Tag: Homeowners

Florida’s AOB Reform Prompts Citizens to Update Homeowners’ Policies

Floridians insured by Citizens Property Insurance Corporation will see new policy forms next year. Citizens updated its homeowners and other personal lines property insurance policies to reflect Florida’s new assignment of benefits (AOB) laws. These updates will be incorporated into Citizens’ policies with effective dates on or after February 1, 2020.

AOBs, which are commonly used by homeowners after suffering a property loss, generally authorize vendors (contractors, water remediation companies, etc.) to collect payment for services directly from the owner’s property insurance company. In 2019, Florida’s laws were changed to stop the abuse of post-loss AOBs by strictly regulating their use.

In light of these new statutory requirements, Citizens made a number of AOB-related changes to its policy forms. For example, the updated policies include the following AOB-specific definitions.

  • An “assignment agreement” is any instrument which assigns post-loss benefits under a residential property insurance policy to a person providing services to protect, repair, restore, or replace property or to mitigate against further property damage.
  • An “assignor” is the person who assigns post-loss benefits under a residential property insurance policy to another person. (The “assignor” is typically the homeowner or tenant named as the insured under the policy.)
  • An “assignee” is the person who is assigned post-loss benefits. (This is typically the contractor, water remediation company or other vendor providing services to the homeowner.)

The updated policies also:

  • Clarify that assignment agreements do not change the policy’s performance obligations.
  • State that in the event of a covered property loss, Citizens has no duty to provide coverage to an assignee who fails to comply with specific statutory duties.
  • Require assignees to provide Citizens with written notice of intent to initiate litigation before filing a lawsuit.

Citizens will include a Notice of Change in Policy Terms with their 2020 renewal offers. Other insurers may make similar changes to their homeowner’s insurance policy forms in the near future. In the meantime, please contact us if you have any questions about your homeowners’ insurance coverage.

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.

 

Are You Ready for the 2017 Hurricane Season?

It’s that time of year again. If you live or work in the Atlantic hurricane region, it’s hard to forget that hurricane season officially starts June 1st. The beginning of hurricane season, which runs through November 30th, is not a time for panic. Instead, it’s a time to finalize the plans and protective measures that will be needed if a storm is coming your way.

The National Oceanic and Atmospheric Administration made the following predictions about the 2017 Atlantic Hurricane Season.

  • 45% chance of an above-normal season
  • 35% chance of a near-normal season
  • 20% chance of a below-normal season

NOAA forecasters also predict a 70% likelihood of:

  • 11 – 17 Named Storms (winds of 39 mph or higher)
  • 5 – 9 Hurricanes (winds of 74 mph or higher)
  • 2 – 4 Major Hurricanes (winds of 111 mph or higher)

These predictions include pre-season Tropical Storm Arlene, which formed over the eastern Atlantic in April. An average season produces 12 named storms, six of which become hurricanes, including three major hurricanes.

A strong El Nino and wind shear typically suppress the development of Atlantic hurricanes. Warmer sea surface temperatures tend to fuel hurricanes. However, NOAA is expecting “a weak or non-existent El Nino, near- or above-average sea-surface temperatures…and average or weaker-than-average vertical wind shear.”

Regardless of predictions, it only takes one hurricane making landfall to make it an active season for you. Since it’s better to be safe than sorry, here are a few tips that can help your home and business weather a storm.

Before the Storm

  • Monitor the news to allow time to prepare.
  • Identify tools and equipment that will be needed to secure property before and recover after the storm (flashlights, batteries, caulking, tarpaulins, sandbags, cutting and fastening equipment, etc.).
  • Clear drains and downspouts to minimize the risk of flooding.
  • Unplug electrical equipment and move items inside and away from windows
  • Check and secure all documents and records.
  • Take or update photographs of real and personal property.
  • Gather insurance policies and agent/insurer contact information.

After the Storm

  • Only after it has been declared safe to do so, take reasonably necessary steps to protect against any further property damage.
  • Report fallen power lines to power company immediately—stay away from them!
  • Check exterior walls and roof for damage.
  • Check interior perimeter walls, floors and roof for leaks and water damage.
  • Document all damage with photographs and video.
  • Prepare detailed damage reports.
  • Call your insurance company or agent as soon as possible to report damage.

With over 30 years of experience dealing with tropical storms and hurricanes, we know that taking preventative measures before a hurricane is the most effective way to limit the damage. To help you get started, we created a 2017 Hurricane Season Checklist.

Setnor Byer Insurance & Risk has a long history of helping clients prepare before the storm and, more importantly, recovering after the storm. Our team of experienced and responsive professionals can help protect your personal and business property in the event of a hurricane.

Please contact us if you would like more information about protecting your personal and business property during the 2017 Hurricane Season.

You can receive regular updates about developments that may affect your home or business by subscribing to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Does Homeowners’ Insurance Cover Damage Caused by a Meteorite?

Nearly 95 percent of homeowners have some form of homeowners’ insurance. Most have a basic understanding about their insurance policies. But, a survey by the Insurance Information Institute revealed that many homeowners have significant knowledge gaps about what is and what is not covered by a standard homeowner’s insurance policy. As you might imagine, these gaps can be very costly.

The good news is that according to the survey, a majority of homeowners correctly identified perils that are covered by a standard homeowner’s insurance policy.

  • Fire (91%)
  • Theft (79%)
  • Hail (73%)
  • Burst Pipes (71%)

The not so good news is that many homeowners think other perils are covered even though they aren’t. For example,

  • 43% think damage caused by flooding from heavy rain is covered.
  • 28% think hurricane storm surge flood damage is covered.

Standard homeowners’ insurance does not cover damage caused by flooding from heavy rain or a hurricane-driven storm surge. A separate flood insurance policy is needed to cover this kind of damage. Though flood insurance is available through the National Flood Insurance Program and from some private insurers, the Insurance Information Institute found that only 12% of homeowners carry flood insurance.

Another common misperception involves “earth movement” coverage. According to the survey, many homeowners incorrectly believe the following perils are covered by standard homeowners’ insurance:

  • Sinkhole (31%)
  • Mudslide (24%)
  • Landslide (23%)

Supplementary insurance is often needed to cover these perils. Mudslide damage can be covered by a flood insurance policy, but landslides, sinkholes and earthquakes typically require separate, specialized policies.

The survey also found that many homeowners were not aware of various coverages that are included in a standard policy.

  • 43% didn’t know that theft of possessions from their car may be covered.
  • 54% didn’t know that theft of a camera while vacationing may be covered.
  • 70% didn’t know that theft of a child’s laptop while at school may be covered.
  • 56% didn’t know that damage caused by airplane debris may be covered.
  • 73% didn’t know that damage caused by a meteorite may be covered.

Given the complexities of homeowners’ insurance and the wide range of risks associated with owning a home, homeowners are encouraged to speak with a reputable and experienced insurance agent. Knowledge is the key to protecting your most valuable asset.

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 weekly risk management news brief.

Save Money on Homeowners’ Insurance with Wind Mitigation Credits

Did you know that 15 to 70 percent of your homeowners’ insurance premium can be attributed to the risk of wind damage? Taking steps to prevent or reduce wind damage is known as wind mitigation. These steps can save your home from catastrophic storm damage. They can also save you money. In some cases, wind mitigation credits can reduce the wind-specific portion of a homeowners’ insurance premium by more than 50 percent.

Insurance companies offer premium discounts for specific structural and nonstructural building techniques that are designed to prevent or lessen the risk of damage caused by high winds. Though each home has unique characteristics, some structural or design elements are riskier than others.

According to Florida’s Division of Emergency Management, the highest risk elements include:

  • Non-wind rated shingle roofs.
  • Gable ends with wide overhangs, poorly attached roof sheathing, or over 6’ high.
  • Big windows (over 5’ wide and over 5’ tall).
  • Small jalousie, awning type and mulled windows.
  • Gable end walls for rooms with cathedral or vaulted ceilings.
  • Garage, double entry, and sliding glass doors.
  • Roofs supported by poorly fastened posts or columns.
  • Attached structures of almost any type.

If your home has high-risk elements, now is a good time to start thinking about wind mitigation. Though storm shutters tend to be the most obvious type of wind mitigation, there are other less visible types that can be equally effective. For example, wind mitigation may involve:

  • Water Barriers. Providing a sealed roof deck if pieces of roof covering (shingles, tiles, etc.) are blown away.
  • Anchoring. Reinforcing foundation-to-wall and wall-to-roof connections (toe nails, metal clips, single and double wraps) to establish a continuous load path. A continuous load path allows your home to resist high-wind forces as a unit. Weak links are generally where damage occurs.
  • Gable Ends. Strengthening connections between the roof and the wall by reinforcing the framing and bracing the top and bottom of the gable. Connections can be weakened by gable ends that bow in and out in strong winds.
  • Doorways. Replacing doors, including garage doors, with hurricane-rated doors. Additional bracing can also be applied to existing garage doors.

The availability of wind mitigation credits depends on various factors, many of which are very specific. For example, credits may be denied if the size, spacing or number of roofing nails fail to meet specific minimum standards. Specific inspection reports may also be required to qualify for wind mitigation credits. Florida, for example, requires the use of a Uniform Mitigation Verification Inspection Form.

Wind mitigation inspections, which typically cost less than $250 and take about an hour, are often done by licensed building inspectors, contractors, architects and engineers. Since state laws and specific insurance company requirements may dictate who is qualified to perform wind mitigation inspections, be sure to confirm licenses and check references before hiring an inspector.

Depending on when your home was built, you may be entitled to some wind mitigation credits even without an inspection! If you’re looking for a way to save money on homeowners’ insurance, please contact us to discuss premium discounts and wind mitigation credits.

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