Your Daily Real
Estate Blog
From
Supreme Manor
Real Estate Services
5 Myths
about Homeowners Insurance
Homeowners
insurance is one of the most common types of insurance and one of the least
understood. Many homeowners believe that their policies will cover them for
practically any damage to their house or contents. The reality is that
homeowners policies contain many exclusions and restrictions on coverage that
can leave you with a coverage gap. Here are five areas where homeowners assume they have coverage
but may not.
1. Loss-of-use coverage
If
you have damage to your home severe enough that you cannot live in it while it
is repaired, you may expect that the insurance company will put you up in a
hotel while the work is being done. But not all policies include a loss-of-use
provision. If you have to pay for a hotel, meals and other services out of
pocket, it can add up quickly and put you at financial risk. If loss of use is
covered, it will be stated explicitly in your policy, along with any limits of
coverage. For example, your policy may state a maximum per diem amount or restrict the length of time the expenses will be
paid.
2. Replacement cost
Replacement
cost in a homeowners policy refers to valuing the loss at the amount it will
cost to replace the item. For example, if your four-year-old computer is lost
in a fire, replacement-cost coverage would allow you to purchase a new one with
similar features. Most homeowners believe that is what will happen if they have
a claim, but most policies do not carry this clause. If not included, losses
will be valued at what they were worth in their condition before the calamity.
The 4-year-old computer might be valued at $250 — not enough to purchase a new
one. Replacement-cost clauses are a valuable inclusion in a homeowners policy.
3. Flood
coverage
Almost all homeowners policies exclude flood
coverage, along with earthquakes and other natural disasters. Floods can occur
from a number of causes, such as a hurricane, burst pipes or sewer backup. A
flood is one of the most common causes of home damage and the destruction of
contents. Some companies specialize in flood coverage. If you live in a
susceptible area, look into having a separate flood policy. Your mortgage
company may require this additional coverage.
4. Termites
Termites live all over North America but are most
destructive in Southern climates where their life cycles are not affected by
cold weather. Termites eat wood — lots of it — and can eat the supports in your
house as easily as fallen leaves in the forest. They live in large colonies
and, collectively, can destroy the structure of your home. Repairing termite
damage and eradicating them can cost thousands of dollars. Most policies
exclude termites and other pest damage. If you live in a susceptible area, the best
insurance is to have the house regularly checked and sprayed by a professional.
5. Valuation
of loss
When you have a claim, the insurance company will
send out an appraiser to determine the extent of the damage and the best way to
fix it. The appraiser will assess a value to the loss, which will be the
minimum the insurance company can pay in order to meet its contractual
obligations. However, you do not have to take that value as final. If you can
prove your loss should be valued higher, you can negotiate the settlement with
the company. Keeping receipts and pictures of valuable items will help you back
up your claim.
I hope this information is useful.
Should you need assistance with any of your real estate needs,
please contact Supreme Manor Real Estate Services 773-881-9224. Feel free to visit us on our website or any
of our social media sites.
Have a Supreme Day!
Sheila M. Wilkinson-Sanders
Managing Broker/Owner - CPA, GRI, CNC
Supreme Manor Real Estate Services
1840 West 95th Street
Chicago, IL 60643
(773) 785-0127 Direct
(773) 797-9640 (fax)
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