Tag: Theft

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 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.