Homeowners Insurance Lowdown

Your Insurer May Lose Billions Soon

By Priya Jestin, Staff Writer

Mark Landry could well be the face that inspired thousands. Hurricanes Rita and Wilma may be a distant memory now, but for those who suffered from its fury, the pain is still palpable. What has kept the memory of those painful days alive is the highhanded attitude of the insurers especially, insurer of last resort, Citizens. The end to this painful drama seems to be nearing finally. Landry recently won a case in the 15th Judicial District Court that, if upheld after appeals, may hold insurance companies accountable for billions of dollars in additional hurricane-related claims.

To begin at the beginning, Landry and his wife, Barbara, lost everything to Rita. Their home in Erath was a total loss, as wind and flood conspired to damage everything possible. But the loss of their home was probably not as painful as the denial of their claim by Louisiana Citizens Property Insurance Corp. The insurer denied the claim because floodwater was excluded from their policy. And the best part? Citizens failed to mention this fact in their policy application!

In his recent ruling, District Judge Edward Rubin said the insurer was liable to pay for damage to a house destroyed by Rita’s winds and floods even if the policy says floods aren’t covered. Why? Because that particular statement was left out of the application.

And now comes the interesting part. Homeowner policies usually exclude coverage for damage caused by floods, high water, waves and storm surges. So if this ruling holds, it means that the $28 billion paid in insurance claims from hurricanes Katrina and Rita actually covered only a small amount of the total damage. That means we are set for some really interesting times ahead.

No Sinkhole Insurance Please, Plead Homeowners In Florida County

By Priya Jestin, Staff Writer

Residents in Pasco County, Florida may get some relief on the homeowners insurance cost front. That’s if you believe the state lawmakers who say they have a possible solution at hand. Florida’s insurance regulation commissioner is considering a proposal to allow residents to opt out of mandatory sinkhole coverage. This coverage is currently required for all Citizens’ customers in Pasco County.

Most homeowners in this region feel they are forced to buy unnecessary coverage. They claim that they shouldn’t be required to purchase sinkhole protection when most sinkhole claims are filed west of US 19 along the coast. Citizen’s Insurance claims that it pays out, nearly 90 thousand dollars per sinkhole claim.

Actual Value V/s Replacement Value

By Priya Jestin, Staff Writer

There are a few terms in a homeowner’s insurance policy that you must know more about. I am going to discuss two such terms: Actual Value and Replacement Value.

Actual Value: Actual Value is not the exact value of the item you may have lost. It is the replacement cost of an item less depreciation. For instance, if a fire damages your three-year-old television set, your insurance carrier will first estimate the rate of depreciation. Say your TV has depreciated 35 percent during the three years since you bought it. Now, what your insurer will do is first find out the cost of a comparable new TV set. The insurance company would pay you 35% of the present cost.

Replacement Value: Replacement Value is the amount it costs to replace an item with no deduction for depreciation. Let’s take the example of your television set again. Even though the TV was purchased three years ago, due to advances in technology and a decrease in the price of the TV, the exact same TV can be purchased today for a much lower price. So, the insurance company pays you the lowered amount that would allow you to buy a brand new TV.

You must find out if your insurer pays Actual or Replacement Value for your possessions at the time of a claim. Remember, your premium may change depending on the type of coverage you get. So, check with your insurer before you make your decision.

Do You Need Extra Coverage?

By Priya Jestin, Staff Writer

Sometimes you may own something that is worth more than the set limit for that item on your policy. For instance, you own a piece of jewelry that is worth more than the set limit on your policy. In such a case, you can purchase additional coverage specifically for that item. This kind of separate coverage is usually referred to as a personal property endorsement or a rider.

When you purchase a rider for any item, there are a few things you must keep in mind. Firstly, you must be able to verify the cost and the condition of the item. For this you can have the item appraised. Next, don’t forget to take photographs and video of items for which you take a rider. They are useful in case you need to make a claim.

New Homeowner? Know The Basics

Buying a home is an intimidating process for anybody so first-time homeowners will find it especially difficult. They may feel overwhelmed by the number of decisions they are faced with, including choosing the right insurance coverage to protect their property. Find out what you need to know to protect one of their most important assets. Insurance.com reports:

First-time homebuyers may not realize that homeowners insurance covers more than just the structure of a house. It also protects the homeowner and generally anyone named on the policy, including a spouse, resident, household employee, guest or visitor.

Read more: New Homeowner Insurance Basics

Why Do I Need Insurance?

Remember the fable of the wolf and three pigs. Two pigs that built houses of straw and twigs lost their homes when the wolf blew at them. And the pig that had a strong brick house managed to hold his own against the wolf. Now if the other two pigs had the good sense to insure their homes, they may not have felt so bad at losing them.

What am I doing telling you about fables? Well, simply that all of us could lose our homes and it is our duty to protect our home and its contents. As a financial decision, it does put a bit of strain on your resources. But it is also one of the few things that will help you sleep peacefully at night.

For most of us, our homes are usually our biggest single investment and asset. A homeowner’s insurance only allows you to ensure that in case you were to lose your home, you don’t have to fret and you can start over. While your mortgage does ensure that you have a certain amount of homeowners insurance, it may not be enough to insure your home and all your possessions.

How Much Protection Do You REALLY Get?

-- By Priya Jestin, Staff Writer

Fine, you’ve insured your home and are confident that if a disaster strikes, you can rebuild your home… or can you? Do you know how your insurance company values your belongings if disaster were to strike? And more importantly, will the valuation be enough to cover your possessions.

There are two common ways to determine the value of damaged property: Actual Value and Replacement Value. State regulations determine whether your insurance company uses Actual or Replacement value to process claims. This means it all boils down to where you live, as your insurance carrier will comply with the regulations in the state where you live.

In case you have moved residence recently but retained your insurer, it is important to find out if the state you now stay in has Actual Value or Replacement Value in effect. Don’t make the mistake of assuming that what was in effect in one state is the same in another.

Know Your Perils

--By Priya Jestin, Staff Writer

A homeowner's insurance policy provides coverage against different types of disasters, or as insurers would put it, perils. So what exactly is a peril? As a definition, perils are a certain group of events that have the potential to cause damage. These perils may or may not be covered by your policy.

There are basically two groups of perils. The first group of perils, which totals 11, comprise of most of the accidents and damage causing incidents that we are generally used to:

• Fire/ lightning
• Windstorm/ hail
• Explosions
• Riot/ civil commotion
• Damage caused by aircraft
• Damage caused by vehicles
• Sudden/ accidental damage from smoke
• Vandalism
• Theft
• Volcanic eruption
• Damage by glass/ safety-glazing material that is part of a building

And then there are certain perils that may not be everyday occurrences but still do cause a lot of damage. For instance damage caused by objects falling from the sky like meteorites, or airplanes. Other perils include:

• Weight of ice, snow, or sleet
• Accidental discharge/ overflow of water from plumbing
• Freezing of plumbing
• Sudden and accidental tearing, cracking, burning or bulging of a steam or hot water heating system
• Electrical surge damage

Different types of policies cover these various perils. Next time, we will discuss the various policies.