2 months ago ·
by Donna ·
If your home suffers damage in a flood, don’t count on homeowners insurance being enough to protect you. A standard home insurance policy does not cover flooding that originates outside your home, although some types of water damage may be covered. To get coverage against flooding, you will need a separate flood insurance policy. Here’s what you should understand.
Homeowners Insurance and Flooding
Regular homeowners insurance won’t cover flooding, which is defined as flooding that originates outside of your home. This means your policy generally won’t cover flood damage due to:
- Spring thaw flooding
- Hurricane-related flooding
- Overflowing and surging ponds, lakes, and rivers
- Over-saturated ground
- Flash floods
- Backed-up sewers
- Generalized flooding
Your homeowners insurance policy will help cover other types of water damage that are accidental and sudden, however. This can include a burst pipe, a leaking water heater, or a broken washing machine, for example, which can all flood your home with water. The distinction is these sources of water come from inside your home — not outside. Your policy still won’t cover the damage if it’s a result of poor maintenance such as failing to repair a leaking pipe.
The Importance of Flood Insurance
To cover your home against flooding, you will need to buy a flood insurance policy separate from your home insurance. Don’t assume that you don’t need flood insurance just because your home has never flooded, you don’t live near a body of water, or you aren’t in a flood zone. After all, floods don’t pay any attention to flood zones and they can occur anywhere. Hurricane Harvey left widespread flood damage in 2017 yet a whopping 70-80% of homeowners did not have flood insurance.
Don’t rely on flood zones alone when deciding whether you should buy flood insurance. Twenty percent of all claims to the National Flood Insurance Program (NFIP) occur outside flood zones and people in these areas receive one-third of flood-related federal disaster assistance. The average flood damage claim is more than $62,000. Just five inches of water may cause at least $11,000 in damage to your home, according to FEMA. This is certainly not a cost you want to face out-of-pocket after a disaster. Flood maps in many areas are outdated and too conservative, especially in areas with significant new construction.
Flood insurance is required in high-risk designated flood zones but you have the option to purchase it even if you do not live in a flood zone.
Federal vs Private Flood Insurance
Flood insurance comes in two forms: you can buy a policy directly through NFIP, a federal program, or you can buy a private flood insurance policy through an insurance agent. A NFIP policy offers coverage up to $250,000 for your home and $100,000 for the home’s contents. It’s important to note that the NFIP only provides replacement cost coverage for your home itself. This means an NFIP policy will cover the amount needed to rebuild your home. Only actual cash value coverage is offered for your belongings. This means you only get the current value of your belongings, not the cost to replace the items.
A private policy can give you a higher coverage limit to supplement a federal policy or as a standalone policy. If you are outside of a designated flood zone or a federal policy would be too expensive, you can likely save a substantial amount with a private policy. Private flood insurance also offers more coverage for belongings with the option to schedule personal property like collectibles and high-value belongings.
If you are considering buying a flood insurance policy, don’t delay. Flood policies have a 30-day waiting period which means you won’t be covered if you buy coverage shortly before a disaster. If you live in an area that’s considered a low to moderate risk for flooding, you can qualify for very low premiums for flood coverage that can protect you if the unthinkable happens.
2 months ago ·
by Donna ·
Most people will sign their home insurance policy, put them away and start living in their home feeling safe they are protected from danger. It is important for a homeowner to know exactly what is in their policy. If they have made improvements to their home, the value of their property has increased or any similar thing has occurred that could change the coverage needed for a property, it could result in a homeowner to being underinsured. Insurance companies estimate over 59 percent of homes in the United States are underinsured. Each policy provides details of what is covered as well as what is excluded.
It is important to look at the declaration page of an insurance policy to make certain all the personal information it contains is correct. Check to make sure the coverage levels listed are correct and make certain any riders previously added are listed.
This section will help a homeowner understand the details of the property they have that is covered. This part is divided into sections because each category will have a different coverage limit based on losses.
- Dwelling. This covers a home used as a primary residence and any structures that are attached to it. This could be a deck, attached garage and more.
- Personal Property. This will provide descriptions and limits for a homeowner’s personal belongings. This protection extends to any location in the world for covered items. Other people’s personal property may be covered when it is in a policyholder’s home. It could also cover the personal property of an employee or guest and more.
- Loss Of Use. This describes the expense involved with repairing or rebuilding the property when it is damaged. This includes payment if a homeowner must stay in another place while their house is being repaired or rebuilt. A certain amount of money could also be provided for living expenses. If a property owner lives in a multi-unit building, and a unit in this building is damaged, the owner could be reimbursed for the fair market rental value of the damaged unit.
This section will cover all the costs associated with damage to people and property not listed in the policy. This could cover someone accidentally slipping and falling on a homeowner’s property and more.
In this part of the policy, the insurance company states the circumstances in which it will defend the policyholder against claims as well as pay the claims if the policyholder is found at fault for a person’s injuries on their property.
This covers medical payments to others. It will cover in detail the limits and types of expenses the insurance company will cover for people not covered by the policy. This could involve such things as surgical expenses, ambulance, hospital stays and more. It will list payments to individuals even if the insured is not at fault for an accident involving their property. If a neighbor breaks a leg during a party at a policyholder’s home, this would provide reimbursement for medical expenses up to the limit stated in the policy.
It’s also important for a policyholder to review any and all riders they have attached to their policy. They may have some additional items they want to add or some they may want to remove. Insurance riders can cover many different things.
- Underground Service Line. All homes depend on many different underground service lines. This includes everything from water, heat, cable, internet and more. A homeowner is responsible for maintaining them. This will provide coverage should problems occur with underground service lines.
- Sewer and Drain Back Ups. A situation could occur that provides a huge coverage gap for many homeowners. This will provide coverage for repairing or replacing a homeowner’s basement if the damage is caused by a sewer or drain backup.
- Identity Theft Protection. Cybersecurity experts estimate in the United States someone becomes the victim of identity theft every three seconds. This will make it possible for a homeowner to get professional help in restoring their identity. This will involve preparing a case file for creditors and credit bureaus. All necessary information will be provided to law enforcement and more.
- High-Value Items. Collectibles, jewelry, artwork are often worth more than money to some homeowners. This will cover a high-value item getting stolen or damaged. This will provide compensation.
It is always important to know what is in your home’s insurance policy. An occasional review and update are important. A homeowner’s life never stays the same after initially purchasing their property. They benefit when their home insurance reflects all those changes.
4 months ago ·
by Donna ·
There is a lot of great information about insurance. However, there are also a lot of insurance myths. For example, many people think that they will have to pay more for insurance if they drive a red car. They may also think that their belongings are covered by their landlord’s insurance if they live in an apartment. That is why it is important to separate the fact from the fiction.
Myth: Your Insurance Will Increase if You Have a Red Car
Fact: This is one of the most common insurance myths. The color of your car does not have any effect on the amount of money that you will spend on car insurance. The safety features of your car as well as the make and model will determine how much money you will have to spend on insurance.
Myth: If You get Into an Accident While in a Rental Car, Then It Will be Covered By Insurance
Fact: Rental reimbursement will not automatically cover the accident. It is a form of insurance that you will have to purchase separately.
Myth: You Will Not Have to Make any More Car Payments if You Total Your Accident
Fact: The value of a car can depreciate quickly. In many cases, a car is worth less than what a person owes on the car. There is a type of insurance called loan/lease gap insurance. It will pay the balance of your vehicle if you total it, and it is worth less than what you owe on it.
Myth: Your Landlord’s Policy Will Cover Your Vehicle
Fact: Your landlord’s insurance will pay for damages that are done to the structure. You will have to get a renter’s insurance policy for your belongings.
Myth: The Market Value of Your Home is the Maximum Homeowners Insurance Coverage That You Need
Fact: The cost of rebuilding a home is usually more than the market value. You will not only need to consider the cost of your home, but you will also need to consider the cost of labor. You will also need to consider the cost of construction.
Myth: Floods are Typically Covered by Home Insurance
Fact: Floods are not covered by your home insurance policy. You are required to purchase a separate policy if you live in an area that is prone to floods. Even if your area is not prone to flooding, it is still a worthwhile investment.
Myth: You Will Get New Belongings if Your Old Ones are Destroyed
Replacement Cost Value and Actual Cash Value are not the same. If your belongings are damaged, then you will need Replacement Cost Value to get new ones. Actual Cash Value will cover what the belongings are actually worse.
Myth: The Stated Value of Your Scheduled Items is What You Will be Paid
Fact: If you have jewelry or other high-value item, then you may only be reimbursed up to what the current Replacement Cost Value is. The stated value is not a guaranteed amount.
Myth: Your Car Insurance Will Cover You the Entire Time You Work for a Ridesharing Service
Fact: There is a small gap between the time that your car insurance coverage ends and the ride sharing coverage begins. For example, you turn on your ridesharing app and are looking for passengers. You may not be insured until you get a passenger. Every ridesharing company has a different policy.
Myth: There is no Need for an Insurance Agent
Fact: An insurance agent can help you get the best plan for your needs and budget.
5 months ago ·
by Donna ·
Homeowner’s and renter’s insurance policies offer personal property coverage. There are many categories that insurance companies use to assess reimbursement for theft or damage to an item. We will discuss the replacement cost and actual cost value. The coverage stated in your policy will determine which one applies to you. A good place to start is to know the difference between the two different claims payouts.
What is the actual cost value?
This is one of the methods that an insurance company uses to reimburse your claim. It is the least expensive and benefits those on a tight budget. Using the actual cost value (ACV) method, you will not receive the full amount of money that your paid when you originally bought the item. An exception to that rule would be if you have some antiques in your home.
The insurance company has a way of compiling the actual cash value of an object. They start with determining the market value of an item. This begins with discovering how much you paid for it. Next, they consider how long you have had the object. There are other criteria that may be used such as the expected lifespan of an item and its condition. The ACV is the value of an item minus depreciation.
What is the replacement cost?
It is another method that an insurance company uses to pay out a personal property claim. This is the most recommended coverage to have because it has more benefits for the home owner. A claim is handled differently than an actual cash value request. The claim amount tends to be of a higher amount.
When using this process, the owner is offered how much it would cost to re-purchase the damaged item as if new. This type of coverage is used for many objects including insuring the house itself. Insurance companies use contractors with house structure claims due to their expertise in knowing the materials used and how to estimate the costs to re-do a home.
There are many things to consider when preparing to buy new coverage or switching insurance companies. Do you prefer replacement cost or actual cash value? In both instances, you need to already have the coverage before an incident occurs. Consider the cost and benefits of the different value assessments. Do you have many high-end products to insure or a small amount of less expensive items? This may make a difference.
It’s important to read your policy and fully understand the type of plan that you have. Don’t forget to ask an insurance professional if you have questions. It would be helpful to take an inventory of your possessions. Taking pictures of your inventoried items will make the process easier when you have to file a claim. Another factor to keep in mind is the deductibles that you would need to pay before insurance will make a payment. Lastly, remember that your insurance has limits and may not pay the entire cost of replacements.