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There aren't any classes on insurance in school curriculum. So, for most of us the only education we receive on insurance comes from our agent. As an agent, my experience is usually to be contacted at the last minute by a realtor or the homebuyer who is in a hurry to close on their new house. With all the other pending issues weighing on a
client's mind, this does not lend itself as a time for learning.
So I was happy to respond to the editor's call to provide you with a monthly article on insurance and risk matters. Perhaps I can provide you with some food for thought, which might prompt you to review your own insurance coverage. With so much money being spent on our insurance it behooves us to obtain a better understanding of our coverage.
When calling around for an insurance quote on home, business or auto, its natural to focus on the premium as the bottom line of comparison. Because of the often high costs involved with insurance, we naturally have a strong inclination to cut costs and get savings whenever possible. The most critical element which deserves our focus is the
actual coverage provided by the policy. There are many options, or endorsements, available to enhance the coverage so that it will better meet our needs. Knowing how we are covered can enable us to procure proper insurance in adequate amounts. This month, we will look at some of the general limitations and restrictions occurring in HomeOwner policies.
The first thing to consider might be the amount of insurance being placed on the home. This amount should be adequate to rebuild a home, and clean up the debris after a loss has occurred. This amount is not relevant to the resale value or tax appraisal value of the home. A confusion between these differing factors often occurs.
Don't be lulled into a false sense of security that the amount of insurance you've carried on your home for the last ten years is anywhere near adequate to meet today's current costs to build.
Flood or rising water is of course not included in a HomeOwners policy. This coverage is available everywhere, not just in high risk flood prone areas. In fact the cost is quite reasonable in these standard or preferred risk areas.
In a rural community such as the Victoria area, farms abound. So care must be taken by these insureds and their agent to review the coverage regarding property used for farming or ranching purposes.
A Texas HomeOwner policy does not provide coverage for barns, farm equipment and implements, separate farm water wells, windmills and the like.
Separate insurance must be procurred to cover this type of property unless the company offers a special provision, such as with a Farm Mutual policy or a Farm & Ranch Owners Policy.
There is only a limited amount of coverage, $2,500 in an unendorsed policy, for business personal property. If an insured runs a business from the home, this coverage may need to be increased. This coverage, however, is only provided at the residence premises. If the property is taken off premises such as with a laptop computer, then special
attention should be given to this. There is also a limitation on liability coverage afforded to business visitors at the residence premises. Depending on the type of business risk, one might consider a business policy. This will provide more comprehensive coverage for such situations.
The key here is to keep your insurance agent informed of such changes that happen to your lifestyle which may increase your risk and take it outside of the scope of a standard dwelling policy.
Furthermore, a change in occupancy status of the dwelling can limit or restrict coverage for the dwelling. A change that causes an increased risk and
triggers a higher premium charge such as vacancy or conversion to a rental property will cause a subsequent claim to be denied or severely limited. Therefore, this is another matter you should bring to the attention of your insurance agent so as to avoid disappointment at claim time.
I've only covered some of the limitations and matters which deserve extra consideration. I'll continue to explore these and other areas as we go through the year. I welcome your comments or questions.
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 |