March 2017

Got Coverage? What you need to know about your homeowners insurance plan

Author: Marc Ricciardi

“Planning is bringing the future into the present so that you can do something about it now”—Alan Lakein.

If you think insurance contracts are long, cumbersome and sometimes difficult to figure out, then you’re not alone. Having been in the industry for many years, I’ve seen insurance policies that work as designed to help people recover from the unexpected. Insurance works, but it takes a certain commitment on both the agent’s and client’s behalf to manage the risk of everyday life. Below, you’ll find a few helpful tips to discuss with your homeowners insurance agent during your next review:

Deductibles
In addition to your normal policy deductible (often referred to as your “All Other Peril” deductible), you’ll most likely have a separate deductible that will apply to either a wind/hail, named storm or hurricane-type event. It’s important that you know which type of deductible you have and what the deductible percentage is of your dwelling amount. These separate deductibles typically range from 2-5 percent and some even higher.

Why is this so important? The language surrounding a wind/hail deductible in some contracts can trigger a higher out-of-pocket expense if your home is damaged as a result of any wind/hail event, regardless if it was caused by a severe July afternoon thunderstorm or a major catastrophic event.

Liability
In an ever-litigious society, understanding how and what your liability insurance covers is extremely important. Did you recently obtain a new pet? Have you switched ownership of your property from your individual name to that of an LLC or a trust? Did you invest in a vacant lot? These are just a few examples of when it is important to contact your agent to discuss these new situations and how they are covered.

Keep in mind that it’s possible to outgrow your current liability limits. As you accumulate wealth, you may find yourself with a need for an extra layer of coverage through a personal liability umbrella policy. It’s even more important that you work with your team of advisors to determine the correct amount of liability insurance to purchase.

Flood Insurance
Have you considered purchasing flood insurance? According to floodsmart.gov, “…people outside of mapped high-risk flood areas file more than 20 percent of all National Flood Insurance claims.” Most homeowner’s insurance policies exclude damage caused by rising water. Typically, personal items that are stored below the first finished floor are not provided coverage. Alternative living expenses or Loss of Use is not provided by the NFIP. Also, remember that the maximum limit for structure coverage is $250,000 and contents is $100,000. There are a number of solutions for clients who require more coverage than the standard NFIP policy will provide. In such cases, a private flood insurance policy or excess flood insurance policy may be a good solution. In either event, it’s important to speak with your agent to understand what is and isn’t covered by a flood policy.

Please remember that reviewing your insurance doesn’t have to be a painful process. Most agents truly have their clients’ best interest at heart and are more than eager to share their knowledge as it relates to your specific situation. Also, consider that not all insurance contracts are created equal, but with a good line of communication between you and your agent, you can find a solution to almost any situation.

Marc Ricciardi is a family risk manager with BB&T Insurance Services, Inc. (843) 815-0526.

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