You’ve bought your dream home and it’s time to get it insured. You want to choose the right coverage to fully protect your investment. While you have a basic idea of what home insurance probably covers, you may not know the particulars.
A homeowner’s policy is actually a “package” of coverages. It protects your home from specific events that can damage your property, and provides additional living expenses if you are unable to live there due to an insured loss. It also protects your personal belongings. In addition, your homeowner’s policy covers you for lawsuits or liability claims that might otherwise be your responsibility if you accidentally injure other people or damage their property. Here’s the breakdown from A to Z (or in this case, F).
Coverage A: Dwelling
Dwelling coverage refers to the structure of your home. This includes the roof, walls, floorboards, cabinets, and bath fixtures. The easiest way to think about it is that if you could tip your house upside down, the dwelling is everything that remains attached.
What is covered:Thisinsurance covers open perils. That means a loss is covered unless it’s excluded by your policy. Coverage A generally covers direct physical loss due to fire/smoke, lightning, windstorms and hail, explosions, vandalism and theft. If one of these perils destroys your home, your insurance provider will pay to rebuild it up to your policy limits.
What is not covered:If it is listed as an exclusion, it is not covered. Typically, natural disasters such as flooding and earthquakes are not covered by dwelling coverage. You can add these coverages with a separate policy or an endorsement added to your property policy.
Coverage B: Other Structures
If your pool is in the ground or installed permanently above the ground on your property, it is covered under Coverage B – Other Structures. This is an insurance term describing a detached structure on your property. Other structures include pools, fences, gazebos, sheds, etc. However, if your pool is above-ground but portable, it is considered part of your personal property and covered by Coverage C – Personal Property insurance.
What is covered:Thisinsurance covers open perils. That means a loss is covered unless it’s excluded.
What is not covered: Typical exclusions include flood, earthquake, or wear and tear.For other structures, the coverage limit is generally set at 10% of your home’s coverage limit. That means if your home is insured for $200,000, the coverage limit for your detached garage would be $20,000. For an additional premium, you can add an endorsement to increase your coverage.
Coverage C: Personal Property
Personal property coverage protects your possessions, such as furniture, clothes, sports equipment, and other personal items. Again, if you could tip your home upside down, everything that would fall out is considered personal property. This coverage protects these items whether they are in your house or off-premises.
What is covered:If your possessions are stolen, or damaged by fire/smoke or any of 16 covered “perils,” your policy will pay for them subject to your deductible. For personal property coverage on a homeowner’s policy, you typically get 50 or 75% of Coverage A, the total amount of coverage for your home. You may choose replacement cost or the actual cash value (ACV) for reimbursement. ACV is the amount the item is worth, minus depreciation for its age. It will cost a little more for a policy that provides replacement cost.
What is not covered:There are dollar limits for certain items, such as jewelry, firearms, animals, cars, planes. See your policy for a full list. You may choose to purchase additional coverage to ensure your valuables are fully insured.
Coverage D: Loss of Use
If your home is damaged in a covered loss, it may not be livable. If that’s the case, you would need to stay somewhere else. Loss of Use, also called Additional Living Expense, covers you for any necessary increase in living expenses, such as lodging, food, and gas.
What is covered: Your policy will provide a flat percentage toward living costs, usually 30% of the Coverage A amount.
What is not covered: Some states have time limits on when you can use this coverage. Payment will be for the shortest time required to repair or replace the damage, or if you permanently relocated, the shortest time required for your household to settle elsewhere.
Coverage E: Personal Liability
Personal Liability protects you if a claim is made or a suit brought against you for bodily injury or property damage caused by an occurrence to which coverage applies. Liability covers you at your place or anywhere in the world.
What is covered:If you are found liable, the policy will pay up to its limit of liability for damages for which an insured is legally liable. This can include medical expenses, lost wages, pain and suffering, and permanent scarring. The policy also provides a defense in court, if needed, for the policyholder. This is at the insurance company’s own expense.
What is not covered:You are only covered up to your policy’s limit. Coverage starts at $100,000 but should be increased to a minimum of $300,000.You want to consider how much the home and all of your assets are worth and select an amount up to $1,000,000. If you have a pool, hot tub, trampoline or other attractive nuisance which is likely to attract children, consider adding an umbrella policy for additional coverage.
Coverage F: Medical Payments & Other
If you are not liable, but your guest was injured through his/her own fault, then Coverage F – Medical Payment to Others may cover your guest’s medical bills.
What is covered: Under Coverage F, the insurance company will pay the necessary medical expenses to a person injured on the insured location with the permission of an insured, or off the insured location if the injury is caused by the activities of an insured or caused by an animal owned by an insured.
What is not covered:You and your family are not covered. This is only for guests, and they are only covered up to the limit of your policy.
A Word About Deductibles
Generally, the higher your deductible, the lower the cost of your insurance premium. Since the deductible is the amount your insurance provider will subtract from an insurance payout, you’ll want to select a deductible that you’re comfortable paying out-of-pocket after a loss.
Common Home Endorsements
You may add specific endorsements to your homeowner’s package of policies for additional coverage. Here are some of the most popular ones.
Scheduled personal property (SPP) Coverage is for items that have higher values above your personal property coverage limits. This includes heirlooms, watches, jewelry, instruments, and furs. SPP offers much broader coverage for your precious items – if you misplace a set of earrings, they are covered; if a diamond falls out of a ring, or a guitar breaks, they’re covered. There is no deductible if the covered items are stolen, lost, or damaged. Insurance pays the lowest of the four options: repair, replace, actual cash value or the amount of insurance.
A Water Back Up and Sump Discharge or Overflow Endorsement covers two potential losses: (1) if the sewer backs up into your home via the sewers or drains or (2) if your sump pump overflows or discharges. The amount of coverage and the deductible vary by states. The endorsement comes with a maximum amount of coverage ($5,000 or $10,000) and its own deductible ($250, $500 or $1,000).
Home Day Care Coverage: This extends your liability coverage to those in your care. Most states require you to have it for licensing, and parents also may request to see proof of this coverage.
Refrigerated Property Coverage: When there is a power outage, the food in your refrigerator could spoil. A standard homeowner’s policy may cover the costs of replacing some of the food. A refrigerated property policy provides additional coverage. A refrigerated property policy adds up to $500 of coverage for property, such as meat that spoils because of a power outage or equipment failure.
Special Computer Coverage: With everyone working remotely, computers have become our lifeline. Consider a special computer coverage option to ensure you are covered for your devices: desktop computers, laptops, tablets and smart phones. With this coverage, you will receive more money for your devices if they are damaged than with traditional homeowner’s.
Permitted Incidental Occupancies: If you have a home-based business, this endorsement increases the coverage for your business property. This includes furniture, equipment, and supplies.
Ordinance or law coverage helps you bring your home up to current building codes for repairs and/or rebuilding.
Identity fraud coverage covers the expenses associated with identity theft.
Remember that you can ask for ways to lower your home insurance costs when you purchase a policy. You may be eligible for group discounts. There are discounts if you have a burglar/fire alarm. There also is a cost savings and convenience of paying in full with most policies.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
It may not seem like a big deal, but forgetting to make an auto or home insurance payment or having a lapse in coverage can have serious repercussions.
Let’s say you don’t drive that much anymore, so you miss an insurance payment or two, but then you get into an accident… If your premium goes unpaid, your insurance policy is void. Meaning, your insurance company is not obligated to rewrite your policy. You’ll be left without coverage and will likely have a higher rate when you do find a new carrier because the lapse has now left you labeled as “high risk”.
Your cancel notice gives you the date that payment must be received by, and if that date occurs with no payment, the system will automatically cancel your policy. Once you’re canceled, your carrier will not take you back unless they are required by law.
Let’s dive further into more facts and answer some questions every vehicle or homeowner should know about their coverage.
Home insurance is required if you have a mortgage.
While home insurance isn’t required by law, your lender will require you to be insured if you have a mortgage. Your policy will need to cover wind, hail,fire, and vandalism. The lender will be named as an additional insured. Should you file a claim for damage or loss, the insurance company will issue a two-party check naming you as the insured along with the mortgage company.
If you fail to pay your home insurance, you could have a lapse in coverage. Your policy will cancel, which is a violation of your mortgage agreement, and there will be no coverage in the event of a loss or claim. Also, the homeowner’s insurance is a package, which covers the home, other structures, your personal property, additional living expenses, and provides personal liability. You will lose all of that if the policy cancels.
Car insurance is required by law.
In every state except New Hampshire, you’re required to have car insurance. You have to have minimum coverage in case you get in an accident, though what you are required to carry does vary by state.
When you register your car, you submit proof of insurance. When you buy a car, you can’t leave the lot without signing up for insurance. It’s just along the way that you might accidentally, or on purpose, miss a payment and cause your insurance to lapse.
What is a lapse?
You pay for a specific time period on your insurance. It may be six months, a year, or another timeframe. In all cases, you will have a start date and an end date. As long as you are paying the bills on time, all is well.
If, however, you miss a payment, your coverage lapses. A lapse in coverage can be as short as one day or it can be much longer. Like other bills that you may be late in paying, there may be a grace period and a late fee. Unlike other services, however, you might face more severe consequences including government-mandated ones, if the lapse goes too long.
What happens when you drive without insurance?
If your insurance premium goes unpaid for long enough, your insurer will cancel your policy. Insurance helps with the financial responsibility if you get into an accident. Because it is usually required by law, there are additional consequences if you don’t have it. Here’s a summary of what you can expect if you let your insurance lapse.
If you’re in an accident, you would be fully responsible for any damages or injuries.
Depending upon the state where you live, you may be limited in the amount that you can sue the at-fault driver.
Your insurance company may cancel your policy and alert the Division of Motor Vehicles.
Your license and registration may be revoked, and you would be responsible for paying daily fines to the Division of Motor Vehicles. You may also have to pay a fine to reinstate your license and registration.
Once you are reinsured, you may need to carry an SR-22 form with you for three years, showing proof that you have the minimum required insurance.
You may have difficulty getting insurance again, as you’re now considered a risk. If you do get insurance, your insurer can raise your rates. Drivers with a coverage lapse of 30 days or more saw an average premium increase of 35%.
Your car could be repossessed if it is leased or if you are paying a loan.
Your credit score may drop, which can affect your ability to get a loan or credit card. The lapse will remain on your credit report for up to 7 years.
What happens if your home insurance is canceled?
If you lapse in payments for your home insurance, and as a result, your policy is canceled, your mortgage lender will be informed in writing.
Your lender can force you into a more expensive policy, called forced-placed insurance. This insurance only covers the loan amount for the mortgage company. There is no coverage for your belongings or personal liability. Therefore, if the house costs more to rebuild than the remaining loan amount, it won’t be covered.
If you don’t agree to the insurance, your lender can send your loan into default. This presents a risk of losing your home to foreclosure.
Your credit score will drop as a result.
Without insurance, whether or not you have a mortgage, you are responsible for 100% of the costs for any damage to your home if something unexpected happens.
What should you do if you have a lapse in coverage?
Once you realize your policy has been canceled or you’ve missed a payment call your insurance company and see what can be done.
Find out if they are able to rewrite your policy. Pay whatever fines are needed. Many companies may charge extra or interest fees on the remaining balance but California Casualty only charges a small monthly fee.
If you cancel over a certain number of days, you will be looked at as a brand-new customer and have to meet all underwriting guidelines. You may lose certain discounts or benefits for customer loyalty.
If you’re unable to make your insurance payment, let your insurer know. They may be able to adjust the policy to lower your cost.
Your insurer may deny you coverage. In that case, you will need to shop around for a new policy. Be honest with the new company. They will be able to check to see if your coverage has lapsed in the past. Be prepared to pay a higher premium because of it.
After you get insurance again, contact your state’s Division of Motor Vehicles to update your insurance information. Make sure that your registration and license are still valid.
Similarly, update your mortgage lender if your home insurance has been affected.
If you’ve changed insurance companies, and you owe your old insurance company any money, make sure to pay it. They will likely pass it along to a debt collection agency if you do not.
How can you prevent a lapse?
The best way to avoid any lapse in coverage is to set up a system so you will pay your premium
on time.
Pay the premium in full if you are able to do so. Consider using your credit card for your annual insurance payment to get extra credit card award points. There is a cost savings and convenience of paying in full with most policies. At California Casualty, if the state allows, both auto and home policies offer this type of savings.
Set up automatic payments such as an EFT from your checking account or a payroll deduction, if offered or available.
Set a reminder on your phone or calendar for your premium due date.
Make sure you know the end date of your policy. From 30-60 days prior to the renewal, California Casualty sends out a renewal policy for the insured to review. Schedule a time with an agent to review your policy to see if you need any updates before the renewal takes place.
If you switch insurance companies, make sure to time the start date of your new policy with the end date of your old policy so there is no lapse.
Talk to your insurer about options if you are not driving for an extended period of time. For example, you may be deployed overseas. You still may want coverage since your car would remain at risk for damage due to weather or vandalism, and it could be stolen. However, you can suspend coverage for a time period, including while you are deployed or on sabbatical. This may not be an option if your car is leased or you’re paying off a loan.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
If you’ve ever accidentally set off the smoke alarm, you know how loud it can be. But that loud beeping is actually a good thing. Smoke detectors give us that important warning to get safely away in case of a fire. Some detectors do double duty and also alert to carbon monoxide.
However, don’t assume your smoke detectors are working if you’ve installed them once and then never touched them again. Batteries wear out, and detectors have a lifespan of only about 10 years. That’s why it’s important to test yours regularly and there is no better time than when you are spring cleaning.
Two types of detectors
You may have a battery-powered smoke detector or yours may be hard-wired. They look the same from the outside but they’re a little different.
A hard-wired detector is connected to your home’s electrical power with a cable that runs behind your wall or ceiling. They usually have a battery backup in case the power goes out. It is recommended that these detectors are installed by a professional electrician.
The battery-powered detector snaps into a plastic base that is screwed onto the ceiling or wall. In many newer models, batteries are non-removable and come with a 10-year warranty.
Follow these steps
Both types of smoke detectors have a test button that allows you to check if they are working. Test your smoke detectors at least twice a year, once in the spring and once in the fall, and replace them as needed.
Step 1: Let family members know you’ll be testing.
A smoke alarm could cause family members to think there is a real emergency, so let them know that you are going to run a test. Since the sound could frighten small children and pets, you may want to test while they are not around. In addition, if your smoke detector is connected to an alarm company, notify them or you could have the fire department show up at your door.
Step 2: Position someone away from the detector.
Ask a family member or friend to stand on another level of the house, to make sure the alarm is heard. You want to make sure that the warning is heard downstairs in the basement and upstairs, in case someone might be there when it sounds.
Step 3: Press and hold the test button.
You may need to stand on a chair or a ladder to reach the button on your detector. You can use a broom handle if you are able to reach it that way. Note that it may take a few seconds to start. You will hear a loud siren. If there is no sound or a weak one, the batteries and/or the detector need replacement. Make sure to repeat this test with every smoke detector in the house or apartment.
Pro Tip: Some smoke detectors can go into programming mode if you hold the button too long. Wait for the detector to return to normal before testing it.
Step 4: Try this way to check your detector’s sensor.
The test button checks that your detector is powered. However, it doesn’t check the smoke sensor. You can do so with an aerosol spray that you can purchase for a few dollars at a hardware store. Follow the directions on the can to spray the “smoke.” This is a safer way to check the sensor than lighting matches. After the test, you can use a handheld vacuum to remove the material from the detector.
Pro Tip: Some detectors have a button to push to stop the alarm. Find out if yours has one before you run this test.
Other important tips
If you have a detector where you have to change the batteries, you should replace them twice a year. (When we change the clocks is a great time to do that.) If your smoke detector is older than 10 years, you should replace it even if it is working.
Dust and dirt build-up can affect your detector. Keep your detectors clean.
Don’t paint your detector to match your décor. That can interfere with their ability to detect smoke.
Make sure you have enough detectors in your home or apartment. You should have one in your kitchen, but 10 feet away from cooking to avoid false alarms. You also will want to place them inside every bedroom and outside each sleeping area, on every level of your home, and in places where you keep flammable substances like the garage.
You want to be fully prepared in case of a fire, and not just with smoke detectors. Talk with your insurer about your home and property to ensure that you are fully covered.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
Your house may be warm and cozy, but chances are your water pipes aren’t. When temperatures dip too low, those pipes are in danger of freezing and bursting. If that happens, you’re in for a hefty bill…
Causes of burst pipes
Winter is a common season for frozen pipe bursts. That’s because water expands when it freezes. So, when the water in your pipes becomes ice, it takes up more space and pushes against the sides of your metal or plastic pipes. That pressure continues to build up. When it reaches the breaking point, a pipe can burst and send water flowing.
Pipes can also burst for other reasons. This includes corrosion, as pipes rust and weaken over time. Tree roots can interfere with outside pipes. Shifting soil from construction around your home has a similar effect. Finally, clogs from toilet paper and hair can be large enough to cause pipes to burst.
What to do if your pipes burst
You want to take quick action if a pipe has burst in your house. Here’s what to do.
1. Turn off the main water supply. This will keep the water from flowing uncontrollably. If you live in an apartment building, you won’t have access to the main shutoff valve. Contact your landlord right away so he or she can take action. (Pro Tip: Most main water shutoff valves are located close to your water heater or furnace.)
2. Shut off the power. This will help ensure that you don’t get electrocuted through highly charged water that has come in contact with your electrical system.
3. Call a plumber. When pipes burst, it’s best to let a professional handle the problem. If you know that water has affected your electrical system, call an electrician as well.
4. Drain the pipes. You want to get the water out of your pipes to avoid more freezing, bursting, and leaking. With the water main still off, turn on all the cold taps and let the water run. Then turn off your hot water heater and turn on the hot taps. Let the water run. Finally, flush all the toilets.
5. If you turn on the water and only a trickle comes out, you may still have a frozen pipe. Keep the faucet on. As you defrost the ice ball, you want water to be able to flow freely. Use a hair dryer to safely thaw the pipes. Move it around to reach as many places as possible. Alternatively, wet some towels in hot water and place them across the pipes. Replace them as they cool. Do not use an open flame to warm your pipes. That could cause a fire or damage the pipes.
6. Assess the damage. Figure out where the broken pipe is. A plumber can help you to do this.
7. Contact your insurance agent. They will advise you on how to file a claim, and also what the policy may cover. They will send a representative out to inspect the damage.
8. Clean up any standing water. A wet/dry vacuum will pull water from carpets. Dehumidifiers also can help. You will need to clean the area thoroughly. Consider a professional repair that can help prevent future costly problems like mold.
How to prevent frozen pipes
You can take steps to prevent your pipes from freezing and bursting. Follow this checklist.
1. Pipes most likely to freeze are outside or in unheated areas of your home like basements, attics, crawl spaces, garages, and cupboards. These include outdoor hose bibs, swimming pool supply lines, water sprinkler lines, and pipes close to the outside of the house.
2. Add insulation to these places, such as your attic, basement or crawlspace. You can cover your pipes with insulation, too. You can find it at your local hardware store. Measure the length of the pipe and cut the insulation foam to size. Wrap the pipe with insulation. Seal the seam with tape.
3. Consider heat tape which is not tape at all but a type of wiring. It looks like an extension cord that plugs into a wall and then wraps around the pipe. If you use heat tape, make sure it is designated for water pipes and properly installed. Check the tape monthly while in use. Remove it if there are cracks, bite marks, or signs of deterioration.
4. Caulk the cracks in your walls and foundation to keep cold air out. Ask a professional contractor to make sure that your basement is appropriately sealed.
5. Remember to turn off outdoor water faucets in winter. Disconnect your garden hoses. Drain water from sprinkler and swimming pool lines. Do not put antifreeze in these lines, as it is environmentally harmful and dangerous to people, pets, and wildlife.
6. When temperatures are very cold outside, turn a faucet on cold and let it drip to a trickle. This keeps water flowing and helps prevent freezing. (Pro Tip: Put a bucket underneath to collect that water and use it to water your plants.)
7. Open kitchen and bathroom cabinet doors to allow heat to circulate. Just make sure to relocate or safeguard any chemicals that could be hazardous to children or pets.
8. Set up fans to blow heat into colder rooms. Or use space heaters. You can add a space heater to a room where pipes are exposed; however, use caution. Make sure it’s plugged into an outlet with a ground fault circuit interrupter to prevent electric shock. Do not use an extension cord and only use the space heater when you are home.
9. Keep your thermostat set to the same warm setting day and night. If you plan to be away from home for any length of time, make sure that the thermostat is set to at least 55 degrees Fahrenheit to help protect against frozen pipes.
10. Consider relocating your pipes if you continually have issues with freezing.
Your home is one of your greatest investments. Protect it with the right insurance.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
From groceries to gas, it seems like we’re paying more for everything these days. Now insurance rates are increasing as well. Why is this happening, and more importantly, what can we do about it? Here’s what you need to know.
What we’re seeing…
Car insurance rates rose 9% over the course of 2022, a trend that is expected to continue with another 7% rate growth in 2023 according to Insurify. Home insurance rates increased by an average of 12.1% in 2021, and another 3% in 2022 said Bankrate.com. Experts predict rate increases each year for the next few years due to the perfect storm of inflation, supply chain issues, weather changes, and other factors.
We’re experiencing historic inflation.
Inflation is at its highest level in decades. Inflation has had a significant impact on the cost of auto parts and labor, as well as medical expenses for bodily injuries.
From March 2021 to March 2022, here’s how prices have increased:
Medical services – increased 2.9%
Auto repair costs – increased 4.9%
Car rental costs – increased 13.8%
Used vehicles – increased 35.3%
Similarly, the costs associated with a home claim also have been affected by inflation. This includes additional temporary living expenses, replacement of personal property and home furnishings, cost of construction labor, and costs of construction supplies.
From March 2021 to March 2022, here’s how prices have increased:
Rent – increased 5.1%
Home furnishings – increased 10.1%
Construction labor and trade services – increased 21.3%
Construction materials and goods – increased 22.2%
Supply Chain Issues
There are supply chain issues created by the pandemic and by a labor shortage. When we can’t get parts or supplies to repair a vehicle or a home, the process becomes lengthier and results in repairs simply costing more.
Other Factors
The severity and frequency of vehicle accidents are on the rise. Traffic fatalities reached a 16-year high in 2021 according to the National Highway Traffic Safety Administration, due to an increased trend in post-pandemic risky driving behaviors – speeding, driving distracted, not wearing seatbelts, and driving under the influence. This rise in accidents directly affects claims, which contributes to rising auto insurance costs.
Similar conditions come into play for home insurance costs. The number of extreme climate events and weather disasters is also increasing. In 2022, there were 18 disasters with losses of more than $1 billion each, according to the National Centers for Environmental Information.
An inside look at how this affects your insurance rate
As material and labor costs rise, the cost to repair and replace damaged homes and vehicles increases. Factor in the ongoing supply chain issues and costs increase even more. The amount you pay for insurance is likely to go up when the cost to settle claims rises.
“But I’ve never been in an accident, so why would my rate go up?”
Even if you have a spotless driving record or never filed a claim, it’s likely that your insurance costs could be impacted due to economic factors that are out of your control – regardless of the company that provides your coverage. Insurers across the country have been raising rates, some multiple times in the past 12 months. However, it’s not all doom and gloom. There are ways you may be able to reduce your costs.
What You Can Do to Lower Your Premiums
Your insurance provider can recommend adjustments that still give you the quality coverage you need but with a lower premium. Start with a thorough policy review and make sure to look at these areas.
• Review deductible options. Generally, the higher your deductible, the lower the cost of your insurance premium. Since the deductible is the amount your insurance provider will subtract from an insurance payout, you’ll have to select a deductible that you’re comfortable paying out-of-pocket after a loss. Note that there can be diminishing returns if you set your deductible much higher than average, so as a consumer, you need to balance the premium savings against the amount you’d be required to pay after a loss.
• Take advantage of discounts. You may qualify for insurance discounts for being part of a professional association, such as groups for teachers, nurses, or first responders. There are also discounts for being retired, good student discounts, setting up automated payments, and for paying in full upfront. You may also receive a discount for quoting online.
• Buy home and auto insurance from the same company. When you bundle your home and auto insurance, you can often qualify for reduced rates, saving hundreds of dollars.
• Remove Gap coverage if no longer needed. When you buy or lease a new vehicle, it starts depreciating once you drive it off the lot. Gap insurance ensures that you will get the full replacement value of your car if it is totaled or stolen. As a car begins to age, this gap goes down and the need for coverage is less.
• Make your home disaster resistant. Talk to your insurance agent about how you can disaster-proof your home. You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roof materials, or even clearing brush from around your home. Older homes can be retrofitted to make them better able to withstand earthquakes or other natural disasters. In addition, consider modernizing your heating, plumbing, and electrical systems to reduce the risk of fire and water damage.
• Choose electronic documents rather than mail. This is an easy change that often comes with a discount and can add up in the long run.
California Casualty has been slower with rate increases than the bigger carriers. We will always strive to keep our prices as affordable as possible for our members. When we do make rate changes, it is to be able to maintain the financial fortitude to keep our promises to every policyholder during their time of need.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses.
We all know the dreaded drip, drip, drip of a water leak. It’s the sound of a potentially expensive repair or at minimum, an annoying cleanup. Either way, you want to be prepared when it happens. Knowing what your homeowner’s insurance covers in terms of plumbing and pipe leaks is the first step.
In general, sudden plumbing issues are typically covered by insurance but plumbing problems that occur over time due to lack of maintenance may not be.The policy may cover damage resulting from plumbing breakdowns, but it won’t cover the cost to repair the plumbing itself.Insurance is intended to help in emergencies, not a substitute for regular maintenance.
What Insurance (Probably) Does Not Cover
Most policies do not cover old plumbing and pipe leaks. If you’ve got a slow leak and you ignore it until it gets worse, that’s likely not covered by your homeowner’s policy. When you file a claim, your insurance company will send an adjuster. They will determine the cause of damage, and decide whether it qualifies for coverage. Here are general guidelines on what insurance probably does not cover.
Normal wear-and-tear and lack of maintenance are not covered. If you neglect your plumbing and pipes, you essentially have voided your policy.
Leaks that started small and have gotten progressively worse over a period of years are not covered. The time to address them was when they started.
Pipes that freeze because you turned off the heat would be categorized under neglect. So, if you went away on a winter vacation, and failed to take the necessary steps to protect your pipes, the damage that results may not be covered under your policy.
Mold may be excluded from your standard policy. However, you could purchase additional coverage.
Water damage from any flooding is not covered unless you have a flood policy.
What Insurance (Probably) Covers
From certain plumbing issues to broken, burst, or frozen pipes, your homeowner’s policy probably covers the ensuing damage if you have taken reasonable care and performed continued maintenance. For example, coverage for freezing of a plumbing system only applies if you “maintain heat in the building; or shut off the water supply and drain all systems and appliances of water.”
Insurance pays to repair the pipes or plumbing in these cases. It also compensates you for covered items that are damaged by the leak. Coverage A (which includes the plumbing system) will cover the plumbing system if there is a fire, tornado, explosion, etc. The contract specifically excludes coverage for “wear and tear, deterioration and latent defect, inherent vice” – basically, the policy will not pay for the plumbing system or pipes for leaks, broken, etc. – that is the homeowner’s responsibility. If it is a covered loss, the insurance company pays for the ensuing damage, i.e. flooring, baseboards, drywall, and personal property.
Your insurer will likely send someone out to determine the cause of loss and inspect the damage. You will get reimbursed by your policy, minus your deductible (which is the amount that you chose to pay out-of-pocket before insurance kicks in).
There are four different parts of your homeowner’s policy that address damage caused by plumbing and pipe leaks:
Dwelling coverage covers the structure of your home. This includes the roof, walls, and floorboards. However, if you have to remove a wall to see if there is a leak, that would not be covered. There are companies that will come out and complete a Leak Detection Report to determine where the water is coming from.If the loss is covered and over the deductible, your insurance will pay for the report.
Personal property coverage protects your possessions that may be damaged.Coverage may apply if there is “an accidental discharge or overflow of water from within a plumbing system or household appliance.” Damage that occurs gradually due to a leaky pipe is generally not covered. Protected possessions include clothing, TVs, and furniture. There are dollar limits for certain items such as money, jewelry and firearms, so check with your insurer. (You could add an extra rider to cover those items.) For personal property coverage on a homeowner’s policy, you typically get 50 or 75% of Coverage A, the total amount of coverage for your home.
Other structures coverage protects detached buildings, such as garages or guest houses, that may be damaged due to plumbing issues. The coverage limit for other structures is generally set at 10% of your home’s coverage limit. That means if your home is insured for $200,000, the coverage limit for your garage would be $20,000. For an additional premium, you can add an endorsement for additional coverage.
Depending upon the extent of the damage, your house may not be livable. If that’s the case, you would need to stay somewhere else. You would be covered for any necessary increase in living expenses, such as lodging, food, and gas. Under Coverage D – Loss of Use, called “Additional Living Expense,” your policy will provide a flat percentage toward living costs, usually 30% of the Coverage A amount. Some states have time limits (e.g. 12 months) on when you can use that coverage. Plan to cover those additional expenses out-of-pocket.
How to Know if You Have a Leak
Taking the time to inspect your pipes and plumbing periodically can give you a heads-up that there could be a problem. The earlier you address it, the less costly it will be. Look for these signs that you may have a leak.
Stains or discolorations on walls or ceilings
Bulging or sagging spots on walls or ceilings
A trickling sound when it is quiet, such as at night
A musty smell, which can be a sign of moisture and mold growth
Poor water pressure
Rusted metal
Peeling paint
Steady increases in water bills
Finally, make sure your homeowner’s policy is up to date, and that it provides the coverage that you need. That will go a long way toward having peace of mind should you have a plumbing problem.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
