Extended Dwelling Coverage on a Homeowner

Many moons ago all insurance companies used to have guaranteed replacement cost endorsement you could put on your homeowner policy. This endorsement would guarantee that the insurance company would rebuild your house exactly as it was prior to the claim even if your limit of insurance on the house was lower than the cost to rebuild. Today many insurance companies limit that endorsement to only homes that are considered high value (homes valued at $500,000 or more). The endorsements also require that the insurance companies send out professional reconstruction appraisers to figure out as best they can what it would cost to rebuild your home.

For those homeowner clients who have a house valued at less than $500,000 the endorsement that needs to be added to the homeowner policy is Extended Dwelling Coverage. What this endorsement does is give a percentage of the homeowner limit as extra coverage in case of a total loss on the home. For example, if you have 25% Extended Dwelling Coverage and your house is insured for $200,000 then you would actually have $250,000 if your home suffered a total loss ($200,000 X 1.25 = $250,000).

We feel this coverage is important for two reasons. One reason is we do not send out professional reconstruction appraisers to every house. Instead, insurance companies use in house software that helps determine reconstruction cost on your house using things like square footage, construction type, location, year built, etc. to come up with a value. These programs are usually very accurate but nothing replaces the accuracy of an in home visit with measuring tape and details of the type of amenities in the house. The Extended Dwelling Coverage endorsement helps make sure that if for some reason the calculations on the house are a little off, there is still enough insurance there to replace the house to its original state.

The second reason we encourage this endorsement is for catastrophe situations. Let’s say a tornado wipes out not only your house but two other neighborhoods worth of homes. Every builder and building supplier in town will be in demand. Economics 101 will tell you that if demand goes up and supply is the same, then prices are going to rise. That home that only cost $200,000 to rebuild just got a lot more expensive but if you have the Extended Dwelling Coverage on your homeowner you would be in a much better situation.

One thing to note about this endorsement, you can’t use it to underinsure your home. In our example above, you can’t insure the house for only $160,000 and add the 25% Extended Dwelling Coverage (which would put your total insurance at $200,000). That is not the intent of the coverage. The insure companies will use their software to figure out a good estimate of the cost to rebuild your house and you would have to have it insured for that amount in order to add the coverage.

Safe Travels this Holiday!

The Holidays are in full swing and with Christmas just a couple of days away; many have already started their Holiday travels. Being the insurance people that we are, here are a few tips for a safe and secure season of travel.

1) Make your home seem like someone is still there. You can do this several ways. Leave your front and back porch lights on so that at night your house is lit up. Ask a neighbor to collect your mail while you are gone so it doesn’t stack up. You can also ask the post office to hold if for you until you get back. Another way to make it look like you are home is to ask a neighbor to pull in and out of your driveway at some point if it snows giving the appearance that you have been in and out of your house.

2) Don’t show off to the Facebook world that you are on vacation. I know this can be tough for some but letting everyone know you are out of town on Facebook can be dangerous. We recommend waiting until you get home from your trip before you post vacation pictures.

3) Car travelers should be prepared for heavy snow at all times. The best way to do this is to make sure you have extra blankest, windshield washer fluid, ice scrapers and even a small shovel. You never know when you might need any of those things. Also, be sure to have your phone charged during the trip so that you have it in case of an emergency.
4) Don’t skimp on heat in your home: This time last year our big recommendation in our “Traveling Over the Holiday” blog article was to keep the heat in your house at a reasonable level so your pipes don’t freeze. Again, we recommend this.

Those are just a few simple tips. We here at Fey Insurance hope you have a wonderful Holiday and Merry Christmas

Feds urge states to ban texting and talking on the roads

Tuesday, the National Transportation Safety Board (NTSB) announced that in their opinion texting, emailing or chatting while driving is simply too dangerous to be allowed anywhere in the United States. They are urging all states to impose a total ban except for emergincies. Presently, 35 states plus the District of Columbia ban texting while driving, and thirty states ban all cellphone use for beginning drivers. Enforcement is sketchy and no states ban the use of hands-free devices for all drivers. The NTSB says they are seeing increasing texting, cellphone calls and other distractions by drivers in accidents involving all kinds of transportation. It is common for law enforcement officers to immediately request the preservation of cell phone and texting records when an accident investigation begins. While no states ban hands-free use, the NTSB's recommendation that hands-free use of cell phones be banned, too, will carry much weight with federal regulators, Congress and state law makers.

Host Liquor Liability (Repost)

Over the next several months there will be many reasons for businesses and individuals to host events and parties where alcohol may be served. Businesses will have parties and happy hours to celebrate the holiday season where they will be providing alcohol for employees or customers. Individuals may use the same reason to have friends and family over to celebrate and consume alcohol. Taking my party hat off for just a moment and putting my risk management/insurance hat on, let me discuss something called Host Liquor Liability.

This is a coverage that often is part of a Commercial General Liability (CGL) policy and also included in homeowner policies as long as the individual and/or businesses are not in the occupation of making, selling or distributing of alcohol for money (meaning bars, distilleries, wineries, restaurants, etc. would have a different coverage simply called Liquor Liability). Host Liquor Liability is a coverage to help protect in cases where injuries happen because of alcohol incidents. One common example would be a participant is driving drunk and as a result crashes and injures people in an auto accident. Wherever the drunk driver last consumed alcohol could find themselves facing a lawsuit for injuries that were caused by the driver. They could be pulled into the situation because it was at their event and under their supervision that this driver consumed alcohol and then got behind the wheel intoxicated and drove off.

So here is one key thing about host liquor liability that all your employees, customers and/or friends and family will like to hear: if you are going to have an event with alcohol you are best to give it away. If at your event money changes hands and people are then able to consume alcohol you would have violated the no making, selling or distributing of alcohol for money rule. If you are having alcohol at a charity event the alcohol would have to be donated for the event or have a very good paper trail showing that none of the moneys collected to get in the event went toward the purchase of alcohol. Now, if your event is going to have a cash bar you will need to look into purchasing two items. The first is a temporary liquor license from the state and the second is a Liquor Liability insurance policy. Both of those can be costly and time consuming to acquire so your best bet is to just give it away… and be more popular with your employees, customers, friends and family.