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Isn’t It Time for Your Annual Homeowners’ Insurance Check Up?

How long has it been since you reviewed your homeowners’ insurance coverage? For most of us, it’s been too long. We just keep renewing the same policy we purchased years ago. After all, if it was good enough then it should be good enough now, right? Probably not.

As our lives change, so do our insurance needs. We become Airbnb hosts, start home-based businesses and hire domestic employees. We renovate our homes and acquire jewelry and other valuables. Changing circumstances bring about new risks that may not be adequately covered by your old homeowners’ insurance policy.

To avoid potentially devastating coverage gaps, homeowners should evaluate their insurance coverage in the context of their current circumstances. The annual renewal of your homeowners’ insurance policy is the perfect time to do this. Here are some questions to ask before renewing your policy.

Is my dwelling underinsured? In the worst-case scenario, you will need enough dwelling coverage to completely rebuild your home from scratch. This is unlikely with policies that pay actual cash value because depreciation is factored into the claim payout. Policies that pay replacement cost are preferable, but limits need to be adjusted to cover any additions or renovations that would make it more expensive to rebuild or replace a damaged dwelling.

Is my personal property underinsured? More years means more stuff. Personal property coverage limits should correspond to the value of your furniture, appliances, clothing and other personal property. If the total value of your possessions goes up, so should your limits.

Are my valuables covered? Standard policies substantially limit or exclude coverage for certain valuables, like jewelry, precious metals and firearms. If you acquired luxury items, you will need a Personal Property Floater (Scheduled Personal Property Endorsement) to cover them.

Do I have enough liability protection? Liability coverage protects you against third-party claims for bodily injury or property damage. Most homeowners should have at least $300,000 of liability coverage, but those with significant assets should have higher limits.

Do I have the right deductible? The deductible what you pay before the insurance company starts paying. Increasing deductibles may lower premiums, but it’s not for everyone. Before making a change, evaluate your current finances to make sure you can afford to pay a higher deductible in the event of a claim.

Can I bundle policies? Some insurers offer substantial multi-policy discounts. If you have other policies, like automobile or umbrella policies, find out if you can save money by bundling them together with the same insurance company.

Am I eligible for premium discounts? Renovations that reduce the risk of loss can also reduce premiums. If you recently replaced the roof, installed hurricane shutters, purchased a home security system or made other qualifying renovations, you may qualify for premium discounts or credits.

Do I need a separate flood policy? Hurricane Irma taught us that flooding isn’t limited to flood zones and that uninsured flood damage can be devastating. Standard homeowners’ policies do not cover floods, so if you live in an area that is (or is becoming!) prone to flooding, you will need a separate flood insurance policy.

We know that reviewing insurance policies is pretty much the last thing you want to do, but it has to be done. It’s better to understand the insurance coverage you have and discover the coverage you need before you have a claim instead of after.

Please contact us to learn more about evaluating and obtaining adequate homeowners’ insurance coverage.

Do You Know What Homeowner’s Insurance Covers…and What It Doesn’t?

Many of us will remember 2017 as the year of natural disasters. Even if you weren’t in the path of a coming storm or a spreading wildfire, you probably knew someone who was. It was a year of hurricanes, wildfires, flooding and severe weather. Economic losses resulting from weather disasters totaled $344 billion, making 2017 the costliest year ever.

In 2017, there were thirty-one billion-dollar events worldwide. Sixteen were in the United States, including four of the top 10 global economic loss events.

1. Hurricane Harvey ($100 billion)
3. Hurricane Irma ($55 billion)
4. Wildfires ($13 billion)
10. Severe Weather ($3.4 billion)

Insurance played a big role in helping victims recover from staggering property losses. Of the $181 billion in losses suffered in 2017, $84 billion was covered by public and private insurers. Though a substantial number of losses involved homes and personal property, not all of them were covered by homeowners’ insurance. Unfortunately, many victims did not know what their policies did and did not cover until it was too late.

There are two general types (forms) of homeowners’ policies. Broad Form policies protect against perils that are specifically named in the policy. Special Form policies generally provide coverage against all risks, except those that are specifically excluded in the policy. Both standard policy forms generally protect dwellings and personal property against:

  • Fire, smoke and lightning;
  • Windstorm and hail;
  • Explosions and volcanic eruptions;
  • Damage caused by vehicles, aircraft and falling objects;
  • Theft, vandalism, malicious mischief, riot and civil commotion;
  • Weight of ice, snow or sleet;
  • Discharge, overflow or freezing of pipes, heating and A/C systems, fire sprinklers and household appliances;
  • Tears, cracks and burns of water heating, A/C and fire sprinkler systems; and
  • Damage from electrical currents in appliances or wiring.

Standard Special Form policies also protect against all other perils except those that are specifically excluded in the policy. Common exclusions include:

  • Flood;
  • Earthquake;
  • War;
  • Nuclear accident; and
  • Landslide, mudslide and sinkhole.

The increasing frequency and intensity of natural disasters have put homeowners at greater risk. Though we can hope for a better 2018, we would be wise to learn the lessons of 2017. Now is the time to review your homeowners’ insurance coverage. It’s the best way to not only understand the coverage you currently have, but to discover the coverage you still need.

Please contact us to learn more about obtaining adequate homeowners’ insurance coverage.

To receive regular updates about developments which may affect you, subscribe to Setnor Byer Insurance & Risk’s risk management news brief.

 

Does Florida’s Hurricane Irma Emergency Order Affect You?

Hurricane Irma was as big as it was powerful. After making landfall in the Florida Keys, Irma continued on a path of destruction across the entire state. Irma left an unprecedented number of Floridians with storm-related residential property damage. This means a lot of you need to know about the Emergency Order issued by Florida’s Insurance Commissioner.

The order was issued on September 13, 2017, but the process began before Hurricane Irma ever made landfall in Florida. On September 4th, Governor Scott declared a state of emergency in every county in the State of Florida. This cleared the way for the Insurance Commissioner to issue an Emergency Order to “protect the public health, safety and welfare of Florida’s policyholders.”

Here is a summary of provisions that may be particularly important for those left with residential property damage as a result of Hurricane Irma.

Cancellation & Non-Renewals

Residential property insurance policies that cover a dwelling or residential property located in the state that was damaged by Hurricane Irma cannot be cancelled or non-renewed until 90 days after the property has been repaired. A structure is deemed to be “repaired” when it is substantially completed and restored to the extent that it is insurable by another authorized insurer that is writing policies in this state.

The Emergency Order also provides that notices of cancellation that were issued or mailed on or after August 25, 2017 through and including September 3, 2017, must be withdrawn and reissued no earlier than October 15, 2017. The premium for the extended period of coverage will be a pro rata portion of the premium for the entire policy term.

Deadline Extensions

If a policy provision, notice, correspondence or law imposes a deadline for policyholders to perform an act or transmit information that falls on or after September 4, 2017, that deadline is extended to December 3, 2017. However, policyholders with Hurricane Irma claims must still provide information and cooperate in the claim adjustment process.

Though no interest, penalties or other charges can accrue or be assessed as the result of the new deadline, this extension does not apply to premiums due in the normal course of business. The extension also does not apply to new policies effective on or after September 10, 2017.

Payment of Claims

Under Florida law, insurance companies need written authorization to pay claims by debit card or other form of electronic transfer. However, if an insurance company verifies the identity of the recipient and does not charge a fee, the written authorization requirement is waived for the duration of the state of emergency. Insurance companies remain liable for payment if funds are misdirected.

Does Homeowners’ Insurance Protect Airbnb and other Home-Sharing Hosts?

Most of us don’t care whether homeowners’ insurance covers claims caused by renters. After all, how many people actually rent their homes to strangers? As it turns out, a lot of people do. Home-sharing services have turned a growing number of ordinary homeowners into part-time innkeepers.

According to the Pew Research Center, 11% of American adults have used online home-sharing services like Airbnb or VRBO. Airbnb boasts of having over 3 million listings worldwide. This means that a lot of people really need to care about whether homeowners’ insurance covers claims caused by renters.

The Risks

Home-sharing is not without risk. For example, host homeowners face an increased exposure to:

  • Personal and structural property damage or loss.
  • Criminal activity, theft and vandalism.
  • Liability to guests for property damage or bodily injury that occurs on the premises.
  • Liability to third-parties for property damage or bodily injury caused by guests.

Standard Homeowners’ Insurance

Standard homeowners’ insurance policies don’t directly address home-sharing because it didn’t exist when these policies were created. Nevertheless, there are a number of long-standing provisions in standard policies that could limit or exclude coverage for the host homeowner.

  • Eligibility. Many policies are restricted to dwellings used exclusively for private residential purposes.
  • Property Coverage: Standard policies generally do not cover the theft of a host’s personal property from areas that are rented to guests. The same is true for a guest’s personal property. They can also limit coverage for appliances, carpeting and household furnishings in areas that are rented to others.
  • Liability Coverage: Standard policies don’t provide liability coverage for business conducted from the home, like renting your home guests.

As you can see, standard policies may not cover a host homeowner’s losses even though home-sharing is not expressly mentioned or excluded. These coverage gaps are common when standard (old) policies are used to insure non-standard (new) activities.

Unfortunately, the insurance industry doesn’t move as fast as the Airbnb’s and Über’s of the world. So, before joining the sharing economy, review your standard insurance policies carefully to identify any potential coverage gaps. If you’re not sure, ask an experienced insurance agent.

Please contact us to learn more about home-sharing host insurance coverage.

To receive regular updates about important insurance developments, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.