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Insuring Firearms in Your Home

Insuring Firearms in Your Home

If you are one of the millions of homeowners who own a firearm (or several), you have special insurance concerns. While in the majority of cases it is illegal to own and store firearms in your home, how should they be insured? Property Coverage On a standard homeowners’ special form policy (HO3 or equivalent) firearms are discussed under Section I – Property Coverages. There under “3. Special Limits of Liability” is this notation: Firearms will be covered under the property portion of the policy, but only up to $2,500 and only for the peril of theft. It is important to note that this is a sub-limit and does not increase your policy limits. So if you have $100,000 in contents coverage, the $2,500 firearms limit will be included in that amount, not in addition to it. Should your firearms collection (including related equipment) be worth more than $2,500, you will need to discuss higher limits of coverage with your broker that would be in addition to your policy limit. This endorsement may also extend coverage to firearms for perils other than just theft. Liability Coverage The issue of liability insurance coverage for firearms is a bit more tricky. While the policy itself usually doesn’t specifically include firearms, it doesn’t exclude them, either. However, specific policy language does include or exclude coverage based on the circumstances. Here is what the policy says about Personal Liability: Based on this wording, if a shooting occurs in your home or on your property it would be covered, right? Well, it depends on the circumstances. The first thing to note is who is an...
What Happens If You Don’t Rebuild / Replace

What Happens If You Don’t Rebuild / Replace

Every so often, a catastrophe occurs that wipes out entire homes and commercial buildings. It may be something localized, like a fire, or something widespread, such as a hurricane, earthquake, mudslide, or explosion. How your insurance policy pays on your claim is determined by a few factors: your deductible, how the policy was written (actual cash value or replacement cost), the coinsurance penalty (if any) and whether the home or business owner plans to rebuild. In most cases, policyholders rebuild. But what if you choose not to rebuild? What happens then? Should You Rebuild Your Home? A homeowner may choose not to rebuild his home after a total loss for many reasons. Perhaps he is tired of the location, or the cost to rebuild has become too expensive. Maybe it is the wrong school district, taxes in the area are too high, or the neighbors host too many loud parties. Can you choose not to rebuild your home? Certainly, but you should check the terms of your policy before the unthinkable happens, as some policies may have different ideas about how to pay if you choose not to rebuild. The Homeowners 3 – Special Form (HO3) has a section entitled Loss Settlement that addresses this issue in a unique way. If coverage is written on a replacement cost basis, then payment will initially be made at actual cash value (replacement cost less depreciation). Once rebuilding is in process or completed, the remainder of the policy face value (less deductible and coinsurance penalties) will be reimbursed. If the structure is not replaced, then no additional money will be paid on...
Homeowners Insurance: Things to Think About

Homeowners Insurance: Things to Think About

When purchasing homeowners or renters insurance many policyholders are usually thinking about two things: is this the least expensive policy I can find and will it satisfy my lender? While these are excellent questions, they shouldn’t be the only questions you are asking, and they shouldn’t be the only reasons that you purchase one policy over another. Here are three other important questions you should be asking yourself AND your broker before signing on the bottom line: Do You Have Enough Structure Coverage? Many homeowners base their structure coverage on either the purchase price of their home or the lender required insurance. While these are good starting points, they may result in a coverage shortfall in the event of a claim. The purchase price of a home often does not take into account the amount it would cost to replace the home in the event of a total loss. A $250,000 home purchased 10 years ago may cost $350,000 to replace in today’s market due to rising cost of labor and materials. Getting a check for $250,000 might seem great until you realize that extra $100,000 has to come out of your own pocket. In addition, if your policy has a coinsurance penalty, you may be on the hook for even more. A 90% coinsurance penalty says you should have insured your home for 90% of its replacement cost value or your claims payment will be penalized. You should be insuring your $350,000 home for at least $315,000, but you only insure it for $250,000 or 80% of the “should” value. In the event of a total loss the...
Case Study: Wrongful Death – Homeowners Insurance

Case Study: Wrongful Death – Homeowners Insurance

One beautiful spring day an 11-year-old girl in New York attended the birthday party of a friend. Her parents dropped her off, expecting to pick her up when the party was over, but a few hours later, she was dead. The cause of death was a combination of asphyxiation and blunt head trauma. It is believed that the young lady got a marshmallow lodged in her throat, was unable to breath, passed out from lack of oxygen and struck a table on the way down. No criminal charges were filed against anyone at the party, but her parents have filed a wrongful death suit against the homeowners in civil court. What would you do if this happened in your home? How Will You Defend Yourself? Mounting a legal defense in a civil case can be expensive. Unless you have unlimited funds and an attorney on retainer, a lawsuit can put a kink in your current and future financial plans. Homeowners insurance, and even renters insurance can help protect you and your family against the financial strain of a protracted legal battle in the event of injury or death at your home. Will It Be Covered? The Homeowners Special Form 3 (HO-3) defines “bodily injury” as bodily harm, sickness or disease including required care, loss of services and death that results. A death on your property is included under this definition, but it does depend on the circumstances. Under Coverage E “Personal Liability” the policy states that if a claim or suit is brought against an insured for bodily injury caused by an occurrence for which the coverage applies, the...
My Homeowners Policy Covers THAT?

My Homeowners Policy Covers THAT?

From break-ins and fires to slips-and-falls and dog bites, you probably think you have a pretty good idea of everything that your homeowners insurance policy covers.  You might be (pleasantly) surprised to find that the policy covers more than just the run-of-the-mill accidents. Please note that these are examples of coverage that may be available under your policy. Read your policy or talk with your broker to verify coverage. Gravestones You may not have purchased the gravestone, and it doesn’t have to be on your property. If you are the primary caretaker of a headstone and it is damaged or vandalized on your property or at a cemetery, your policy may consider it personal property and offer coverage to replace it. There is usually a sub limit on this coverage, so check with your broker. Dorm Burglary College age children living in dorms away from home may have coverage for their personal belongings under their parents homeowners policy for theft and other covered causes of loss. This coverage is usually a percentage of the homeowners property coverage, and may have age limit restrictions for the student. Falling Objects Occasionally you hear about strange objects falling from the sky and crashing into people’s homes. These have included large chunks of ice and even plane tires. Falling objects are a covered peril no matter where it came from or what it is. Spoiled Food If your refrigerator or freezer loses power due to a covered cause of loss, your insurance policy will pay for those spoiled steaks and rotten milk. Coverage for groceries is usually subject to a limit of $500...