Common Types of Property Insurance Policies There are several types of insurance policies when it comes to property insurance. Some of the most common are Homeowners, Renters, Dwelling or Landlord, Commercial, Business, and Farm Policies. Policies can be found in a Basic, Broad, or All Risk Form. We handle claims for all of these types and forms.
Covered Perils The perils covered under your policy will be determined by the type of coverage you have. Coverage is triggered only when there is a one time, sudden, and accidental occurrence. Below are the standard types of coverage available for a Homeowners or Renters Policy. Dwelling and Commercial Policy coverage can vary slightly from this list.
Basic Coverage - Fire or Lightening, Windstorm or Hail, Explosion, Riot or Civil Commotion, Aircraft, Vehicles, Smoke, Vandalism or Malicious Mischief, Theft, and Volcanic Eruption
Broad Coverage- Everything in the basic policy, plus Falling Objects, Weight of Ice, Snow or Sleet, Accidental Discharge or Overflow of Water or Steam, Accidental Tearing Apart, Cracking or Bulging from within a Plumbing, Heating, Air Conditioning or Sprinkler System or from within a Household Appliance , Freezing, Artificially Generated Electrical Current
All Risk Coverage - Any loss not specifically excluded is covered. Some damages that fall under the all risk policy that most people are unaware of are: melted siding from a grill being too close to the house; a cracked tile from a fallen object; a gauge in a hardwood floor from moving furniture; broken siding due to a rock kicking up from a lawnmower; a water ring on a hardwood floor from over watering a plant or Christmas tree.
***We recommend having an All Risk policy.***
Replacement Cost Value (RCV) vs. Actual Cash Value (ACV) Replacement Cost is Replacement Cost Value is the cost of placing like kind & quality. Actual Cash Value is Replacement Cost less depreciation. Depreciation can be made up of wear and tear, age, obsolescence, and/or market value. We highly recommend having Replacement Cost coverage, not only for your Dwelling, but for your Person Property as well.
Policy Breakdown There are 4 basic parts to a policy: the declarations, the insuring agreement (including perils insured against), the conditions, and the exclusions. The Declarations Page contains information such as the insured's name and mailing address, the property address, the policy period, the deductible, the coverage amounts, endorsements and/or exclusions, any added premiums or discounts on your policy, and additional insureds, if applicable (usually the bank that holds your mortgage(s)).
Coverage Breakdown A Homeowners Policy is typically broken down into the following parts:
Dwelling (Coverage A) - Covers the physical structure and anything attached to it.
Additional Structures (Coverage B) - Covers structures not attached to the dwelling, such as fences, detached garages, sheds, outbuildings, play structures, retaining walls, pools, etc. Most policies automatically place this amount at 10% of Coverage A, even if you have no additional structures. If the standard amount is not enough, talk to your agent about increasing it to the proper amount needed. There will likely be a small premium increase for this, but it will ensure you have the right amount of coverage should anything happen.
Personal Property (Coverage C) - Covers all of the contents in and on your property, right down to your toothbrush, utensils, and even the little things we have in our "junk drawers". Also included is your jewelry, antiques, collectibles, electronics (phones, tablets, laptops, computers, TVs, stereos, DVD players, etc.). It is extremely important to make sure you have enough coverage to replace all of these items. Most standard policies will provide coverage at an amount that is 50%-70% of Coverage A. If the allotted amount is not enough, ask your agent to increase it to the amount needed. Be sure to ask your agent about endorsements for any items that may be high in value or difficult to find a replacement for, such as jewelry, antiques, and collectibles. We also recommend purchasing Replacement Cost for your Personal Property.
Additional Living Expenses (Coverage D) - Covers additional expenses should an event occur that keeps you from living in your home for a period of time. Whether it's a kitchen fire, a water loss to your only bathroom, or a complete loss to your home, Additional Living Expenses covers things like hotel expenses or rent, food, and gas above and beyond what your normal spend while the home is being repaired. Some policies offer coverage with an unlimited amount but a limited time frame. Some offer coverage with a limited amount and no time frame. Others offer coverage with both a limited amount and time frame. For example, your coverage could show up to 12 or 24 months. It could show an amount (usually a percentage of your Coverage A), like $75,000. Or it could show something like 12 months up to $50,000. Regardless of what your coverage shows, you want to make sure that you have enough to take care of you and your family in the event the worst happens.
Other types of policies follow a similar format but may vary in one way or another. For example, a Renters Policy would not have coverage for the dwelling as the renter does not own the dwelling. Another example would be a Landlord, or Dwelling, Policy. The dwelling is covered but the personal property is usually that of the renter so there would typically not be a need for coverage there. In addition to that, a Landlord policy would cover Loss of Rent, instead of Additional Living Expenses, similar to a Loss of Income in a Commercial or Business Policy.
Endorsements Endorsements are changes to the policy. They can give coverage or take it away. One of the most important things to think about when looking at endorsements is what you need coverage for in addition to what your standard policy is providing. Standard policies have exclusions on water backup and limits on things like jewelry, fire arms, antiques, and coins. Adding endorsements for these items, if you have them, may cost a little more each month but will be well worth the cost if something ever happens. As the saying goes…better to have it and not need it, then to need it and not have it!
Inflation Guard Increases your coverage each year by a percentage, or factor, to account for inflation. Inflation guard can come standard on some policies or may need to be added to other policies. While the increased coverage can ensure you are not under-insured, it is important to review your policy each year to make sure the coverage is not increasing too much. Inflation guard acts like compound interest, which can leave you over-insured over time. If you feel that you are insured for more than it would cost to rebuild your home, contact your agent and have your coverage adjusted. Co-Insurance The amount of insurance required in order to recover from a covered loss without penalty. Co-insurance typically applies to Commercial or Business policies but can apply to any type of policy. Often, the amount of insurance required is around 80% of the property's replacement cost but the percentage can vary and is determined by the insurance company. If the property is not insured for the required amount or higher, the recovery amount will be reduced. The formula for determining loss recovery is shown here.
Guaranteed Replacement Cost Allows for full replacement of your dwelling in the even of a total loss, even if your current dwelling coverage is lower than the actual cost to rebuild.
Extended Replacement Cost Allows for replacement of your dwelling, no more than a certain percentage over the dwelling limit, in the even of a total loss, even if your current dwelling coverage is lower than the actual cost to rebuild. Most companies will limit the amount of coverage to no more than 20% more than your dwelling coverage. It is important to make sure your insurance company is notified of any updates made to the home in the amount of $5,000 or more. Not notifying them of these updates can result in the elimination of the extended part of the policy.
Home Value vs. Cost to Rebuild While most people feel that they may be over insured because their coverage exceeds what they paid for their property, that is often not the case. The value of a property can fluctuate greatly based on the location of the property alone. The cost to rebuild that property, however, would likely be the same regardless of the location within its surrounding areas. Your insurance policy should be enough to cover the cost to rebuild the home in the event of a complete loss. If you're unsure of what the cost to rebuild your home would be, contact a home builder in your area.
Yearly Policy Check Having an insurance policy on your property doesn’t mean that you’re properly insured. While many people may think that it is their agent’s job to make sure they have the proper coverage, it is actually the responsibility of the insured…meaning YOU! Since most people wouldn’t know where to start when it comes to determining if they have what they need, here are some things to keep in mind. There are three main types of policies available…basic, broad, and special. The type of policy you have determines what perils you are covered for. Several other factors to consider when reviewing your policy include everything from the type of policy to coverage limits, personal property limits to additional living expenses, deductibles to endorsements. It is imperative to make sure you have the right coverage BEFORE disaster strikes! Understanding your coverage and policy language can be complicated if you are not familiar with it. We offer a free, in-home policy review to help you make sense of it all.
Keep Your Information Current It is important to make sure your insurance company is notified of changes to your current situation. Whether it is an addition or upgrade to the property, the purchase of high priced or valuable personal property, or a change in mortgage, your insurance policy should be adjusted accordingly. If you have updated your kitchen or bathroom, added on a room, finished off a basement, or added outdoor improvements such as a garage or pool, you should notify your agent. Not doing so could result in being under insured, keeping you from recovering fully from a loss. Also, if your mortgage company has changed, you have added a second mortgage or you have paid off your mortgage, let your insurance company know as improper information could lead to delays in receiving claim payouts.
Be Prepared Preparing an inventory of your personal property is one of the best things you can do to help ensure you recover fully from a major loss. To give you a better idea of what your personal property is, consider this. If you took your property, turned it upside down and shook it, your personal property would be anything that falls out. This will likely mean you’re making a list of hundreds of items, including furniture & electronics, dishes & silverware, bedding & clothing, and even the small, random items that we all throw in what we typically call “the junk drawer”. Trying to remember everything we own is hard enough but, in the midst of a tragedy, it becomes that much more difficult to recall every little item. The easiest way to inventory your property is to walk through your home while taking a video and narrating. Couple that with pictures and a written, room by room break down of all of the items and you’ll be setting yourself up for a much smoother road to recovery should the unthinkable happen. But don’t forget to store your videos, pictures, and documents in a cloud somewhere so you can access it even if your phone, tablet, or computer are destroyed.
What should I do if I have damage to my property? Although we may want to believe “nothing like that will ever happen to me,” the unfortunate truth is that many of us, at some point in time in our lives, will deal with a loss, large or small, that we did not expect. Here are some key things to keep in mind when that happens.
Take lots of pictures! - Take pictures of any and all damaged items and affected areas. The more pictures, the better!
Do not throw anything away, no matter how bad it’s condition. - Throwing things away is like throwing money away. If there is no proof of what was ruined, you’re likely to have trouble getting it replaced by your insurance company. Instead, move the damaged items from their original location and place them in a safe area where they can be revisited at a later time, when needed.
Mitigate the problem. – It is very important to make sure you do what you can to keep the damaged areas from worsening. Not taking proper action to stop the cause of loss can result in your claim being denied due to negligence.
Do minimal clean up. - Cleaning up too much can result in destroying pertinent evidence that the loss ever existed. In order to be made whole by your insurance company, they will need to see the damages in as close to loss condition as possible.
Document everything. - Record your date of loss, and be sure to keep all invoices and receipts for every repair and/or replacement item, no matter how small.
Most importantly, before you call your insurance company, call a public adjuster! - We will come out to evaluate the damage, put together an estimate for the full extent of the damage, and present the claim properly to the insurance company to make sure you get the maximum settlement for your claim.
Storm Chasers Storm chasers are contractors, typically roofers or general contractors, that target areas hit by storms. They locate areas that have had reports of damage from tornadoes, hurricanes, heavy winds, hail and blizzards. Many times they are from out of town and will send letters, put up signs and even travel to the area to and knock on doors. They often offer to handle your insurance claim and deal with your insurance company for you. Unless they are licensed by the state as a public adjuster, they are not legally allowed to represent you on your insurance claim. Public adjusters are licensed by the Department of Insurance and are bonded by the state to handle property claims for the insured and make sure they are paid a proper settlement. Contractors should be licensed and insured to perform the work they are presenting. Do your homework and be sure to know who you are dealing with. If you need help finding a qualified contractor, contact Tried & True Referrals, LLC. They can connect you with contractors who have been thoroughly check and verified to provide trustworthy services to their clients.
Insurance Adjuster vs. Independent Adjuster vs. Public Adjuster Insurance Adjusters work directly for the insurance company and are looking out for the best interest of their employer. An Independent Adjuster is an adjuster working for a third party hired by the insurance company to represent them. They are often used when there large storms hit and the insurance company does not have enough of their own adjusters to address all of the claims coming in. A Public Adjuster is a consumer advocate. They are hired by the insured to represent them on their claim and to look out for the best interest of the policyholder.