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Eight things that might surprise you about your home insurance policy

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By David Miller, Vice PresidentPlexus Private Client Solutions 

Home insurance is essential, but only having the right home insurance offers true piece of mind.

What's more, there is nothing worse than being surprised by an expense not covered by your insurance.

With these points in mind, here are eight things to consider as you think about your homeowner's coverage.

Finally, if you want to discuss issues raised in this article, please contact me at 847-307-6141 or dmiller@plexusgroupe.com.

Eight Considerations

1. Your home's probably underinsured.  According to CoreLogic, which provides analytics information to insurers and other businesses, 60% of U.S homes seem uninsured by an average of 20%.  Most home insurance companies will provide additional coverage if the amount listed in your policy's not enough to rebuild your home. The amount of this cushion varies from one company to the next.

The bigger concern, however, is not working with an agent that insures the home correctly in the first place.  You don’t want to find out at the time of loss that your policy provides you with 20 percent additional coverage when you need 50 percent more coverage to completely rebuild your home.

2. Your deductible may be too low.  Many insurance companies are starting to provide meaningful premium reductions at higher policy deductibles.  Our rule of thumb is to accept a higher deductible when the increase in deductible divided by the premium savings is five years or less.

For example, let’s assume your current deductible is $1,000.  The insurance company would decrease your premium by $450 if you increased the deductible to $2,500.  If you divide the additional out-of-pocket expense ($1,500) by the premium savings ($450), the result is 3.3 years.  In this example, we would recommend moving to the higher deductible.

3. Your deductible may have changed.  We have started to notice that some direct writers are moving towards a percentage deductible as opposed to a flat deductible for all causes of loss.  Other companies are implementing higher deductibles for certain types of losses. Many range from one percent to as high as five percent for losses due to wind or hail.

4. You may have little or no coverage for losses due to sump pump failure or sewer backup.  Most policies issued by direct writers provide no coverage if water enters your home through a sump pump failure or a sewer drain backup.  Many of these same companies will allow you to buy back some coverage. The amounts may be low ($10,000 is common), or the buyback includes restrictions on the types of property covered.

Even if you have an unfinished basement, the costs associated with a sump pump/sewer claim might surprise you.  We represent companies that offer higher limits, all the way up to limits on your home and/or contents.

5. You may have a depreciation schedule for hail damage claims to your roof.  Some companies are including a depreciation table in their policies that list how much less they will pay for your roof, based on the type and age of your shingles.  For example, if you have a 20-year-old roof and asphalt shingles that  hail damaged, your company might only pay for 50 percent of the claim.

6. Your policy might not cover claims for Personal Injury.  Personal Injury refers to such things as libel, defamation, and invasion of privacy.  While these types of claims may seem far-fetched, they are on the rise with the pervasive use of social media.  And while you may be careful with what you post about your neighbors or friends, your children may not.  They might send an inappropriate photo or text to a friend, and that message's forwarded and quickly goes viral.  Adding this coverage to your home insurance is inexpensive (less than $50 a year) and often overlooked by the agent.

7. Your jewelry or other valuables may not be insured.  Most policies limit the amount of coverage for lost or stolen jewelry to no more than $2,500 – and that's after your deductible's applied.  For additional premium, you can insure your jewelry for its full value at a $0 deductible.

You can insure collections of just about anything. Whether it's sports memorabilia, old movie posters, or wine, your passion's included.

8 Your homeowner’s liability limit may be too low.  Many home insurance policies carry a liability limit of $100,000 or $300,000.  For less than $50 per year, this limit can be increased to $500,000, or even $1 million.

About Plexus Private Client Solutions 

Plexus Private Client Solutions protects the life’s work of families and individuals, offering tailored, comprehensive personal insurance solutions, including home, auto, and umbrella policies. Click here for a personalized quote.

 

What's in a name? When it comes to a storm, it could mean a higher deductible.

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The heavy rainfall, high winds, and storm surges associated with hurricanes and other intense storms can devastate any business, even those located hundreds of miles off of a coast. Because these storms have the potential to cause tens of billions of dollars in damage, insurance providers generally use special “named storm deductibles” to provide coverage in the event of a loss. Named storm deductibles typically cost more than traditional fixed-dollar deductibles, but specific circumstances trigger them and vary based on location. However, the details of these deductibles are important to know so you're prepared in the event of a severe storm.

Named Storm Deductibles: An Overview

Storms trigger Named Storm Deductibles: The National Weather Service (NWS) will name a tropical depression, tropical storm, or hurricane if it's severe enough.

The NWS first started to name storms to make it easier for the public to track and follow severe storms as they developed. However, after large hurricanes and tropical storms began to cause large amounts of damage, insurance providers began looking for ways to mitigate their losses. Named storm deductibles, tied to the time periods surrounding NWS-named storms, ensure insurance providers are responsible for a smaller portion of any loss caused by a named storm.

It’s important to note other organizations have started to name storms. The Weather Channel, a privately owned weather organization, recently began naming winter storms in order to make tracking them easier for its viewers. However, insurance providers only apply named storm deductibles to storms named by the NWS.

The Triggers for Named Storm Deductibles

The triggers for named storm deductibles can vary based on the insurance provider and location, although almost all triggers generally include a timing window, such as 24 hours before a storm's named by the NWS to 48 hours after it's downgraded to a tropical storm. During this window, your named storm deductible will apply to any damage instead of a normal wind and hail deductible.

Other triggers can include when a hurricane makes landfall or when a hurricane watch's declared. Because the triggers for named storm deductibles can vary significantly, it’s important to look up the exact rules as defined by the state you live in and your specific insurance policy.

Price Differences

Named storm deductibles generally cost more than regular deductibles because they're based on percentage rather than a fixed dollar amount. Most named storm deductibles range between 1-to-5 percent of your total insured amount, but in high-risk areas, deductibles can reach as high as 10 percent.

For example, imagine that you insured your business for $1.5 million. If normal wind or hail damage your business, you would pay a regular, fixed-dollar deductible before your insurance provider would provide coverage for the remaining damage. However, if during the window of a named storm deductible, the storm caused damage, your deductible would use a percentage to calculate the cost. For a five percent deductible, this would amount to an out-of-pocket expense of $75,000 before your insurance provider would pay for damages.

What It Means for You

Deductibles for damage caused by named storms are higher in order to mitigate the financial risk to insurance providers while still offering premiums that are relatively low. Additionally, many insurance providers believe that the high deductibles will encourage business owners to take proactive steps to protect their businesses from severe storms.

Let’s Have a Conversation

Have questions about named storm deductibles or other commercial insurance matters? Contact a Plexus P&C client executive at 847-307-6100. We're here to help, and we're happy to help.

Disclaimer and publishing credit: This Coverage Insights not intended to exhaustive nor should any discussion or opinions construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2016 Zywave, Inc. All rights reserved.

Helpful insurance links, resources for storms

Currently a Category Five storm, Hurricane Irma could make landfall in Florida by Sunday, according to the National Hurricane Center. From there, the storm could move north and east to affect parts of Georgia and South Carolina. Irma's impact on renters, homeowners, and business owners could be significant. As a resource, we have put together a short fact sheet on insurance FAQs and contact information for U.S. areas most immediately affected by Irma.

A brief overview of common insurance coverages

Flood insurance: Flood coverage is required in some flood-prone areas, and possibly essential for homeowners, renters and business owners, as homeowners, renters and businessowners coverage typically excludes flood damage.

The National Flood Insurance Program oversees most U.S. flood policies. This is typical coverage under flood insurance.

Homeowners / renters insurance: These policies will cover structural, fire and other various damage inflicted by storms. A rental policy covers damage and loss to a leaseholder's apartment, including valuables.

Businessowners insurance policy (BOP): Businesses guarding against a wide range of risk, including property damage from storms, typically hold this coverage. The coverage often contains business interruption insurance, a must if operations are halted because of weather or another cause.

Auto insurance: Comprehensive auto coverage, will protect you in case of storm damage to a car. Note that flood coverage excludes car damage.

In all cases, it is good to known what each of your policies covers and excludes, and your insurance agent can be your greatest guide in this regard.

Beginning the post-storm claims process

To begin, policyholders are advised to inventory their belongings before a storm strikes (though, of course, that can be easier said than done when time is of the essence).

In the case of a loss, consider taking these steps:

⇒ Take care of this first if you need emergency assistance.

⇒ If -- and only if -- it is safe to do so, you may want to take action to begin reducing the impact of the loss. For instance, if there is water on your floor, and you have access to shut off your water, this would be a logical step, but only if it safe to proceed.

⇒ Contact your insurance agent. However, in the case of a major weather event, it is possible your agent might not be immediately available.

Resources -- national

FEMA offers numerous online resources on the flood insurance claims process, including infographics in more than a dozen languages and an in-depth fact sheet on claims.

Here is a list of toll-free numbers for property & casualty insurance carriers from the Property Casualty Insurers Association of America (PCIAA).

The PCIAA website has plenty of valuable information as well, including tips for before the storm.

Resources -- state

⇒ The Florida Office of Insurance Regulation offers information for state policyholders. Visit the organization's website, or contact the office via multiple phone numbers, including toll-free in-state at (877) 693-5236.

The Office of Insurance and Safety Fire Commissioner regulates Georgia's insurance industry. Telephone: 800-656-2298. The commission website offers search functions to find local insurance agents in Georgia, as well as other insurance information.

⇒ The South Carolina Department of Insurance has a host of information for policyholders, including a brochure on what to do before a storm. Telephone:  803-737-6160.