What is water back-up coverage?

Recently I had a conversation with a client regarding water back-up. They recently purchased home insurance and in reviewing their home policy I noted that they only had $5,000 for water back-up.

The standard home policy does not provide coverage for water back-up. In fact you will see an exclusion for water back-up. Water back-up is considering water that backs up into your home from a drainage system. It could be a sump pump that fails. It could be a toilet that overflows. It could be a shower drain that backflows. It could be a hot water heater that breaks. The easy way to think about it is water back-up is any drainage system to your home that could back-up or overflow.

Water back-up is not flooding. Flooding is water from the outside your home coming in through the foundations, windows, doors, etc.

Why is water back-up so important? It is one of the top causes of homeowner claims across the country. Every homeowner will experience at least one water back-up loss in their lifetime. 

Secondly, the average water back-up claim is $20,000. Think about it… you clean up the free flowing water, you need water mitigation to dry out the floors, the walls, and the room to reduce the chance of mold. You may need to replace the flooring and the walls. And possiby some furnishings. And you may still have mold after all.

In some cases a water back-up loss could mean a total loss of your home. Think of sewage back flowing into your home.

Kind of scary stuff.

So what do I recommend? I recommend full water back-up coverage. This doesn’t mean up to the total value of the stuff in your basement or the basic limit for water back-up. Water back-up should be up to the dwelling, other structures, personal property, and loss of use policy limits.

Yes, water back-up can be expensive but is it more expensive then the cost of the average water back-up loss? Water back-up coverage has gotten more expensive of the years because of the frequency of such claims and the average cost of a claim.

If your insurance company doesn’t provide full water back-up coverage as we insurance professionals call it then find another insurance company. This applies to rental and investment properties.

Have your insurance agent review your policy today to determine if and how much water back-up coverage you have.

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Diamonds Are A Girl’s Bestfriend!

It is that time of year where many of my client’s will give or receive a very sparkly gift from Santa.

I can’t deny that I get a little excited when a client calls to provide the specifics on their new diamond encrusted whatever.

That being said, now is also the time to start talking about insurance for those beautiful items.

I recommend everyone have at least some type of jewelry schedule or jewelry insurance. It should be a given when talking about homeowners insurance.

There are two ways to do a jewelry schedule, a blanket or an agreed value. Blanket requires less effort but agreed value will provide more definitive coverage.

If you are unsure which direction you should go you need to look at your jewelry collection.

Go home and pull out all of your jewelry pieces and lay them out on the bed. Decide which is your most inexpensive piece? Which is the most expensive piece? What items do you wear regularly? Do you keep any of the items in a safe? Knowing what you have will help you decide what is more important.

You can even do a combination of blanket and agreed value. The one thing I don’t recommend is no jewelry schedule.

Keep in mind that if you have no jewelry schedule, coverage will be found under your homeowners insurance. The missing item would be subject to the policy deductible. The minimum deductible with most insurance companies is $1,000. Also, you have to account for any limitation in the homeowners policy for lost or misplaced jewelry. The policy may limit coverage to $2,500 or $5,000, less the policy deductible. That can really hurt when your heirloom engagement ring disappears.

Before you go and buy your next piece of jewelry go get some type jewelry insurance in place. It is always better to be safe than sorry.

Pamela

Thanksgiving Day Safety

Thanksgiving is my favorite holiday of the year. Probably thanks in no small part to the fact that turkey is one my favorite foods. Needless to say I will be getting my fill in the coming days.

However, the Thanksgiving Holiday has one of the highest counts of home fires than any other day of the year. Statistics show that home cooking fires are 3 times more likely to happen on Thanksgiving than any other day.

Below are some quick tips to reduce your chances of a home cooking fire this Thanksgiving…

  • Never leave your food unattended while cooking.
  • Use a timer and routinely check whatever you’re cooking.
  • If frying or deep-frying, keep the fryer outside, away from walls, and free from moisture.
  • Never use a glass casserole or lid on the stove or burner, as it may explode from the heat.
  • Ensure that pot holders and food wrappers are a safe distance— at least 3 feet—from warmed surfaces.
  • Position pot handles to the back of the stove to avoid anyone bumping into them.
  • Avoid dangling accessories or loose clothes while cooking.
  • The stove will be hot, keep children 3 feet from the stove at all times.
  • Be sure electric cords from electric knives, coffer makers, plate warmers, and mixers are not dangling off the counter in reach of children.
  • Never douse a grease fire with water, as the fire can thus spread. Turn off the burner, smother the flames with a lid, or douse with baking soda or a fire extinguisher if it’s getting out of hand.
  • Keep a fire extinguisher handy in the kitchen, and know how to use it.
  • Ensure your smoke alarms are connected and working.

I hope everyone has a safe and happy Thanksgiving Holiday!

Gobble! Gobble!

Pamela

LLCs, Trusts, and Estates

Recently, I had a client call me regarding the purchase of a new property.

I went through the typical questions I would ask…

What’s the address?

Do you have a settlement date?

Is it a business or personal property?

How do you plan to use the property?

Who will reside at the property?

Who will own it?

It is not uncommon to get all green lights until you get to the last question. Business entities are a tricky business in the personal insurance arena. They are not impossible just tricky.

Insurance companies get a little crazy when you start talking business entities owning personal properties. A business has a different kind of exposure or risk and therefore has different insurance needs. Personal insurance policies are not designed to meet those needs and ultimately a business entity could put an insurance company in quite a pickle if a claim happens.

An LLC can sometimes be done if the LLC is formed solely for the purpose of holding a single residential property. The LLC should not conduct any other business and should not employ anyone. There may be tax benefits to an LLC but you need to weigh the tax benefits against the issues that arise when it comes to insuring the property in the name of an LLC.

Trusts can also be done but every insurance company is different. Some will name the trust as Named Insured, some as Additional Insured, some require a special endorsement for naming the trust. Only your insurance company will be able to tell you how the trust can be named.

Estates are tricky in that typically the estate was developed to hold assets for a person that has passed away. An insurance company would shy away from this type of situation because it is unknown who will live in the home, who will take care of the home, will the home be vacant, is it for sale, how long will the estate exist? The answers to these questions have an additional amount of risk associated with it and the insurance company may not want to take on that risk.

Regardless of what your plans are, you should always consult with your insurance agent on what your plans are before committing to them. You may not be able to get the coverage you thought you could or need.

Pamela

Occupied… Rented… Unoccupied… Vacant…

I have several clients right now that have properties up for sale. All of them hope to have a favorable offer and sell the property quickly but that is not always possible.

As winter starts to approach the real estate market starts to cool down a little. So for clients hoping that their property will sell they may face the prospect of holding onto it through the winter season.

This type of situation begins the conversation I must have with clients that are facing the unknown but hoping for the best.

Are you still living at the property? Is it occupied? Do you plan to rent it? Is the home vacant? Does any one visit the property? What is your plan? When do you feel you can rent it or sell it?

Some of these questions can be challenging for a client.

Here is a brief definition of each scenario…

Occupied: It’s occupied by you or by another immediate member of your household; spouse, daughter, son, etc.

Rented: The property is rented out to an unknown individual or distant relative either temporarily until the home sells or permanently. There is a written lease agreement of some type. However, most insurance companies ask that the property be rented on an annual lease agreement.

Unoccupied: No people live at the property. It may be fully or sparsely furnished. It may only house a few items or used for storage. Any one that visited the property would be able to tell the home is not furnished for daily use. This type of scenario may lead an insurance company to believe the property is vacant.

Vacant: The property is absent of people and all contents. No visitors or occasional visitors. This is a big red flag for insurance companies and could result in swift termination of the policy.

If a client holds onto a property that is unoccupied or vacant they run the risk of not having coverage when a loss happens. The policy will specify what occupancy is acceptable under the policy. The policy will also define when coverage starts to fall away if the property is unoccupied or vacant.

No one thinks it will happen to them but during the cold months the number one cause of loss is frozen pipes bursting. If pipes burst when the home is unoccupied or vacant the claim may be denied.

I understand the strain my clients are under when they are forced to hold onto a property longer than they wish. That being said there are insurance products out there to address each of these situations.

Always err on the side of caution and call your agent to discuss your situation.

P