Basics
Property policies separate losses into various types:
Polices are packaged together to cover the various types of losses. The main policy forms available include:
When to Buy
Insurance coverage should begin as soon as you become the legal owner or tenant. This also includes buildings under construction. It is important to know how your policy covers your contents when moving from one location to another and to make sure that your old location stays covered until you no longer legally own it or are responsible for it. It is important to note that most companies do not provide theft coverage for vacant buildings and also require a vacancy permit when a property is vacant for over 30 days.
Insurance to Value
Don’t under estimate your contents. Complete an inventory annually and keep it up to date. Make sure to include taxes. Most polices are based on Replacement Cost, which is the replacing of an item with one that is new, and of like kind and quality. Consider taking photographs or a video tape to keep with the list. An inventory will not only help you to access the total amount of contents you have but it will also help to prove your loss to your insurer in the event that you have a claim. The onus is always on you to prove your loss to the insurer.
Building limits should be based on the buildings estimated rebuilding cost and not its market value. Most home policies usually include Replacement Cost coverage for buildings. The settlement can be up to, but not greater than, the amount of insurance on the building. If the replacement cost of the building is underestimated, the policy will not pay more than the cost stated in the policy. There is an optional coverage called Guaranteed Rebuilding Cost that can change this. Please see a description of this in the preceding.
As part of our service we use the ezITV 2010 Evaluation to help determine rebuilding cost.
Policy Forms
There are three common policy forms available for Personal Property. They are Comprehensive, Broad, and Named Perils.
The “Comprehensive” policy covers both the building and contents for all risk that are not specifically excluded in the policy. This is the best form of protection that can be purchased.
The “Broad” policy provides all risk coverage on the building and named perils coverage on the contents. Although this form is good it is not as good as the ‘Comprehensive Form” but it does come at a lower cost.
The "Named Perils" policy is a very basic form and only provides protection for a specific list of coverages as follows:
It is normally the least expensive policy that is available.
What’s Not Covered
It's important to note that a personal property policy is not a maintenance contract. It is intended to cover only those unforeseeable events that are sudden and accidental. A partial list of those events that are not covered include:
Special Limits and Limitations
Most Personal property policies contain special limits of coverage for a number of items. These items include:
If a building has been vacant for over 30 days all coverage ceases unless arrangements have been made with the insurer for a vacancy permit. It is important to be aware that even with a vacancy permit coverages are greatly reduced. If a house has been unoccupied for more than 96 hours during the normal heating season, frozen pipes will not be covered unless all the pipes have been drained and water shutoff, or arrangements have been made for a competent person to enter the house daily to check the heating system.
Property of roomers and boarders are not automatically covered
Optional Coverage Extensions
There are a number of additional coverages that can be added to your policy in order to receive the full protection that you require. A partial list of these coverages are:
Umbrella Liability Coverage
What is Umbrella Insurance?
Umbrella Insurance provides exactly the type of coverage that it sounds like it would; it provides an umbrella for you to stand under. Providing protection against liability losses which exceed the limits of your existing personal insurance policies, be it your home, cottage or car insurance. You don’t need to be rich or famous in order for someone to sue you.
What does Umbrella Insurance cover?
The liability coverage within most of your current insurance policies only provide coverage for bodily injury and property damage to others. Umbrella policies will extend those limits to not only provide additional coverage for bodily injury and property damage, but also to cover things that are not listed under regular liability coverage. Examples would be libel, slander, defamation of character and invasion of privacy. Every policy is different, so what is considered a covered liability loss under one insurance policy may not be covered on another. Umbrella Insurance kicks in when these situations present themselves and/or you exceed the amount of liability coverage for the events that are already allowed under your regular insurance policies.
Why should you purchase Umbrella Insurance?
You may not think you need an umbrella policy, but consider this: What happens to you and your family’s assets should you be sued for something that occurred at your home and the legal costs of the lawsuit greatly exceed the liability coverage defined by your homeowner’s policy? Who will pick up the tab if you are responsible for a multi-car accident and your liability costs exceed the limits on your car insurance by thousands of dollars? Although these kinds of things may be few and far between, you cannot be too careful. Umbrella Insurance is typically purchased at a low cost to you, but will provide enough coverage to where you shouldn’t have to worry about liability costs in the future. Contact L.D. Dermody today for more information on umbrella policies.
Guaranteed Replacement Cost
What is Guaranteed Replacement Cost Coverage on Dwellings? Your insurer will guarantee to rebuild your home, even if the cost to rebuild it is more than the amount of insurance you have purchased. To obtain this coverage you must insure your home to its estimated replacement cost, keep the home updated and notify your company of any changes made to the home which would increase the homes' rebuilding value by $5,000 or more. The perk of this coverage is that you will never be underinsured.
Discounts
There are many discounts provided by Insurers. Make sure you are aware of the discounts offered by your company so that you may maximize your savings. Some of the more common discounts are:
Deductible
The Deductible is the portion of a loss that you are required to pay before your insurance coverage will respond. Consider lowering your premium by taking a higher deductible. Common deductibles today are $500 and $1,000.
Working from home
If you work from home it is vital to look at the range of options available in your home insurance policy. Some insurers automatically cover up to $2,000 for home office equipment. This is likely to be adequate unless you use specialized equipment or employ other people, in which case you will need to speak to your insurer about the possibility of gaining specialized coverage. Most companies offer a home run business extension or policy. You could need extra coverage for more valuable items, and items that are particularly susceptible to theft, such as laptops.
The liability protection provided by your homeowners policy does not automatically cover your homerun business operations. If you are working from home check with your insurer to see what coverages you have and what options are available to you.
