By Edward Martinez, CoreLogic
It’s often been said, “it’s better to have insurance and not need it than to need it and not have it”; as a homeowner, I do have insurance so I must be covered … right ... well there is more to the story.
Understanding what is and what is not covered requires an in-depth look into how insurance policies differ from one another. Having a firm understanding of what your policy covers in case of a loss is essential to ensuring that you and your family are protected in case of an accident or natural disaster.
Property and casualty insurance has two main objectives: first to prevent losses (injuries, deaths, and/or property damage) from occurring in the first place, and second, as stated by the American Insurance Association, is to facilitate recovery from losses suffered by individuals or businesses – whether those losses are relatively small or truly catastrophic (such as a flood, earthquake, hurricane etc.). Insurance helps individuals, businesses, and entire communities stay financially stable and recover from unanticipated – and potentially ruinous – losses, even with insurance your policy may not cover all disasters.
One of the most commonly written home policy types is HO-3, because it is the minimum coverage required by mortgage providers. The HO-3 policy is an open perils policy that covers any direct damage to the house or other structures on the property unless it is specifically excluded. However, the coverage for personal property is for named perils only—the same perils listed in an HO-2 policy. Covered losses on realty are insured for full replacement value with no depreciation deduction, although certain restrictions apply. The key is knowing what exact perils are covered and to what extent as well as what the restrictions are.
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The top three occurrences not covered by this type of policy are:
- Flood
- Earthquake
- Maintenance
Weather related occurrences happen every day throughout the country, some more severe than others leaving us to wonder what kind of perils we may face. As a lifelong resident of California I have experienced my share of earthquakes as well as mudslides and wildfires. California has been in a serious drought for years, which compounds the danger of homeowners living near bush fire zones, while any heavy rain we get causes new issues such as landslides and flooding. It is these types of events that may not be covered by standard homeowner policies and could be financially devastating if your insurance does not cover it.
Today’s world of technology allows for greater insight into various weather related occurrences - it is this type of data that helps determine what perils you may be dealing with in your area.
Make sure you deal with qualified companies and individuals that can certify their knowledge of this industry because; it is always better to have it and not need it than to need it and not have it!
Related stories:
Flooding and damaging wind were most destructive natural hazards in 2016
Agents: How to prepare for April’s NFIP changes
