Does your insurance cover you if you have a fire or if your home is destroyed by a disaster? These are some of the questions you should ask your insurance agent before disaster strikes.
Quality Claims Management Corporation, one of Southern California’s top public insurance experts, does not sell insurance or endorse any specific insurance companies or agents. Quality Claims Management works with homeowners and business owners who need help valuing, adjusting or negotiating an insurance claim after a disaster, and believe the best solution to insurance problems is to be properly insured BEFORE a disaster.
Here’s a checklist to make sure you’re protected.
Is the policy a replacement cost policy or an actual cash value policy?
Replacement cost coverage pays the amount it costs to replace your property.
Actual Cash Value (ACV) pays you the fair market value of the property, which usually means that the insurer pays you a depreciated amount based on the age of the property.
Replacement cost coverage is preferred and the most common.
Does the insurer offer Guaranteed Replacement Cost Coverage or Extended Replacement Cost Coverage?
There are only a few insurance companies in California that offer Guaranteed Replacement Cost coverage and this one is preferred over all other coverages. It will pay you the total amount needed to repair or replace your property, even if it costs more than the limits stated on your policy.
Extended replacement cost coverage adds a certain percentage to your specified policy limits. The policy may add 50% or 100% additional cover above the stated policy limits. This coverage is added by an endorsement and contains certain additional conditions that must be met in order to obtain this extended amount. Be careful here, as the language of the endorsement may limit your coverages.
Determine policy boundaries
Base the amount of cover on the replacement value of your home. This can be tricky to calculate. Make sure you use “reconstruction” costs, not “new” construction costs – there is a big difference.
Make sure the limits include the additional amount needed to comply with current building codes.
Check with a contractor or real estate appraiser to see how much building costs are for your home.
Do not base the limits on the amount of your mortgage
Your mortgage lender may require you to insure your home at the replacement value of your home up to the amount of the loan. They cannot require you to insure your property for more than the replacement value amount.
Your loan is usually based on the total value of your property, including the value of the land.
Your homeowners policy only insures the improvements to your land. In addition, your policy includes other covers, but not the land itself.
Have you properly identified your property?
Do you have the correct address?
Have you stated the correct number of square meters?
Did you mention the type of construction?
Have you identified any upgrades to your home, such as kitchen or special
floors, windows, etc.
Have you included any structures on your property, such as special custom terraces, swimming pools, guest houses, extensive driveways or fencing?
Do you have extensive planting or expensive plants?
Do you have special equipment or personal property that may require higher limits?
Do you have collections or collectibles?
Do you have valuable art, antiques, jewellery, fur, firearms or other objects?
who need higher limits?
Do you have a boat that should be covered by this policy?
Includes the policy regulation or law coverage – also known as code upgrade
If you need to renovate your home, it must meet the requirements of the current Building Decree.
If you have an older home and don’t have Code Upgrade coverage, your policy won’t pay for the extra construction costs to comply with current building codes.
Do you run a business from your home?
If you own or run a home business, be sure to ask if an approval is required to cover your business equipment.
Have adequate liability coverage
If you have a swimming pool, dog, or anything else that could create additional risk, consider increasing your liability limits.
You may want to inquire about an umbrella policy. An Umbrella policy increases your liability limits on both your homeowners and auto policies. Umbrella policies are very affordable.
Don’t limit your search for coverage to a direct writer agent – talk to a broker or independent agent
A direct writer can only provide coverage for one insurance company, the one they work for.
An independent agent will search many different insurance markets to find the best coverage options and insurance rates specific to your needs.
Talk to your agent
Take the time to fully describe to your real estate agent what your property consists of. Send a follow-up written statement from your property. Invite the estate agent to visit you for a visual inspection.
Be prepared and don’t forget to ask questions.
If you don’t ask, you are probably underinsured or not properly insured in the event of an emergency. According to Amy Bach, Executive Director, United Polishholders, “Most people who lose a home in a natural disaster find out the hard way that they are underinsured. After the 2007 San Diego County wildfire, 75% of victims were underinsured. an average of $250,000.”