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Topics in Homeowners Insurance
Homeowners Insurance Coverages in Plain English
Who needs insurance industry jargon? Read this to get an explanation of your homeowners insurance coverages in plain English.
What Is Replacement Cost?
Why does your agent have your policy for a different amount than your house is worth? Read this article to learn why the amount of insurance
on your homeowners policy is completely unrelated to the value of the house.
Presrving the Value in Your Valuables
Do you know if your homeowners or renters policy will cover your jewelry, electronics, or computer equipment? Do you know if they will be
replaced at the full value, or if the payment will be reduced for depreciation? Do you know if they are covered if they are stolen, lost, or broken?
Avoiding Insurance Nightmares with Vacant Homes
You have taken care of your home all these years, but now you have moved and the house is vacant. Do you know what changes on your insurance coverage
when the house is vacant? More importantly, do you know how to prevent uninsured losses? Read this to learn about vacancy insurance.
How NOT To Lose Your Home-Based Business
About three out of every ten people operate some sort of home business. Their businesses vary widely, and so do their insurance needs.
But they have one thing in common: A typical homeowners policy probably does not cover their businesses the way they think it does.
Insuring a Home-Based Business: Why Most Home Businesses Could Go Up in Smoke
About three out of every ten people operate some sort of home business. Their businesses vary widely, and so do their insurance needs.
But they have one thing in common: A typical homeowners policy probably does not cover their businesses the way they think it does.
Flood and Water Damage: What Does a Homeowners Policy Cover?
Water damage is tricky on a homeowners policy, because the answer is, "It depends." It depends on where the water comes from, and what it damages.
It also depends on your company and your policy. Are you covered for storm damage? Frozen pipes? Flood? Find out here!
Five Ways To Protect Your Home from Winter Storm Dangers
We hope you don't experience a storm-damaged roof, leaking basement, or frozen pipes this winter. Nobody wants to
go through that. Here are five very smart ways you can prepare for winter, either to avoid damage, or to be prepared
if it happens despite your preparation.
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Building Codes Coverage: Bringing Your Policy Up to Code
 Christy M. Perry, President
Community Insurance Center, LLC
Elizabeth thought she was safe from hurricanes in Ohio, so imagine her shock when the remains of Hurricane Ike blew across the state in September, 2008.
78-mph winds flattened crops, tore roofs off houses, and knocked out the power for days. Her roof was damaged and needed to be replaced,
but when the claims adjuster wrote the check, she got another shock: She would have to pay thousands of dollars out of pocket.
Why? Because her house had a thirty-year roof, but new building codes in her area required her to replace it with a more expensive forty-year roof.
Most homeowners policies, however, reimburse you only for the same quality of roof as the one that was damaged.
Elizabeth was reimbursed by her insurance company for the cost of a thirty-year roof, and she had to pay the difference in price out
of her own pocket to get the forty-year roof.
The Principle of Indemnity
So what's the deal? Why did it work that way, and more importantly, what could she have done differently to avoid this situation?
Most homeowners policies cover storm damage, but the insurance company's agreement is to pay for what was lost, or to restore you to the position
you were in before the hailstorm. This is known as the principle of indemnity. You should be exactly as well off as you were before the storm damage,
so you neither profit from it nor suffer a loss. In this case, if you bought a thirty-year roof when you bought your house,
but the insurance company paid you for the upgrade to a forty-year roof, then you would have come out ahead by several thousand dollars.
To take another example, if your five-year-old sedan is totaled, the insurance company will pay you enough to buy a similar five-year-old sedan.
If you paid $20,000 for the car when it was new, but now it is only worth $8,000, you will get a check for $8,000.
If the insurance company paid you $20,000, you would profit from the accident. In fact, you would have every incentive to crash your car on purpose
just so you could make a $12,000 profit. (That's called a "moral hazard," in case you're interested.) Again, this is the principle of indemnity,
or the idea that you should neither gain nor lose as a result of your insurance policy-you should just be restored to where you were before the accident.
What Could She Have Done Differently?
There is a solution. Many homeowners policies offer an option called "Laws and Ordinances Coverage" or "Building Codes Coverage."
(Your company might use a slightly different name.) This option pays the extra cost required to comply with upgraded building codes.
It usually costs only a few dollars a year, and it would have paid the extra cost for the upgraded roof. Elizabeth did not have this coverage ...
but she does now!
Insuring Your Home Property Is Tricky!
Homeowners policies have many different options, and they can be bewildering. Typically we find people fall into one of two groups.
One group has their agent explain the policy and the limitations, so that they have the opportunity to close gaps like the one above—or
to decide that certain things are not worth the extra cost. The other group does not want to deal with it, so they prefer to wait until
they have a claim and then find out whether it is covered.
Which group are you in? If you're in the first group, bring up these questions with your agent at your next Annual Protection Review.
We have some general information about homeowners policies posted on our web site, but every company's homeowners policy is slightly different,
and the coverages also vary by the state where you live, so please go over your policy with your agent.
Your home is one of your biggest assets, so you need to protect it properly. More importantly, it is your dream.
If your policy cannot be adjusted to get the coverage you need, consider shopping for a different company. And if your agent cannot answer your questions,
consider shopping for a different agent. This type of consultation is the agent's job. It's why you pay him! Don't you deserve to have your home protected?
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