Silver Insurance Solutions
Silver Insurance Solutions
I am going to give you an overview of property Insurance below. Once you have had a broker work the numbers in detail without trying to gouge you- looking at numerous and affordable coverage for you- I believe you will never want to go back!
I understand that many people shop every single year trying to save just a few dollars and I don't blame them! There are so many factors and number you can play around with in property that unless you study and understand it all, you might not have ever been given a true hard quote. All I ask is give me the chance and I hope to surprise you!
Property insurance is a broad term for a series of policies that provide either property protection coverage or liability coverage. Property insurance provides financial reimbursement to the owner or renter of a structure and its contents in case there is damage or theft, and to a person other than the owner or renter if that person is injured on the property.
Property insurance can include a number of policies, such as homeowners insurance, renters insurance, flood insurance, and earthquake insurance. Personal property is usually covered by a homeowners or renters policy. The exception is personal property that is very high value and expensive—this is usually covered by purchasing an addition to the policy called a "rider." If there's a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the REPLACEMENT COST to fix the problem.
[Important: Property insurance includes homeowners insurance, renters insurance, flood insurance, and earthquake insurance.]
Perils covered by property insurance typically include select weather-related afflictions, including damage caused by fire, smoke, wind, hail, the impact of snow and ice, lightning, and more. Property insurance also protects against vandalism and theft, covering the structure and its contents. Property insurance also provides liability coverage in case someone other than the property owner or renter is injured while on the property and decides to sue.
Property insurance policies normally exclude damage that results from a variety of events, including tsunamis, floods, drain and sewer backups, seeping groundwater, standing water, and a number of other sources of water. Mold is usually not covered, nor is the damage from an earthquake. In addition, most policies will not cover extreme circumstances, such as nuclear events, acts of war or terrorism.
There are three types of coverage: replacement cost, actual cash value, and extended replacement costs.
Replacement cost covers the cost of repairing or replacing property at the same or equal value. The coverage is based on replacement cost values rather than the cash value of items. Actual cash value coverage pays the owner or renter the replacement cost minus depreciation.
Extended replacement costs will pay over the coverage limit if the costs for construction have gone up; however, this usually won't exceed 25% of the limit. When you buy insurance, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence. *** Most agents do not understand this rule and therefore make you purchase more insurance than what you actually need.***
Most homeowners purchase a hybrid policy that compensates for physical loss or damage caused by 16 perils, including fire, vandalism, and theft.
The coverage, known as an HO3 policy, has certain conditions and exclusions. There is a predetermined limit on the coverage of certain valuable and collectibles, including gold, jewelry, fur, cash, firearms, and other items. No coverage is usually provided in an HO3 for accidental breakage/damage and mysterious disappearance (lost, misplaced) of valuables, including fine art and antiques.
HO5 homeowners coverage includes everything in an HO3 policy but is geared toward the structure itself and the property within the home, including furniture, appliances, clothing and other personal items. An HO5 doesn't cover for earthquakes or floods. HO5 insurance policies are available to homes that were either built in the last 30 years or renovated in the last 40 years, and they typically cover any damages at replacement cost.
HO4 property insurance is usually known as renters insurance—it covers tenants from loss of personal property and liability coverage. It does not cover the actual house or apartment being rented, which should be covered by the landlord’s insurance policy.
Replacement value is not what your house is appraised for by a realtor or what your state says it is worth in taxes. You also can have a buffer of up to 25% over replacement value to make sure if your house was destroyed that it could still be rebuilt.
I want people to know that covering your house at 100% or in most cases people seem to be covering at over a hundred percent replacement, it is not necessary and you are throwing that money away. What is important is to keep it over 80%.
The 80% rule refers to the fact that most insurance companies will not fully cover the cost of damage to a house due to the occurrence of an insured event (e.g., fire or flood) unless the homeowner has purchased insurance coverage equal to at least 80% of the house's total replacement value. In the event a homeowner has purchased an amount of coverage less than the minimum 80%, the insurance company will only reimburse the homeowner a proportionate amount of the required minimum coverage that should have been purchased.
Let's say that James owns a house with a replacement cost of $500,000 and his insurance coverage totals $395,000, but an unanticipated flood does $250,000 worth of damage to his house. At first glance, you might assume since the amount of coverage is greater than the cost of the damage ($395,000 vs. $250,000), the insurance company should reimburse the entire amount to James. However, because of the 80% rule, this is not necessarily the case.
According to the 80% rule, the minimum coverage that James should have purchased for his home is $400,000 ($500,000 x 80%). If that threshold had been met, any and all partial damages to James's home would be paid by the insurance company. But since James did not buy the minimum amount of coverage, the insurance company would only pay for the proportion of the minimum coverage represented by the actual amount of insurance purchased ($395,000/$400,000), which amounts to 98.75% of the damages. Therefore, the insurance company would pay out $246,875 and, unfortunately, James would have to pay the remaining $3,125 himself.
Since capital improvements increase the replacement value of a house, it's possible that coverage that would have been enough to meet the 80% rule before the improvements will no longer be sufficient after.
For example, let's say James realizes he did not purchase enough insurance to cover the 80% rule, so he goes and purchases coverage that covers $400,000. One year passes and James decides to build a new addition to his house, which raises the replacement value to $510,000. While the $400,000 would have been sufficient to cover the $500,000 house ($400,000/$500,000 = 80%), the capital improvement has driven up the replacement value of the house, and this coverage is no longer enough ($400,000/$510,000 = 78.43%). In this case, the insurance company will once again not fully compensate for the cost of any partial damages.
GOOD THINGS: I try to get you close to the 100% replacment as possible but if you are covered at say 95% and save thousands of dollars- I believe its worth it. WHY- if James had coverage of 95%, then the company has to pay 100% of his damages. Very few houses actually ever need total replacement: the common occurrence are accidents or small damages that need to be replaced or fixed. AS long as you stay above 80% replacement cost- you are safe and enjoying large savings.
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