Tag: Ordinance or Law Coverage

Making the Most of National Electrical Safety Month

Protecting your family, home and property is a full time job. Unfortunately, busy schedules often get in the way of making safety a top priority. Since May is National Electrical Safety Month, now is a good time to discuss electrical hazards and review effective safety practices.

According to the Federal Emergency Management Agency (FEMA), electrical malfunctions are a leading cause of residential building fires. In 2011, there were 26,800 residential building fires caused by electrical malfunctions that resulted in 280 deaths, 1,200 injuries and over a billion dollars in property loss. FEMA reports that residential building electrical fires cause more injuries, death and damage than all nonelectrical residential fires combined.

Steps can be taken to avoid becoming another tragic statistic. For example, since the average home in the United States was built in 1974, the Electrical Safety Foundation International (ESFI) recommends installing updated home safety devices that are designed to meet today’s electrical demands. The following items, for example, can greatly increase electrical safety.

Tamper Resistant Receptacles

Curious kids and electrical receptacles (outlets) are a dangerous combination. Tampering with electrical receptacles causes an estimated 6 to12 child fatalities and 2,400 severe shocks and burns every year. Those relying on plastic outlet covers to protect their children should know that a Temple University study found that 100% of 2 to 4-year-old children were able to remove plastic outlet covers in less than ten seconds.

A Tamper Resistant Receptacle (TRR) has spring-loaded shutters that cover the contact openings, or slots, of the receptacles. These shutters only open when both springs are compressed at the same time. The shutters will not open when a child attempts to insert an object into only one contact opening, so there will be no contact with electricity. According to the ESFI, the cost of installing TRRs in new homes is about 50 cents more than installing traditional receptacles, and the cost of retrofitting existing homes can be done for about $2 per outlet.

Ground Fault Circuit Interrupter

A ground-fault occurs when there is a break in the grounding path that may cause the electrical current to take an alternative path to the ground through a person, resulting in serious injuries or death. A Ground Fault Circuit Interrupter (GFCI) is a fast-acting circuit breaker designed to shut off electric power within as little as 1/40 of a second in the event of a ground-fault. It works by comparing the amount of current going to and returning fromequipment along the circuit conductors. If there is a measurable difference between the two, the GFCI interrupts the current.

Arc Fault Circuit Interrupter

An arc fault is an unintentional discharge of electricity in a circuit that can be caused by damaged, overheated or stressed electrical wiring or devices. Sparking or arcing caused by loose or corroded wires making intermittent contact generates heat and can damage insulation of the wires, which can trigger an electrical fire. Since arcing may not trip a circuit breaker, an Arc Fault Circuit Interrupter (AFCI) is needed to shut off the electricity before a fire can start.

The ESFI also recommends conducting a home electrical safety checkup by asking a number of questions designed to identify potential safety hazards, such as:

  • Are all switches and outlets working properly?
  • Are any switches or outlets warm to the touch?
  • Are any outlets or switches discolored?
  • Do any switches or outlets make crackling or buzzing sounds?
  • Do plugs fit snugly into all outlets?
  • Are any cords cracked, frayed or damaged?
  • Are any cords pinched by furniture, doors or windows?
  • Are cords attached to anything with nails or staples?
  • Are cords placed under carpets?
  • Are any extension cords being used on a permanent basis?
  • Are cords kept tied up while being used?
  • Are appropriate wattage light bulbs being used in all lights?
  • Are all appliance cords placed so they will not come in contact with hot surfaces?
  • Do you have recurring tripped circuit breakers or blown fuses?
  • Are electrical safety devices, such as GFCIs and AFCIs, tested every month?

If potential electrical safety hazards are discovered, the ESFI cautions against taking a do-it-yourself approach and strongly recommends leaving electrical work to the professionals. Nevertheless, the ESFI recommends the following precautions before doing any electrical work:

  • Turn off the power by switching off the correct circuit breaker in the main service panel.
  • Unplug lamps, appliances, etc. that are being worked on.
  • Test wires before touching them to confirm power has been turned off.
  • Never touch plumbing or gas pipes when performing an electrical project.
  • Never attempt a project that is beyond your skill level.

Since completely eliminating the risk of electrical damage is impossible, homeowners and renters should check with their insurance agent to make sure they are adequately protected. In some cases, a personal property floater or ordinance and law coverage may be necessary.

If you would like information about how insurance can play a valuable role in protecting your home from electrical safety hazards, please contact us.

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The Risk of Fire Facing Homeowners

Though often overshadowed by hurricanes and earthquakes, fire remains one of the greatest risks facing homeowners. Consider the following:

  • U.S. fire departments responded to an estimated 1,375,000 fires in 2012
  • Residential fires caused 2,450 deaths and 13,900 injuries in 2011
  • On average, 7 people per day die in U.S. home fires
  • Home fires occur more frequently in the winter and on the weekends
  • Cooking is the leading cause of residential fires, followed by heating, electrical malfunction, unintentional/careless conduct, intentional and open flame

Statistics show that residential fires are not only becoming more frequent, but more expensive. According to FEMA’s U.S. Fire Administration, there were 364,500 residential fires in 2011 that caused over $6.5 billion in losses. To avoid becoming another statistic, homeowners must take effective protective measures, such as:

  • Installing smoke alarms, preferably those with both photoelectric and ionization sensors, on every level of your homeIand outside bedrooms, testing them monthly, replacing batteries yearly, and teaching children what they sound like and what to do when they hear it
  • Placing properly maintained fire extinguishers strategically throughout the home, and making sure children know where they are and how to use them
  • Maintaining and repairing electrical systems, such as wiring and outlets
  • Inspecting and cleaning chimneys, fireplaces, furnaces, etc. annually
  • Using appliances, especially space heaters properly
  • Cooking safely
  • Properly using and storing flammable materials

Since it is impossible to completely eliminate the risk, homeowners and renters should check with their insurance agent to make sure they are adequately insured in the event of a fire. In some cases, a personal property floater or ordinance and law coverage may be necessary.

If you would like more information about homeowners’ insurance or would like to discuss your insurance needs, please contact us.

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Ordinance or Law Coverage Video From Tower Hill® Insurance

Hurricanes have led to significant building code changes in Florida. Ordinance or Law Coverage provides for the additional cost to bring a building up to current building codes when significant repairs are needed. One of our Insurance Carriers, Tower Hill Insurance Group has created a great video explaining the importance of Ordinance or Law Coverage and the different options available for this product. If you would like to learn more about this coverage please contact us.

https://youtu.be/WJGnqgBEI_Y

Below please find the transcript from the video featured in this article.

Hi I’m Joel Curran coming to you from the Gainesville, Florida offices of Tower Hill Insurance Group. With me today is Heidi Moore, the Claims Manager. Heidi’s been with Tower Hill for 15 years.

Do you know if your homeowner’s insurance policy covers you for Ordinance or Law? If you’re like most people, you’re not sure what this coverage is, let alone know if your policy includes protection from this exposure.

Ordinance or Law coverage provides for the additional costs to bring a building up to current building codes when major repairs are needed.

Florida has implemented significant building code changes over the past few years largely due to our experience with hurricanes. If your home was built before the code changes and it needs repairs, the repairs are often needed to be done according to the new building code.

Heidi, in your experience, you’ve had many real life situations where customers had the Ordinance or Law coverage and sometimes they did not.

Yes, we recently had a 1994 home that had tornado damage. They had plenty of coverage to repair the home, but had a code issue with the pool enclosure.

Tell us more about that code issue.

Well the policyholder had minor damage to the pool enclosure, but due to the Post-hurricane Wilma codes, they had to replace the pool enclosure. This would be an additional cost of $17,000.

And did the people have the adequate coverage? In this case they did because they chose the 25% option. They had $82,000 in Ordinance or Law to go towards the replacement of the pool enclosure. The additional cost for them was $17,000 but due to the fact that they had this, they did not have to incur the expense themselves.

So they were a satisfied customer?

They were very satisfied.

Heidi, have you had situations where the customer had to incur the additional costs themselves?

Unfortunately, yes. We had a 1987 home that was struck by lightning and this lightning caused a fire loss. There was damage to the interior and exterior of the home.

And what was the building code issue?

In this case the home was located in a coastal flood area. The Ordinance or Law stated that the homes had to be at 8 feet elevation, this particular home was at 4 foot elevation. Therefore we had to raise the foundation an additional 4 feet.

And what was the additional cost? The additional cost for this policyholder was $35,000.

And they did not have the coverage?

Unfortunately, they did not. They had selected the 0 option. So they had plenty of coverage for the fire damage, but they had to incur – at their own expense- the coverage for raising the elevation.

You can check your policy Declarations page to see what option is included. You should see a percentage figure that applies to the amount you insure your home for.

Not all policies are identical; some include 10% Ordinance or Law coverage unless you select another option. But usually you have the option to select 0% or none, 10%, 25% or 50%.

Florida statutes require insurance companies to get your signature for selections other than 25% and to notify you of your options at least every 3 years.

At Tower Hill, a look at recent new business shows that most of our customers purchase 25% Ordinance or Law coverage. A small number select 10% and 50% but close to 1 in 5 select the 0% option.

There are policy conditions and exclusions that apply and your agent is the best person to contact to explain these and to advise you on your selection. At Tower Hill, we want you to have the coverages you desire so if the unfortunate claim does occur, we are there for you. We want to help you get safely back in your home as soon as possible. We’ve been doing exactly that for 40 years.

Self Storage Facilities: Protecting the Bottom Line

Most businesses rely on their facilities to manufacture products or provide services. In the self storage industry, the facilities typically are the product. If property loss or damage is not fixed quickly, the business may fail. Though most believe their self storage facilities are adequately insured against property loss or damage, many overlook Ordinance and Law coverage. This oversight can be the downfall of any self storage facility.

Ordinance and Law insurance is designed to pay the extra expense of rebuilding to comply with ordinances or laws, such as building codes, which did not exist when the building was originally constructed. Since the costs of improving a structure to bring it up to code are specifically excluded under most property policies, this coverage can be quite valuable.

An insured’s obligation to rebuild according to current and stricter codes is often triggered when an insured building experiences a covered loss, such as a fire or hurricane. Unfortunately, many insureds first learn of this additional obligation and expense after they experience a property loss. To avoid the burden of these additional rebuilding costs, self storage facilities can add Ordinance and Law coverage to their current property insurance policies. Doing so will generally cover:

  • Loss to the undamaged portion of the building;
  • Increased demolition costs; and
  • Increased costs of construction.

Since rebuilding according to current building codes may suspend operations for an extended period of time, self storage facilities can purchase Business Interruption insurance to cover reductions in net income caused by an inability to continue business operations. Since payroll, mortgage/rent payments, money owed to suppliers, taxes, and other continuing expenses must be met, Business Interruption insurance may provide badly needed capital when operations are suspended.

Combining Ordinance and Law coverage with Business Interruption coverage, self storage facilities increase the likelihood of surviving not only the initial property loss, but a protracted suspension of operations resulting from the obligation to rebuild in accordance with current building codes.

While the decision to obtain Ordinance and Law and Business Interruption coverage should be easy, understanding specific policy provisions and terms can be difficult. Since there may be variations among different policy forms, it is important that you consult with an experienced insurance agent to discuss your options.

If you would like more information about protecting your self storage facility or obtaining Ordinance and Law and Business Interruption insurance coverage, please contact us.

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