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HOMEOWNERS INSURANCE -
Types Of Homeowners Insurance (continued)
d. Depending on where you live, special exceptions for damage caused by certain catastrophic or other events, such as hurricanes, earthquakes, sink holes, fungi contamination, etc. may exist. Sometimes coverage is excluded altogether for certain hazards, sometimes limits of coverage are reduced, and sometimes larger deductibles apply for certain hazards. Make sure your agent explains what exclusions and limitations to coverage apply, and whether additional coverage can be purchased to lessen your exposure.
e. Damage from flooding is most always excluded from homeowners insurance. Coverage for flooding is only available through the National Flood Insurance Program run by the Federal Government. However, purchase of this additional coverage can usually be arranged through your insurance agent or company.
f. Coverage for certain types of personal property is restricted to limits that are far lower than the amount of stated coverage for all other personal property. Types of property with restricted coverage include cash, jewelry, furs, collectibles, antiques, fine art, computers, cameras, etc. If these items have significant value, their full loss will not be covered. Endorsements can be purchased that will cover these items up to their full value. Check with your insurance company.
g. Identity fraud protection is also generally available in case your personal information is stolen and misused. This coverage provides protection for lost wages, attorneys' fees, and other costs incurred while clearing your name.
Deciding On Coverage & Deductible Amounts
Most people purchase enough property insurance to cover the cost of rebuilding their
home should it be a total loss, due to an insured occurrence. If the estimated cost
of rebuilding the home is $200,000, they purchase $200,000 of coverage. As noted
above, many people choose to purchase an endorsement to cover potential overruns
of up to 20%-
1. Consider the following when deciding the amount and types of coverage to purchase for your home :
a. In order to decide on the amount of coverage for your home, make sure you answer
all questions accurately about the characteristics of your home. These include such
things as size, type of construction, type of interior appointments, number of bathrooms,
etc., but does not include the value of the land, since this is not being insured.
The insurance company will use this information to determine the estimated cost
to rebuild your home, and for this reason it is important that it is accurate. It
is also important that it is accurate since if large inaccuracies exist it may jeopardize
your ability to collect fully on a claim, due to misrepresentation. Do not be tempted
to low-
b. “Replacement Cost Plus” endorsements that provide an extra cushion of coverage over and above the insured value of your home may be worth considering. However, if you are secure that the insured value of your home is more than enough to rebuild your home in case of total loss, this coverage may be redundant. If you do not have this coverage, just make sure your insurance company increases your coverage limit annually to reflect any increase in building costs in your area.
c. Coverage to cover any additional costs of rebuilding your home due to changed building codes may or may not be necessary. If building codes have changed considerably since your home was built, this is probably good coverage to have. If codes are essentially the same, there is really no benefit to having this coverage. Check with your city’s or county’s building department to see if building codes have changed significantly since your home was built. Also check with your insurance company to understand if you need this coverage. But even if you do not need the coverage at this time, as building codes change in the future you may want to add this coverage.
d. If your home is located in an area of the country where a catastrophic event could potentially take place, strongly consider getting additional coverage if it is required to protect against these events. Remember, insurance is best when used to protect against major losses. And catastrophic events often produce major losses.
e. Flooding is also a catastrophic loss. If there is a possibility for a flood where you live (including storm surge from hurricanes), consider this insurance. To determine your flood risk you can inquire at your city’s or county’s building department. You can also go to the web site FloodSmart.gov. Damage to the structure of your home is available in limits up to $250,000. Contents of your home can be insured up to $100,000.
f. Loss of use (up to 24 months) will also be included automatically at about 20% of your home’s value. So, if your home is insured for $200,000, you will have loss of use coverage of $40,000. This is usually adequate coverage.
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