Thursday, November 1, 2012

Voice of Reason: Insuring Your Home's Coverage for Bad Storms


Some great information on homeowners insurance issues from our friends at Douglas Elliman:

The following includes information regarding damage control immediately following Hurricane Sandy. Erik Braunitzer is a writer for Douglas Elliman, brokers for NYC, Long Island and Westchester Real Estate.

Waking up after Sandy, many people in the Northeast are left with a devastating truth: their homes are gone or flooded beyond repair. Some of these homeowners may not be ready for the awful truth that comes next. They may not get their homes back. The truth is homeowner's insurance usually excludes flooding and hurricane damage. If you don't know the ins and outs of your policy before a destructive storm, it will be too late to change your policy later to cover these gaps. Most often, these following areas cause the most issues after devastating destruction.

1. Replacement Value
Replacement value or cost is listed in your homeowners policy and means the value of the loss at the amount it costs to replace an item. For example, if you have property in your home, such as a home computer, you may think that you will get a brand new computer with same features at the original price. However, unless your policy states this exactly in your insurance policy, losses are valued at what they were worth in the condition before the destruction--in this case, a five-year-old computer may only have a value of $200. Replacement-cost-value clauses should always be included in your policy.

2. Flood Insurance
Homeowners insurance policies usually exclude flood coverage, as well as hurricane cover and earthquake coverage. Whatever the cause, floods happen, particularly because of exploding pipes and the amount of rainfall in a hurricane. Floods are actually the most common reason for damage to the home. Some insurance companies include some types of flood coverage. If you live an area susceptible to flooding or if you want to be sure you are covered, adding flood coverage can save you from a lot of financial stress.

3. Negotiating Valuation of Loss
One of the first things that people do after a damaging hurricane is call the insurance company to file a claim. After you file a claim, an appraiser comes to the property and assesses the damage. These appraisers do not work for you. They work for the insurance company. They are looking for the minimum that the insurance company will have to pay in order to meet its obligations. However, you do not have to take that valuation as final. If you can prove the loss is significantly higher, negotiate a settlement with the company. To prove your claim however, you need to take pictures of damage and loss of valuables, as well as keep receipts for repair costs.

4. Hotel Stay or Rental Coverage
If you have this in your policy, it will be listed as "loss-of-use" coverage. This means that the insurance company pays to place you in a hotel while work is being completed on your home, if it is uninhabitable. Not all policies include these types of provisions and others have limitations, such as a maximum per day amount or a time limit for how long expenses are covered. To avoid the out-of-pocket living expenses after a hurricane, ensure that you have loss-of-use coverage.