| If you were to suddenly lose
your home by fire or a tornado or have the contents damaged or stolen,
you probably could not afford to replace everything all at once. So it's
a good thing that your insurance policy will cover such things.
And if somebody sued you for an injury or damage caused by you or
your property, the cost of defending that suit could run into thousands
of dollars just for legal fees - regardless of the outcome of the suit.
Insurance helps to protect us, but many times this necessary contract
confuses us with its legalese, definitions, terms and exclusions. And I
am speaking of the current "more readable" policy.
Although great strides were made in organizing the policy and making
it more understandable, the complexity of the contract can't help but
offer some confusing reasoning.
Take for example that if your child spills a bottle of bleach on the
carpet, it's a covered loss, but if it also spills on the sofa, that's
not covered. What's up with that?
Or likewise, let's assume wind-driven rain leaks through the flashing
against your chimney. Relax; the subsequent stains to the wall and
ceiling will be covered in an HO-B. But sorry, the water-stained hutch
isn't covered unless the leak came in through a hole first made by a
covered peril such as wind or falling objects. The reason here is that
the dwelling receives broader coverage than the contents, which only
receive named peril coverage.
What are named perils, you ask? In the Texas Homeowners -B, both home
and contents are covered for damage caused by:
Fire or lightning; Windstorm or hail; Explosions; Riot or civil
commotion; Aircraft; Vehicles; Smoke; Theft or vandalism (also called
malicious mischief); Falling objects; Accidental Water Discharge; Weight
of ice, snow or sleet; Freezing of a plumbing, heating, air conditioning
or other such household system
Many homeowners' policies cover damage by "just about
everything," for the dwelling (under Coverage A) unless the
coverage is specifically excluded. In these cases, it is even more
important to understand what is not covered, so the list of exclusions
basically replaces the list of covered perils.
So it's possible for Sonny to throw the baseball through the French
doors and it is covered, but if he hits the hanging wall mirror and
breaks the glass, sorry, it isn't a named peril so no coverage - just
seven years of bad luck.
Dad insists he can fix the electrical problem but falls through the
ceiling while climbing through the attic. It's covered over the
deductible, but his landing on the coffee table is just the breaks.
It's funny when it isn't happening to you, but why the distinction?
The intent is to give the home a broad coverage, but limit the coverage
to your everyday things so that it isn't so easy to make a claim on
older contents when they become outdated. "Oops, Honey, I dropped
the TV - guess it's time to buy a new one!"
There does exist an HO-C policy, which offers almost all risk
coverage to contents, but the premium is high and most companies don't
offer it. The way to handle that is to place an all-risk floater
endorsement on the policy for valuable art, jewelry and musical
instruments, or add coverage for valuable papers, silverware, bullion
and the like. This is a more reasonable approach.
While it sometimes appears arbitrary how the big print giveth and the
small print taketh away, there is sound actuarial reasoning in the
construction of an insurance contract to enable it to cover most big,
unexpected occurrences in exchange for a reasonable premium.
Discuss coverage with your agent until you have a fair grasp of how
your policy will respond for you. Otherwise you might be surprised to
learn that medical bills from your pooch biting the neighbor's kid are a
payable claim, but let Rover nip your child and that's just a bad dog.
Or, that the cost to remove your tree from your house, blown down by a
storm, is payable, but let the tree land in the yard, not damaging a
covered structure, and it's just winter firewood.
I could go on, but we're painting the house and I just stepped into a
can of paint. I have to go change clothes and try to wash them out. But,
at least the carpet is covered.
Russell Janecka is a Certified Insurance Counselor. He is the owner of Janecka Insurance Agency in Victoria, and serves on the board of directors with Germania Insurance Companies. (361) 573-4475 e-mail: info@jiavic.com
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