Enough?

Verify That Your Dwelling Limits Are Adequate

One of the painful aftermaths of fires and tornadoes that decimate homes may be the crushing realization that the home is dramatically underinsured. According to one of the largest residential building cost data companies, Marshall & Swift/Boeckh, 64 percent of U.S. homes are undervalued by an average of 19 percent. If this figure is applied to a home with a replacement cost of $400,000, it might be insured for only $324,000, a shortfall of $76,000.

This underinsurance results in a potentially huge coverage gap, particularly if the home is not insured with a guaranteed replacement cost provision. A survey by United Policyholders, a consumer advocacy group, said 75 percent of California home owners affected by the 2007 San Diego wildfires were underinsured by an average of $240,000. [The statistics for this year's losses look like they'll be worse.]

Here are some general tips to consider to reduce the likelihood of your home being underinsured:

• Make sure your home has been physically inspected. This will increase the likelihood that it is insured for its replacement cost value. Ask for periodic reinspections of your home (particularly high-end ones) to ascertain whether the dwelling limits are adequate.
• Consider guaranteed replacement cost (or guaranteed rebuild) coverage; an alternative would be to procure coverage that offers a 30 to 50 percent cushion above the dwelling limit (extended replacement cost coverage).
• Increase the ordinance or law coverage (10 percent of dwelling limit for many homeowners policies) to a higher percentage of coverage. Note that this recommendation is particularly important if you have an older home.
• Keep the insurance company informed about any remodeling at your home, since remodeling can dramatically increase the need for higher dwelling limits. Americans spend more than $170 million annually on home improvement projects, according to the National Association of the Remodeling Industry.
• If building costs are rising rapidly, an inflation guard endorsement is worthy of consideration. This endorsement increases the dwelling limit of insurance (along with other coverages) to reflect increases in values due to inflation.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

HO/Condo Association Loss

Many people are active in their condominium or home owners' association, serving as directors, officers, and editors of association newsletters. If you are an active member of your association, consider the following risk management tips and recommendations.

• Verify that the association has directors and officers (D&O) coverage in force with reasonably high limits. If the association refuses or chooses not to obtain D&O coverage, seriously reconsider your leadership activities within the group due to your unprotected liability exposure.
• If D&O coverage is in place, verify that this policy provides errors and omissions coverage for the proper purchase of insurance. To do this, verify that the "failure to maintain insurance" exclusion is not attached to the D&O policy.
• Ask your association to hire an independent insurance consultant to audit the association insurance program to uncover any potentially lethal coverage gaps. For example, home owners' associations should have at least the following types of coverages: guaranteed replacement cost property coverage for common areas, commercial umbrella coverage, workers compensation insurance (even if there are no association employees) to cover claims brought by uninsured independent contractors, and D&O liability coverage.
• If you don't already have it, consider adding a personal injury (HO 24 82) or related endorsement to your homeowners policy.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

Storage (follow-up thought)

Most homeowner's insurance policies do not cover (or cover adequately) your stuff while it's in storage... there are policies that do cover it quite well - and they're not cost-prohibitive.

~ Jon

Merriam Insurance Agency

Storage!

More and more Americans are storing their excess personal property in self storage rental units. In fact, the Self Storage Association indicates that approximately 11 million households in the United States rent some type of storage unit.

The first consideration, after deciding to rent a storage unit, is which self storage facility to select. The following are some tips for selecting the appropriate storage facility.

• Select a rental company that has adequate security, such as proper lighting, formidable fencing, coded security pads, and 24-hour video surveillance cameras.
• Look for a unit that you can access any time of the day.
• Consider your need for a climate-controlled environment—particularly important if you are storing items that could be damaged by damp, cold, or hot weather such as upholstered furniture and archived items.
• Choose a unit that is well-maintained, clean, and pest-free.
• Ascertain the reputation and history of the rental company through referrals and the Better Business Bureau.
• Select a rental company that offers competitive rates for insurance for your property in order to give you more options; the rental company should also have its own commercial general liability insurance if someone gets hurt on its premises.
  ~ Jon
  Merriam Insurance Agency
  
  
  Used with Permission, Copyright 2012
  International Risk Management Institute, Inc.

Protect! (Historic Homes) p3

If you are planning any type of restoration to your home, make sure you hire contractors and architects that specialize or have experience in restoring historic homes. Note that the local historical commission typically has to approve any renovation plans.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

Protect! (Historic Homes) p2

If you want to replicate custom or historical features of your historic home, such as stained-glass windows, antique wood floors, ceiling moldings, or hand-carved banisters, ask us about a restoration cost homeowners policy or about adding an endorsement onto your policy providing this coverage.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.

Protect! (Historic Homes) p1

Historic homes pose more challenges for home owners as they are typically subject to historical renovation regulations. Here are some recommendations worthy of consideration for your historic home.

You should avoid any type of functional replacement cost endorsement because this allows less costly construction materials and methods to be used to repair your home. These materials and methods may reduce the value of your home.

~ Jon

Merriam Insurance Agency

Used with Permission, Copyright 2012
International Risk Management Institute, Inc.