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Understanding Your Insurance Policy

Home Insurance

With the unpredictability of life, sometimes things happen. When they do, you’ll be glad that your home is properly and adequately insured.

But are you?

Do I need an Insurance Agent

Home owner’s insurance can be very confusing. For this reason, while we are making this available for informational purposes, we always recommend home owners consult with a qualified local Insurance Agent who is able to address your individual needs and the needs of your property. Often, these local insurance agents recognize insurance needs that may be unknown to a call center representative in another part of the country.

What is the difference between All Risk and Named Peril?

Essentially, the difference between an All Risk policy and a Named Peril policy is in the way coverages are outlined. In an All Risk policy, coverage is available on all claims that are not specifically excluded, whereas in a Named Peril policy, coverage is only available on claims that are specifically listed (or named). As coverage available under an All Risk insurance policy is much more comprehensive, they are generally recommended. Here’s more on the difference between Named Peril and All Risk Insurance.

What is the difference between Actual Cash Value (ACV) and Replacement Cost?

The primary difference between ACV and Replacement Cost policies is whether the Insurance Company ultimately is responsible for the cost to replace the item at its fair market value or its current value. With an Actual Cash Value policy, your insurance company owes you for the “market value” or “actual cash value” of the item or repairs taking into consideration its age and condition. Should the cost of materials and repairs exceed this “market value” settlement, these additional costs are your responsibility. Replacement Cost refers to the amount it would cost to replace the item or material now. This will reflect the current cost of the material and current labor costs expected as part of the repair. Replacement Cost policies are generally recommended, as they provide much better coverage in the event of a claim. A more detailed explanation of the difference between Actual Cash Value (ACV) and Replacement Cost can be found here.

What is an Attractive Nuisance?

An Attractive Nuisance is essentially a hazard that may be attractive to others, particularly children. These are things that may cause a child (or sometimes adult) to place themselves in harms way while investigating, exploring, or playing on something that they believe to be safe or innocuous. Injuries that are the result of an Attractive Nuisance may be determined to be the fault of the property owner and ultimately (provided adequate coverage is available) their Insurance Company. As a result, insurance companies generally require that steps be taken to minimize or reduce the potential hazards that Attractive Nuisances may represent and will likely require additional liability insurance as well. Given the increased potential for a liability claim on your property, Attractive Nuisances will generally result in an increase of your insurance premium cost. You can find more on what an Attractive Nuisance is as well as some common examples here.

How do I choose a deductible?

There are many options available when selecting a deductible, from flat dollar deductibles to percentage based deductibles. When choosing a deductible, it’s important to understand what your out of pocket costs may be in the event of a claim (particularly important with percentage based deductibles), and that it is an amount that you are able to afford should you need to report a claim. For more on choosing your deductible, please see Understanding Your Deductible.

What coverages are included

The coverages included in a standard Insurance Policy are broken down under Structure, Contents, Liability, Other Structures, and Additional Living Expenses. But what does this mean? Let us break this down by coverage type.

Structure represents coverage for damage to your house. If something, such as a severe storm, Pipe Break, or Fire results in damage to your home, your Insurance Company will assist with the mitigation, cleanup, and repair costs.

Content coverage protects the contents inside your home should something happen to them. This coverage often also extends to damage to contents in occupied vehicles and items stored in secure storage facilities. It’s important to note that there is often a limit on the covered value of any individual content item, so if you have high value items such as jewelry or artwork, you may need to add a high value content rider to your policy.

Liability covers incidents where someone is injured on your property. Your insurance company can assist with medical and rehabilitation costs of the injured party, as well as legal expenses should you be sued. Liability is often limited to $ 100,000, however increased coverage is available and generally advisable.

Other Structures extends coverage to structures that may be on your property other than your home. Detached garages, sheds, barns, etc. are all examples of other structures and are covered under the same perils as your main home.

Additional Living Expenses can cover out of the ordinary expenses that you may accrue as a result of a covered claim. Common examples include meal or hotel expenses, increased electric or water usage, etc. It’s important to note that payments under this type of coverage are intended to cover additional expenses only, meaning that you may be asked to provide bills from prior periods to create a baseline from which to determine how much these costs increased as a result of the claim.

How do I know how much coverage I need?

When determining how much coverage you need, it’s important to answer a couple of questions:

How much would it cost to rebuild my house? This is an important question as many people look at the purchase price of their home and use that to determine how much insurance they need. Each home is different, and unique finishes such as decorative trim, tilework, and furnishings all should be considered. A Victorian, with their decorative touches will cost more to rebuild and repair than a similar sized home that may not have these finishes.

How many Other Structures do I have on my property? Do you have a shed, detached garage, or barn? If so, you want to make sure that you are adequately covered in the event something happens to these other structures.

Do I own any high value items? If you have expensive jewelry or artwork, you will want to make sure that you are properly and adequately covered should something ever happen to these items. This may require an additional content rider in order to cover these high value items.

Do I have a pool? While a great addition, pools are viewed as hazards, and as such, may be a factor in determine how much Liability Coverage you may need.

What can impact the cost of my home owners insurance?

Insurance Carriers look at a variety of factors to determine your insurance rate. Common things that they take into account include:

• Your claims history and the claims history for the area where you live

• The estimated costs of rebuilding your home

• Your deductible (For more on deductibles, see Understanding your Deductible)

• The location of your home

• The age of your home

• Your proximity to a fire department or hydrant

• The coverages you select

• Your credit score

More common things that increase your home insurance rate

Can my relationship impact my insurance needs?

Yes it can! What many people don’t realize is that your significant other’s belongings may not be covered under your insurance policy. If you have a live-in girlfriend or boyfriend, it’s important to review this with your local insurance agent to ensure that you and your partner are both covered in the event something happens. Here’s more on how your relationship can impact your insurance needs.

What is Flood Insurance and do I need it?

You standard homeowners insurance policy does not cover flood damage, necessitating a separate and specialized policy to cover this peril. Made available through the Federal National Flood Insurance Program (NFIP), flood insurance coverage is available to assist homeowners in the event of flooding from rising bodies of water such as lakes, rivers, streams, and oceans and in cases where existing flood controls such as levies fail. Available flood insurance coverage is managed and administered by the Federal Emergency Management Agency (FEMA). For more, please see What is Flood Insurance.

We hope you found this information useful! Due to the complexities of home owners insurance, we always recommend consulting with a local Insurance Agent whenever purchasing insurance, as they are best able to ensure that you are adequately covered in the event of a claim.

Of course, should you have a need of Water Mitigation, Mold Remediation, or any of our other services, please do not hesitate to contact your local Disaster Blaster!

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