One of the many reasons we live and work in the Mount Washington valley and the New England area in general, is this time of year. In the wake of the past few weeks of crazy weather in the Northeast, I wanted to spend some time talking about protecting ourselves, our north conway real estate and our livelihoods from these types of “weather incidents”.
I’ve never been much of an “ambulance chaser”. I always preferred the scene in Superman where he flies around the earth and reverses time in order to prevent the disasters from happening (and hurting Lois!). I’m sure I could find 100 notes, phrases, clichés, anecdotes and parables to enforce the “an ounce of prevention” theme. Instead I’d like to explore some of the basics of homeowner insurance and hopefully nudge you the at least review your policy and make sure you have the coverage you THINK you have.
There are a few “standard” policy types in the United States. For the purposes of this article, I’m going to assume you have an “HO-3”. This is the most common policy and provides very broad coverage for fire, lightening, storms, hail, vandalism and other “perils” as they are called. One of the first things to check for with your policy is the associated dollar amounts. You simply want to be sure that the valuables that you own are, in fact, covered by your policy. Also, for those of us living on the coasts, it is a good idea to check for restrictions based on wind damage. Areas prone to hailstorms often require a special rider or hail damage deductible.
One of the main questions that arise in the area of home insurance policies is the coverage of possessions such as jewelry, silverware, stamp collections, etc. The standard policy will provide up to $2,000 of protection. If you have more than that invested in your jewelry or other possessions, it is recommended that you add a “floater” to your policy. This adds higher limits for the valuables as well as encompassing additional risks that are not normally covered.
Similar to being able to replace our vehicle if it were totally damaged, it would be good to know if we would be able to rebuild our home if it were totally destroyed in a fire. If the cost to rebuild your home is equal to or less than $150,000, you have enough coverage. The standard policy covers structural damage on a replacement cost basis. If the cost to rebuild your home is $200,000, you need to increase your policy. Keep in mind we are only talking about the structure itself. If you live on the beach or have an amazing spot of land, you are not insuring the “dirt” it sits on. Don’t use the market value of your house to establish your policy amount.
Water damage is clearly a hot topic right now. As many of our friends and neighbors across New Hampshire and Vermont have tragically just learned, flood damage is not covered under the standard policy. However, if a pipe bursts and water flows all over the house, you are covered. It is obviously a good idea to have your plumbing and heating systems checked once in a while just to avoid the hassle, but at least you are covered. Interestingly enough, if the water “seeps” in from the basement and causes issues during a particularly wet spring, that damage is not covered. Seepage is seen as a maintenance issue and is something you should eradicate on your own.
Outside the home provides a whole new slew of factors. If a neighbor slips and falls on your property and threatens to sue, believe it or not the policy will pay for the damages. It will also pay for the legal costs to defend you against the claim. The standard liability portion is $100,000. If you feel you need more, have vindictive neighbors or even just have a particularly steep driveway, I would bump it up a bit.
Trees can be a beautiful highlight to any property. They provide shade, accents and brilliant beauty in the fall. However, if a tree falls during a storm and damages your roof, are you covered? The answer is yes! You are both covered for the damage to the roof and up to $500 for the removal of the tree. That said, it is always a good idea (think: ounce of prevention) to trim those dead branches and overhanging limbs before they become a problem.
As a first time homeowner of Jackson, NH Real Estate, I was baffled to realize that when my golf clubs were stolen out of my truck, they were covered by my homeowner’s policy! Of course, they were so old, it was not worth putting in a claim, but the coverage was a nice surprise. Your property, anywhere in the world, is covered by your policy. And while they are certainly not your “property”, your kid’s possessions are covered while they are away at college. Coverage varies on whether they are full-time, living in a dorm or living in an apartment rented in the child’s name. Again, these are details worth checking into.
Along the lines of pleasant surprises, there are policies in some states that cover food spoilage in your refrigerator, especially if the power loss is due to a break in a power line on or close to your property. Imagine your insurance company buying you a six-pack and a fresh gallon of milk!
Along the lines of asking your insurance company to buy you beer it should be noted that in general, and excuse the pun, but honesty is always the best policy. In doing some research for this article, I learned that insurance companies are starting to use social media as a means of research and “checking in” on claims. I’m sure your insurance company would be very interested in the video of you running the bumps on the Ledges trail at Cranmore while they are reviewing your disability claim for back pain.
“Acts of God” is likely one of the more misunderstood phrases in the world of insurance. For the most part, that actual phrase is not mentioned in the standard policy we are talking about. It typically refers to natural disasters like hurricanes and tornadoes as opposed to “man-made” acts like accidents and theft. As we talked about earlier, hailstorms and floods are not always covered so it is a good idea to review your policy and know what you have. Your insurance agent is also a good resource for what you currently have and what you can add. I recommend using their skills to educate yourself on your policy. I simply can’t resist saying, “It’s better to be safe, than sorry”.