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What Your Property Insurance Doesn’t Cover

What Your Property Insurance Doesn’t Cover

Ask the average homeowner what their property insurance covers and they will probably say “not much”. All too often homeowners make claims against their property insurance for common occurrences that simply aren’t covered by the policy. There are many things covered by property insurance: fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, volcanic action, falling objects; weight of snow, ice, or sleet; water damage (in the form of leakage from appliances); and collapse from specified causes (unless, of course, any of these are specifically excluded). However, there are some specific exclusions you should be aware of since claims for any of these will not be covered under your policy. Vermin & Animals The specific property exclusion in the Homeowners 3 – Special Form (HO3) policy form looks like this:     Vermin includes lice, fleas, roaches, bed bugs, and rodents. Damage or infestation by these pests is not a covered peril under your homeowner’s insurance policy. Damage to the home and subsequent repair and treatment of the home would be an out-of-pocket expense. So what is considered a rodent?  According to Wikipedia, the most well-known rodents are mice, rats, squirrels, prairie dogs, chipmunks, porcupines, beavers, guinea pigs, hamsters, gerbils, and capybaras so damage by these would not be covered. What about skunks, bats or raccoons? None of these are considered insects or rodents, so coverage would most likely apply to damage made by these creatures. However, check with your broker or insurance policy for a complete definition. As for part (h) – “Animals owned or kept by an ‘insured’” this means...
Why Is Flood Insurance So Expensive?

Why Is Flood Insurance So Expensive?

Whether it is your first time purchasing home or business flood insurance, or your renewal just came in the mail, you’re sure to have sticker shock. How can one policy covering one peril be so expensive? There are a few reasons why, and there are some things you can do about it. Location, Location, Location If you own property in a flood-prone area, your rates will be higher than in areas not prone to flooding. This can mean you are located near a water source such as a lake or river, or it could mean that you live in an area susceptible to run off or dam failure. Your flood zone is the largest determining factor in your premium. The Federal Emergency Management Agency (FEMA) defines flood zones as Special Hazard Flood Area (SFHA – zones starting with A or V), moderate hazard flood area (zones starting with B and X zones that appear shaded on the FEMA map), and minimal flood hazard areas (zone C or unshaded zone X). What can you do? Short of moving, you can check your flood zone to be sure what is on your policy is correct. FEMA is constantly revising maps in all areas. You can check your flood zone in the FEMA Flood Map Service Center. Bear in mind that the flood map link above won’t be enough to change your policy – you will need either a Letter of Map Revision (LOMR) from FEMA or have your elevation certificate updated by a licensed surveyor. The rate change most likely won’t be retroactive, but it would affect your upcoming flood policy...
What is Difference in Conditions?

What is Difference in Conditions?

All over the country and around the world, natural disasters and man-made catastrophes seem to happen on a daily basis. Earthquakes, hurricanes, fires, and flooding have begun to take their toll in certain areas, causing ripple effects in the insurance industry. After several years of hurricanes in the late 90s and early 2000s, Florida created Citizens Property Insurance Corporation in 2002. This was to be the insurer of last resort for homeowners, condominium associations, and co-ops that could no longer find property and/or wind insurance coverage through the open market. Much like the FAIR Plan in California, Citizens offered coverage that was basic perils only. While it did cover windstorm, hail and hurricane coverage, it left many other important perils uninsured. Situations like this are where a Difference in Conditions (DIC) policy comes in handy. Read on to find out more about DIC and if this coverage is right for you. What is Difference in Conditions? A Difference in Conditions policy is the property insurance equivalent of “gap” coverage. This coverage can be written to cover many different perils that may not be covered by a standard property insurance policy. If you want or need coverage not offered under your personal lines or commercial policy coverage, DIC is right for you. Some of the most important coverage items include: Perils to bring either basic or broad form up to special form, such as: Weight of ice, snow or sleet Collapse from specified causes Falling objects Water damage (in the form of leakage, not flooding) Theft Earthquake (earth movement) Flood Are All DIC Policies the Same? There is no standard...
Flood Insurance for Businesses

Flood Insurance for Businesses

Flood insurance is more important now than ever. Flood events across the country in the last few years are affecting not only homeowners, but also businesses. In August 2016, Louisiana experienced flooding that cost over $3.8 billion in losses. Included in that figure were over 6,000 businesses, many uninsured. What many business owners don’t know is that flood is not a covered peril under your business package insurance policy. It also cannot be included in these policies. Flood insurance is always a separate policy, but it can be purchased in different ways. Here is what you need to know about flood insurance for businesses: Basic Flood Insurance The National Flood Insurance Program (NFIP) offers basic flood insurance limits for businesses. Because this is a government program, coverage is limited to: $500,000 or replacement cost value per structure at any one location, whichever is less. $500,000 or replacement cost value in contents coverage per structure at any one location, whichever is less. In addition, policies are limited to one structure per policy.  Even if your building is worth more than $500,000, the limit may not exceed $500,000. Underwriting requirements include a flood elevation certificate, two pictures of the structure front and back and payment in full of the policy premium. Unless the insurance is for a loan closing, there is typically a 30-day waiting period before the policy goes into effect. Private Market Insurance While NFIP used to be the only game in town, this is no longer the case. There are private insurers available to insure businesses for the peril of flood. The good news is that these insurers...
Three Reasons You Should Buy Flood Insurance NOW

Three Reasons You Should Buy Flood Insurance NOW

Drought conditions in the west and warmer than average winter temperatures across the country have forecasters in a tailspin as to how to predict exactly what weather event is coming next. Heavier than average rainfall has affected the Mississippi River Valley with St. Louis area residents experiencing a very wet Christmas due to flooding. When there hasn’t been much rain, home and business owners tend to drop the insurance policy that could help them most: flood insurance.  And those who haven’t purchased it don’t see the need. In order for flood insurance to work for you in a flooding event, you have to purchase it NOW.  Here are three reasons why you should buy flood insurance now: 1. There Is A Waiting Period. The National Flood Insurance Program (NFIP) policy is designed to be purchased before you need flood coverage, and not during a storm or flood event. To prevent such on-the-spot purchases NFIP instituted a 30-day mandatory waiting period to purchase flood insurance. The policy you purchase today won’t start covering you until 30 days from now.  If it is raining now and flooding is likely, you won’t be able to get flood insurance until at least 30 days later, too late to help you when you need it now. There are no exceptions to this rule except for loan closings. If flood insurance is required for closing, the policy can be purchased and started on the same day, subject to program guidelines. Private insurers are beginning to provide quotes for flood insurance independent of NFIP which would alleviate the waiting period. However, insurance companies still will not...