is the cost of my homeowners insurance determined? A number of factors determine the cost of your homeowners policy including:
One way to keep insurance costs down while maintaining adequate protection for your family, property and belongings is to increase the size of your deductible.A deductible is the agreed amount by which, in the event of a covered loss or damage, the insurance company reduces the loss payment. For example, if you agree to a $100 deductible on your homeowners policy you would be responsible for the first $100 in damages and your insurance company would reimburse you for the balance of the loss up to the policy limit. The higher your deductible, the lower your premium will be. Increasing your deductible to the level you can afford will reduce your insurance costs while still providing protection from large losses. You also may be eligible for lower premiums if you have certain protective devices installed in your home such as a burglar alarm, fire alarm, smoke detector, storm shutters or hurricane resistant glass and doors. Many insurance carriers also offer multi-policy discounts for their customers (i.e., having both your automobile and homeowners insurance with them).
All-risk policies generally insure against more losses or damages than named-peril policies by insuring against every direct cause of physical loss or damage except those excluded in the policy such as losses due to flood or war.A named-peril policy covers only losses or damages resulting from perils named in the policy contract.A peril is an event such as a fire or vandalism that causes damage to your home or property.
A homeowner has a legal duty to provide a safe premise for invited guests and even trespassers. Neighbors certainly have a right to expect that activities on the premises will not be harmful to their person or property. Consequently, a homeowner could be held liable for bodily injury or property damages involving a contractor’s activities either because of the homeowner’s own negligence or the contingent responsibility for hiring a negligent contractor. Such protection is provided by the liability coverage of a homeowners policy. However, you will not want your policy to respond as primary coverage. We recommend that you verify (usually by certificate of insurance) that the contractor has general liability coverage in effect before performing the work. And, since no workers’ compensation coverage for a contractor is provided by your homeowners policy, it is all the more important to verify that the contractor carries the required workers’ compensation coverage.
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.
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.
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, your 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 that you will 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. Call you agent today. He or She will be happy to explain the many options available to you.
Fire is perhaps the most common disaster that can befall any homeowner or apartment dweller.Those who live in a high rise building, whether in an apartment, co-op or condominium, have special concerns that require special precautions. Fire fatalities usually are caused by smoke and intense heat, not flames. It is crucial to know how to get out of your building quickly and safely; it could mean the difference between life and death. First, always know your exit escape routes, and be sure they are clear of anything that might impede your evacuation.Then observe the following tips: What if fire breaks out in my dwelling? Remain calm and exit the dwelling.Take your key and close the door behind you.Activate the closest fire alarm. Leave the building by the stairwell—never use elevators during a fire. What if the building fire alarm sounds? Before opening your door, use the back of your hand to touch the top of the door and door handle. if they feel hot or warm, don’t open the door because fire could be right behind the door. If the door is cool, open it slowly. If the hall is clear of smoke, exit and close the door behind you and leave the building by stairwell, not elevator.
Remain calm. Keep your door closed but unlocked. Seal the door jamb with duct tape and place a wet towel across the bottom to keep smoke out. Call 911, tell them your location and your situation. They will give you further instructions.
Remain calm and keep low below the smoke. Call 911 and tell them you are trapped by smoke. If you have a balcony stay low and go outside closing the balcony door behind you. If you don’t have a balcony or can’t get to it, go to a window and open it fully. Hang a towel or blanket out the window so the fire department will know you are trapped. Stay low and wait for rescue.
Tenants of high rise buildings and owners of high rise condominium or cooperative units have the same risk of loss to personal property located in these residences. A tenant may purchase a tenants policy, and condominium and cooperative owners may purchase a unit-owners policy.While personal property is covered the same by both types of policies, the unit owners policy will provide additional protection for building property that the policyholder is responsible for. There are many different optional enhancements that may be available with these policies such as replacement cost, added assessment coverage, personal property schedules and broader perils including the addition of earthquake protection. Contact your insurance agency for details.
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 replace-ment-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.
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 $1,000 now, even if those items cost you $1,400 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 after you satisfy the deductible. 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.
The following items usually are not covered:
Additionally, many homeowners and renters policies do not cover perils such as nuclear accidents, earthquakes, war, floods, mud slides and certain acts of God.Audiotapes and compact discs kept in automobiles also may not be covered.
As your professional insurance agent we can help you with this.We 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.
When a catastrophic event occurs you no doubt will feel overwhelmed by the loss and the confusion that follows.Advance preparation is your first prescription for getting through the experience. But, now that you have suffered a loss, you will benefit from the kind of information that proceeds from questions asked by others who have endured similar events.
Your safety always is the most important concern. Do not return to your property until authorities have signaled it is safe to do so. When you approach the property look for unsafe conditions such as downed power lines, the smell of natural gas and unstable structural conditions. If it is safe to proceed proactively shut off the utilities (electricity, natural gas, water, etc.) before inspecting the damage. Do not drink tap water (without boiling it for five minutes first) until you know the water is safe to drink.
Yes. Take a liberal amount of pictures from different angles before you make emergency repairs to protect the property from further damage.You may use a video/digital camera for this purpose as well.
Contact your relatives, friends and church affiliates to see if they may be able to accommodate you temporarily.You also may want to seek help from the Federal Emergency Management Agency, the Red Cross, the Salvation Army or any other disaster recovery service organization. Your homeowners policy typically will pay your additional living expenses to reside at another location until repairs to your home can be completed. The typical homeowners policy covers events such as fire, windstorm and tornado. Unfortunately, even if you have a flood insurance policy, your additional living expenses will not be paid when the damages are caused by flooding. Keep this in mind when you make your living arrangements.
The adjuster will “scope” the damage, an important part of the claim process.An attempt will be made to determine the cause of damage. For example, was the damage caused by wind, flood or both? Next, the adjuster will itemize the property that has been damaged.You will want to make sure that nothing is overlooked.The placement of values on the damaged property will not occur at this time. Appraisals, repair estimates and inventories will be obtained later to establish values. Often the adjuster will offer an advance payment on a covered claim so that restoration may begin and living arrangements can be made. Be sure to keep detailed records on how this money is spent.
Public adjusters are paid a fee based upon a percentage of the claim settlement, typically, between 10 and 15 percent (state laws may apply). Consequently, you will need to decide whether the adjuster’s services are worth the discounting of your claim settlement. Some of the services public adjusters provide are:
It may just be a need for additional documentation.When you obtain the evidence that substantiates the property value go back to the adjuster and negotiate a better settlement. If the adjuster is being obstinate and unfair, you can request to talk to the supervising adjuster. Your agency will advocate on your behalf to the extent possible. If you are unable to negotiate further with the adjuster there is an “Appraisal” provision in your policy that specifies a procedure for resolving differences in the valuation of property losses.You and the insurance company each will get an appraiser at your own expense respectively. Then those two appraisers will choose an umpire (whose fee is shared).An agreement by any two of the three appraisers will establish the amount payable. Any time you feel your insurance company is not treating you fairly you may file a complaint with the Insurance Department. YOUR HOMEOWNERS POLICY AND STORM DAMAGE—WHAT IS COVERED? Generally, how does my homeowners policy respond to storm damage to my property? Your homeowners policy covers most losses that may occur to your dwelling and personal property. Commonly, losses resulting from theft, fire, wind, vehicles and vandalism are covered.
A standard homeowners policy covers storm damage to the dwelling, its contents and other structures such as garages and fences up to the policy limit. Such damage also acts as a trigger for coverage of other consequential losses and expenses including removal of debris and loss of use.
When storm damages make it necessary to leave your home temporarily your homeowners policy covers the additional costs necessary to maintain your normal standard of living for such things as meals, lodging, laundry, transportation, entertainment, etc. You will need to present receipts for all of your expenses to be reimbursed.
Your homeowners policy will cover costs for removal of debris when covered property is damaged. This includes the removal of trees that fall on covered structures, but this coverage for trees usually is limited to $1,000 for a single storm.
Your policy obligates you to protect your property from further damage following a loss as a condition to payment of your claim.You can expect your policy to pay for such expenses to board windows and make emergency repairs.Also, property removed from your home to protect it from an impending storm receives more comprehensive coverage than what is provided at your home. For a limited period of time, it covers flood, earthquake and any direct damage to your dislocated property without exclusions. However, the expenses to remove the property from harm’s way is not a covered expense.
Trees, shrubs and gardens damaged or destroyed by the storm are not covered.The spoilage of food due to an inoperative refrigerator or freezer resulting from a utility line power outage is not covered by many policies unless the appliances are inoperative because the damage to power lines or other utility equipment occurred on your property. For example, lightning damage to your circuit box or a tree falling on power lines connected to your home. It is important to note that there is no coverage for any damage that is a direct result of flood, surface water or water that backs up through sewers or drains that is caused by an act of nature (a storm). There may be additional coverage on other policies or by endorsement.
The information provided here includes general guidelines for storm damage coverage. You should contact your agency for definite answers and further advice.
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 rebuilt 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 rebuilt. The old structure must be demolished and removed.These are just a couple of reasons for the difference between replacement cost and sale price.Your agent will be able to give you a more thorough explanation. For more information, talk to your insurance professional, or the author of this article.
Your Professional Insurance Agent … We want you to know about the insurance you’re buying.
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