HOMEOWNER INSURANCE REVIEW

BY ALAN PLAFKER, PRESIDENT & CEO
MEMBER BROKERAGE SERVICE LLC
A MELROSE CREDIT UNION SERVICE ORGANIZATION

Home Insurance Summary

It is important to insure your home for the full replacement value but not up to the market value which may be more than replacement. Review the amount of insurance and make sure you have the right coverage form with the least exclusions. There are many options to review to make sure you have only what is needed. Increase your deductible to reduce your cost, but don’t reduce your coverage.

Chances are you won’t submit a small claim since it can be managed, but you need the right coverage and limits in the event of a major loss. There are also other limitations for things like jewelry and other valuable items. If you have separate coverage for this and need to reduce costs, put your valuable items in a bank or credit union vault before dropping any coverage.

The importance of windstorm coverage

The Northeast may not be quite the hurricane alley that the Gulf coast is, but hurricanes, in particular, and windstorms in general, are a real threat to homeowners all along the eastern seaboard. Between expanded coastal development and a troubling increase in damaging storms, it’s a danger that shows no sign of slacking. Inland households are not immune to the risk either. A middling hurricane has a good, long reach, and don’t forget, even a modest thunderstorm can cause significant wind damage.

Fortunately, damage from windstorms is covered by all the standard homeowners policies. Even so, there are some deductible quirks of which you should be aware. You see, insurance companies see the same trends we do. So, to reduce the effect of increased losses from natural disasters such as windstorms, many insurers have begun selling policies with a percentage deductible instead of a hard and fast dollar amount deductible.

According to the Insurance Information Institute the insurance industry’s authoritative information source:

“With a policy that has a $500 standard deductible, for example, the policyholder must pay the first $500 of the claim out of pocket. But percentage deductibles are based on the home’s insured value. So, if a house is insured for $300,000 and has a 2 percent deductible, the first $6,000 of a claim must be paid out of the policyholder’s pocket.”

As you can see, the precise deductible language of your policy can mean a good $1,000+ difference in a claim. And, of course, each state regulator has issued different guidelines for windstorm damage deductibles. Be sure to check in with your agent. Agents can help you understand the coverage you have, and make a change if you need to.

What isn’t covered under most homeowners and renters insurance policies?

The following items usually are not covered:

• motor vehicles;
  
  
• commercial buildings on your property or buildings you rent or lease to others except a private garage;
  
  
• pet injuries or damage to your property caused by your pets;
  
  
• jewelry, coin collections, silverware, furs and other valuables above specified limits that particularly are vulnerable to theft.
  

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. Audiotapes and compact discs kept in automobiles also may not be covered.

What damages are not covered by my Homeowners policy?

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. This applies 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.

Develop a home inventory

Devote a few hours of your time with a working camera or video recorder

First, list all of your major belongings and furnishings with a brief description of each: any serial numbers, and any receipts or appraisals.

Second, back up this list with photos or a video. Photograph every wall of every room, and inside closets and cabinets. With a video make comments for a verbal record as well as a visual one.

Third, store your lists, videos, photographs in a safe place away from the home such as a safe deposit box so they won’t be damaged by the same event that might cause you to need them as would a fire.

Fourth, update this inventory whenever needed. That’s all it takes for the peace of mind that comes with knowing that you are adequately covered.

Policy Limitations

There may be limitations on the amount of insurance provided by your homeowners policy, especially for expensive gifts such as personal computers, silverware, stamp or coin collections, fine art and jewelry. There also may be limitations on the types of loss or damage that are covered, such as breakage or flood. You can get additional coverage for these gifts.

Look into personal property endorsements and floaters. With an endorsement you can specify a higher amount than under the standard homeowners policy. With a personal articles floater items such as jewelry can be covered at full value with no deductible based on current appraisal or the bill of sale. Floaters also can cover additional causes of loss such as dropping a new ring down the drain.

How to insure collectibles

Most people think stamps, coins or baseball cards when they think of collections. But the items people collect are as different as the people who collect them. Think salt and pepper shakers, snow globes and even refrigerator magnets. All of these things are valuable to someone and, if they have value, they are insurable. The question now is how to go about insuring them.

Four things you’ll need in order to insure your collectibles:

• Inventory list;
  
  
• Current appraisal;
  
  
• Sales receipts; and
  
  
• Photos and descriptions.
  

First, contact your agency to review your homeowners policy which may or may not provide full coverage for your collectibles. They will also make sure your policy includes protection in the event of theft, vandalism, accidental damage and natural disasters.

Second, have your collection appraised, review the value on a regular basis and work with your agency to adjust your coverage as needed. A check up every three to five years is a good rule of thumb.

Third, add an endorsement to your homeowners policy which will give you coverage on these items. Insurance companies will pay towards restoration if a covered item is damaged.

Fourth, list all items separately on the policy so that you get the full value for each one if only a few are damaged or stolen.

Finally, assign a number to each of your items when taking inventory so missing items can be identified readily. That way you can tell easily what is missing should someone break into your house. Put the assigned number on the sales receipt to make it easier to find when you need it.

Now, give your agency a call. They should go over any questions you may have regarding insuring your collectibles.

Are your holiday gifts covered?

Not necessarily. There may be limitations on the amount of insurance provided by your homeowners policy, especially for expensive gifts such as personal computers, silverware, stamp or coin collections, fine art and jewelry. There also may be limitations on the types of loss or damage that are covered such as breakage or flood. You can get additional coverage for these gifts.

Look into personal property endorsements and floaters. With an endorsement, you can specify a higher amount than under the standard homeowners policy. As stated above, with a personal articles floater items such as jewelry can be covered at full value, with no deductible, based on current appraisal or the bill of sale. Floaters can also cover additional causes of loss such as dropping a new ring down the drain.

New holiday treasures might need coverage

Once you have unwrapped all the holiday packages it will be up to you to protect your items. Do this by updating your household inventory to include the new electronics, jewelry, sports equipment and other big ticket items you may have received. And, before you send off your thank you notes, take pictures, record any serial numbers, and store them both in a safe place like a fire proof lock box or in your safe deposit box at your bank.

Most importantly, give your agent a call to make sure you have the proper coverage on your homeowners or renters insurance policy. Remember some items, such as fur coats, fine art and jewelry, are not covered under a basic insurance policy and require an umbrella policy to protect your valuables if they are lost, damaged or stolen.

How can I reduce the cost of my homeowners insurance?

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 may also 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.

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 also serves as:

• Past President of PIANY (Professional Insurance Agents Association of NY),

• Treasurer for 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 PERSONAL and COMMERCIAL insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext.1082, or visit the website at: www.MemberBrokerage.com

© 2015 TLC Magazine Online, Inc.