BotH617WebEdition2

June 2017

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or most people, your home is your most valuable asset.

Whether you own a traditional house, a condo, townhouse,

coop or tiny home, there are very specific types of homeowners

policies for each. Even if you are renting, there is an insurance

policy form for tenants that insures your personal property and

alsoprovides liability insurance. Whenwas the last time you really

looked at the limits of coverage, deductibles, endorsements and

coverage form on your policy to know what you are covered for

and also what is excluded? Maybe never or just when you first

made the purchase. Maybe now you just notice the price of

your renewal. You may have purchased the homeowners policy

to comply with a lender’s requirement to meet the amount you

were borrowing with the coverage limit for the structure of your

home being the same as your mortgage amount, or interior of

your condo, townhouse or coop.

This is not how to arrive at the limit

of coverage for the structure, since

the limit should be what it would

cost to replace the structure (or

unit interior in the case of a coop

or condo that you are responsible

for). The limit should also not be

what market value is, as this could

exceed the replacement cost of

the structure, since land is a factor

in market value. The reverse can

also be true where you need more

coverage than market value due

to the house being higher-valued,

unique or Victorian home or you

may be in an area where market values are low due to being

in a depressed, remote or not popular area. If you have had a

policy renew for many years, often this structure limit may have

overinflated or you are underinsured. The insurance company

is never going to pay more than it would cost to rebuild your

home in the event of a total loss, so you may want to contact

your agent or company to see if your structure, or condo/coop

interior limit needs to be changed. At our agency, we complete

detailed cost estimating charts that calculate the approximate

replacement cost unique to each home, based on year built,

location, square footage, style of construction and features. If

you have a condo or coop your by-laws should indicate what

your responsibility is for the unit interior. Would you have to

replace sheetrock, flooring, electrical wiring and plumbing pipes

and fixtures? Possibly yes, and also any improvements you have

made. Have you renovated you kitchen or bathroom(s)? Your

unit interior limit should be sufficient to replace all of this in the

event of a total loss.

What type of policy and coverage do you have? Fire insurance

would be common to all properties, but beyond that, do you

know what else you are protected against? If you own a home,

it is recommended you have a replacement cost endorsement

for the structure that will pay above the limit specified on

the policy, which is typically capped at 125% or 150% of your

structure limit. This is to your advantage to have this “cushion”

of extra insurance, since materials and labor increase ever year.

On all forms of homeowners policies you should also have an

endorsement for replacement cost for personal property. Your

clothing, electronics, furniture and other common items would

qualify for this coverage but be careful, since there are strict

limitations for certain classes which would not qualify and only

be insured on an actual cash value basis (with depreciation for

age taken into consideration). Examples of items where there

would be limitations in your policy may be jewelry, art, antiques,

collectibles, or anything not commonly replaceable. Items such

as these can either be added by endorsement to the policy on a

scheduled basis, with an itemized list, or

blanketed with a lump amount assigned

to a particular class, so as to insure them

at their current value.

It depends on the homeowners

insurance company how this is handled.

You can also buy a separate policy for

valuable items, which is commonly used

for items too high in value to be added

to the homeowners policy. Several of

our customers have separate policies for

extensive lists of jewelry, art or antique

items. Coverage is broader when you

specifically name items and theft on and

off your residence premises applies. For

example, a stone falling out of your ring would be insured this

way as an endorsement on your homeowners policy or on a

separate policy, but not typically on an unendorsed policy.

Water damage is one of the most common types of claims.

But what type of water damage is covered and what is not?

Generally, a sudden and accidental pipe that bursts and causes

damage would be a covered claim. The repair of the plumbing

probably not but the resulting damage, yes. However, if this is

a result of leaking or seepage over time this could be consider

“wear and tear”and excluded. Ice or snow melting and entering

through your roof or backing up through gutter generally is

covered, but only if you have “special form” coverage. This is

something to check on with your own homeowners, condo ,

townhouse, condo or coop policy. Damage to the personal

property should be covered as well as sheetrock repair and

painting. What water damage might not be covered? Anything

relating to water entering through ground level, flooding or

water backing through sewers or drains. These types of claims

could be covered by buying a flood insurance policy and an

endorsement on your homeowners policy is usually available

for the damage caused by sewer or drain back up.

Your Insurance

with

Cathy Karas.

Homeowners Insurance

Simplified - Getting

The Best Coverage at

The Best Rate

photo: intellaclaim.com