Homeowner Policy: Section 1

A homeowner policy is made up of two sections, Section 1 Property and Section 2 Liability.  This blog post will focus on Section 1 which outlines the four property coverages provided by a homeowner policy.  Those four coverages are as follows:

 

-Coverage A Dwelling:  This coverage pertains to the actual house itself.  The limit shown on the policy in this section is the amount of insurance the policy will pay out if the house was totally damaged.  It Is important to understand that this limit of insurance should be based on Reconstruction Costs (the amount it would take to rebuild the house) instead of Market Value (the amount you can buy or sell the house on the real estate market).  For more details on this check out our Reconstruction Cost vs Market Value article.  The dwelling limit of insurance will drive the other three parts of Section 1 Property so for example purposes let's say our Coverage A Dwelling limit is $200,000.

 

-Coverage B Other Structures:  Other Structures are property located on your land that are not permanently attached to your home.  This would be things like detached garages, fences, sheds, barns and pools to name a few.  Back in the 50's this was a much more common concern to have Other Structures coverage because the norm was to have a detached garage.  Today many garages are part of the house so this coverage is not as much of a focus on new homes.  The homeowner policy, however, automatically includes this coverage in most cases so even if you do not have a need for it, still it is there.  The limit for this coverage is usually 10% of the dwelling limit so if our Coverage A is limit is $200,000 then our Other Structures limit is $20,000.  

-Coverage C Personal Property:  This section covers your contents, your personal belongings inside the house, such as TVs, clothes, furniture, pictures, etc get its coverage.  The important thing is to be sure that you have replacement cost coverage for you Personal Property and not actual cash value.  If you have actual cash value it means they will take into account how old your stuff is and not give you enough money to go out and replace your items without having to go buy used.  If you have replacement cost coverage you can go replace your furniture with new furniture from a store and the policy will reimburse you the full amount.  Coverage C Personal Property is also derived from the Coverage A Dwelling and usually is 70% or 75% of the amount.  This means that if our Dwelling limit is $200,000 then our Personal Property limit would normally be $140,000 or $150,000.

-Coverage D Loss of Use:  Loss of Use means that if you have a claim on your house that makes it so that you can not live in the house for a period of time, the homeowner policy under this section will help pay for your lodging expenses and some of your eating out expenses (usually 1/3rd of your meal expenses).  This loss of use might be for a few days or a few months depending on the extend of your homes damage.  The limit of coverage given under this section can very from company to company.  Some companies give a time period they will cover it for (example 2 years) or they will just pay what ever the amount of loss is (actual loss sustained).  Some companies, similar to how they do it on the Other Structures and Personal Property section, give a percent (usually 10%-20%).

Catastrophe Liability Protection

How much liability protection do I need to carry to protect me and my family? Unfortunately there is no simple formula which you can use to calculate how much liability insurance you really need. With your home or a commercial property, there are computer programs which will help determine the construction replacement Please contact us, and we will prepare a quotation for your review on this very important catastrophe liability protection.
cost of the building, but there is no such program in the area of third party liability claims. Some insurance companies claim they make you “legal” for less, but in Ohio, for example, that means bodily injury limits of $25,500 per person/$50,000 per accident and property damage limits of $25,000. Any kind of serious accident will wipe out those limits in a heartbeat. As a bare minimum, we recommend no less than $500,000 in Personal Liability and $250,000/500,000/100,000 in Automobile Liability, but higher limits are available and recommended. This is where the Umbrella Liability Policy comes into play. These policies are written in increments of $1,000,000 with $1,000,000 being the lowest limit you can purchase. Limits of $1,000,000 to $5,000,000 are usually available, and higher limits are also available depending on the circumstances.

Insurance Things to Consider on Rental Properties

Over the last few years many homeowners have turned into landlords.  With the real estate market drop, those that decided to purchase a new house also decided to not sell their prior home for fear of a financial loss on the property.  Instead, they have turned their prior house into a rental.  The trend still continues today even after the real estate market has rebounded some because landlords are seeing great cash flows from renting.

Here at Fey Insurance Services we insure a number of these properties and on occasion we are asked by clients if we have any insurance tips in renting a property.  When asked we always mention these five things:

1.  Temperature Requirement in the Lease:  It is a good idea to include a clause in your lease that requires the tenant to keep the heat no colder than 59 degrees.  This is important because around the Holidays many tenants will travel and if they want to try and save a buck they may turn off the heat.  Pipes do not enjoy this especially with a polar vortex threatening again this year.  This way, if they do turn the heat off and pipes break you can pass that damage on to the tenant.

 

2.  Renters Insurance for Tenants:  Since you may have passed on the risk of pipe freezing damage to your tenant you then want to make sure they have insurance in place to pay for such damages.  Requiring tenants to have renters insurance is a good idea.  Not only does it protect their contents (which is excluded under your policy), it protects your property if they are negligent in causing damage to your property.  I would recommend they have liability limits at least the value of your property.

3.  Dogs:  Know your states laws on dog attacks.  For example, in Kentucky there was a law recently passed that could drag landlords into dog attack claims.  This may make it difficult to get insurance for a property that has a dog.  If you are going to allow dogs to live on your premises it is best to limit which kinds as some insurance policies exclude coverage for "vicious dogs".

4.  Loss of Rents Coverage.  Make sure your rental property insurance policy includes coverage for loss of rents.  If you sign a year's lease with someone and then have a fire a month later, you are going to be out 11 months of rent or at least however many months it takes to rebuild the house.  You can recoup this loss with loss of rent coverage.  Also, make sure that you have enough loss of rent coverage.  Many polices give  you 10% of your dwelling limit or give you a flat $25,000.  Add up your annual rents and make sure you have enough coverage.

5.  Certificates of Insurance from Contractors:  Unless you yourself are handy, you may be employing contractors to do fixes around your rental property.  We strongly recommend you ask these contractors for proof that they have insurance.  If they were ever to cause damage to your tenants contents or to your tenants person, you would want to make sure they have insurance to cover such things.

Ohio Teen Driver Changes

Effective July 1, 2015 there have been some changes to the laws for drivers under the age of 18 in the state of Ohio that all teens and parents of teens should be aware of.  The changes are as follows:

-No driving between midnight and 6 a.m., unless a parent or guardian accompanies the youthful driver. Those with valid documentation from work, school or church allowing for travel for activities between these hours are exempt.
-No driving with more than one non-family member in the car
-All passengers must wear safety belts at all times
-Prohibits the use of mobile communication while driving

For more details about this change check out this article from the Ohio Insurance Institute. 

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Tornado Truths That Can Help You Stay Safe

Tornadoes have caused severe and irreparable damage to tens of thousands of Americans and their property in recent years. On top of the physical and emotional fallout, many have also lost their lives as a direct result of a tornado.

Although you can never control the weather or the outcome of a destructive storm, there are steps you can take to help you and your family remain protected in the event of a tornado. Those steps of action begin with knowing fact from myth.

Here are a few tornado truths that could help keep you and those you love safe:

 

When indoors, shut all windows and doors. Do not leave them open in an attempt to follow the mythical need to “pressurize” your home because the result would more likely be debris flying through the window and causing severe harm, or wind pressure working to lift the roof off the house from the inside.

 

If you are inside your home or other structure, retreat to the lowest level (a basement is ideal) or the room closest to the middle of the home or farthest from windows and doors. Do not seek a “corner” of the structure for your retreat; instead, go to the center-most point, away from windows and anything heavy that could fall on your head.

If you’re outdoors, find the lowest spot, such as a ditch or dry river bed, and lie flat on your stomach, covering the back of your head with your hands.  Do not follow the myth of seeking shelter underneath a bridge or overpass because it could collapse on top of you or large debris and winds could come rushing underneath and potentially sweep you up into the tornado itself.

If you are in a vehicle, abandon the vehicle and try to find shelter in a structure or outdoors in a low place where you should lay stomach-down and cover the back of your head with your hands. Most importantly, do not attempt to drive away from the storm unless it’s very obviously far away and moving in the opposite direction. 

Do not take shelter near a road or foothill and expect the tornado to miss you. Some myths say that tornadoes will reverse their directions when nearing a road or foothill, but a tornado doesn’t discriminate and will keep on its path.

Keep head gear handy. Head protection can be the number-one most important factor in remaining protected from flying debris—indoors or outdoors—so know where bike, football, batting, boxing and other helmets are in the house, and make them easily accessible.

 

At Fey Insurance we want to help you know the tornado truths that will help keep you and your family safe. For more tornado safety tips, visit the Storm Prediction Center’s comprehensive guide at http://www.spc.noaa.gov/faq/tornado/safety.html.

After-School Safety Tips for Parents and Kids

Parents, weather is starting to warm up in southwest Ohio, so you’ve likely already reviewed the basic safety tips for kids who walk or bus to and from school.

Those tips, of course, are:

• Walk with a buddy
• Stay in well-lit areas
• Never accept a ride with strangers
• Once home, lock the door and don’t let anyone in

However, Dr. Michele Borba, author of The Big Book of Parenting Solutions, urges you not to overestimate your kids’ safety smarts. Kids under 10, for example, may not grasp the concept of crossing a street safely, she says.

She suggests teaching them: “Stop. Left. Right. Left.” Meaning that children should, “stop at the curb, look left, right, then left again before crossing, and keep looking as they cross.”

Another thing kids need to know, says Borba, is how to ask for help. Have kids practice saying, “I need help,” out loud and instruct them to “find a uniformed employee, a police officer or a woman, preferably with a child,” when they need assistance, she says.

Once home, kids will likely use the Internet, so be sure to discuss digital safety too.

Staying Safe Online

Intrnet safety advocate Sue Scheff, author of Wit's End and Google Bomb, says that, “we need to put parental controls/security measures on computers and cell phones. Unfortunately, these aren’t guarantees, so having a cyber-smart child is your best defense.” 

Teach kids about the dangers of sharing personal information, such as their home address and phone number, online. And about using social media responsibly.

While online, it’s best for kids – and adults – to converse and connect only with people they truly know and trust, to keep their social accounts private and to still be cautious even then. After all, photos and information that go online today will still be there years later, when kids apply for college scholarships and jobs.

Above all, stay involved in your kids’ digital lives. Let them know you’re there for them, always – to talk, not to judge or punish, says Scheff. “Many kids fear having their Internet removed if they tell their parents they are being bullied online,” she says.

So keep the lines of communication open to help keep everyone safe, both in and outside of your home.

-Safeco Insurance Article