What you need to understand about Homeowners Insurance!
A large percentage of U.S. homeowners mistakenly believe that standard homeowners insurance protects them from a wide array of perils, according to new research by the National Association of Insurance Commissioners. The NAIC survey found that 33 percent of U.S. heads of household, who own a home and have homeowners insurance, incorrectly believe food damages would be covered by a standard homeowners or property and liability policy, despite extensive media coverage on Hurricane Katrina victims whose claims were denied because they lacked flood insurance.
The NAIC survey also revealed other homeowner misunderstandings relating to common loss situations — none of which are covered by standard homeowners insurance policies — such as:
- 68 percent think vehicles such as cars, boats and motorcycles stolen from or damaged on their property are covered.
- 51 percent think damages from a break in the water line on their property supplying water to their home are covered.
- 37 percent think damages due to a break in the sewer line on their property that connects to their municipal sewer system are covered.
- 35 percent think damages from earthquakes are covered.
- 34 percent think damages from mold are covered.
- 31 percent think damages from termites or other infestation are covered.
- 22 percent think pets stolen from or injured on their property are covered
The NAIC survey revealed another type of potential consumer misunderstanding. Twenty-four percent of respondents indicated their policies insured their homes for the actual cash value, while 64 percent said their policies covered the replacement cost. Another 12 percent said they did not know which type of coverage — actual cash value or replacement cost — they purchased. (Reprinted with permission from Independent Insurance Agents of Wisconsin Action News 6/25/07.) This is why we believe you need to understand the insurance you have bought or are looking at buying. Because of this belief we take time to explain the coverage you have and seek to answer any questions you come up with. If we don’t know the answer, we are more than willing to find the answer for you.
The more informed you as the insured are, the easier claim settlement will go. Please contact us with your questions.
When Comparing Homeowners Insurance Policies, What Should I Look At Other Than The Limit On My Real Estate Property?
There are many features within a homeowners insurance policy that will make it different than another. In addition to the limits shown on the front of your policy (dwelling, contents, liability, etc.), you need to dig into the policy language or contact a qualified Richards Insurance Agent to see how your policy addresses things like:
Backup of Sewer or Drains
The basic homeowners insurance policy does not cover this, but many offer it as an option or enhancement.
Wind damage to trees
If you have a tree blown down on your home, most policies will pay for the cost to remove it. However, if the tree is just downed in the yard, some policies will cover the removal — others will not.
Cost to Replace your Home
Virtually all homeowners insurance policies provide replacement cost coverage (not depreciated) up to the home value shown on the policy. What if your cost to rebuild exceeds that limit? Many companies offer endorsements to allow some “excess coverage” to allow for situations where the cost to rebuild exceeds the home value shown. While you should try to insure at the full cost to rebuild, these endorsements take the burden off of you to make sure that you are aware of every change in building costs over time.
If I Have A Business Office In My Home, Does My Homeowners Insurance Policy Provide the Coverage I Need?
Probably not, unless you address a few items specifically.Be sure to address any business activity with your agent. There are many gaps in both the property and liability coverage under the homeowners insurance policy, relative to the business. Your policy may exclude any detached structures, such as a garage, that are used for business purposes, including storage of materials. Contents coverage for business personal property is usually limited to $2500 at home or $250 away from home. Liability coverage for business activity is generally excluded. Many of these items, however, can be addressed by many homeowners policies as in-home businesses become more common. Coverage for contents, business computers and data and liability can often be added to the homeowners policy or be provided by a companion policy.
Why do I need Renters insurance?
A: Renter’s insurance protects all personal property you own while a tenant, and will reimburse you for loss due to fire, robbery, burglary. Plus, policies also cover:
- Additional living expenses for motel during repairs
- Medical payments to others if injured while in your apartment
- Personal liability due to a lawsuit not related to your work or profession
Should I have “Replacement Cost” coverage on my home?
Yes, because there is much better coverage under your homeowners insurance policy with this endorsement. The company must cover the full value of the property in case of a loss. Otherwise, the company would pay only the face amount of the policy and that amount may be lower than the cost to rebuild your home due to inflation costs.