HOMEOWNER’S INSURANCE: ARE YOU REALLY COVERED?

Since the hurricanes in 2004 throughout Florida, homeowners are having to pay much more for much less insurance coverage. Even though the property insurance industry reported record profits of $44 billion in 2005 and $64 billion in 2006, there has been an ongoing deliberate attempt by insurance companies to limit those things that are covered by your policy of homeowner’s insurance in order to increase profits. The changes in insurance coverage have been gradual. They are spelled out in annual revisions to the terms of policies. Unfortunately, few homeowners read their policies and they are often unaware that their coverage has been deleted, reduced or changed until they are faced with making repairs or rebuilding their homes.

The following are some examples of things that many homeowner’s insurance policies no longer cover:

Flood: This is also referred to in most policies as lateral water intrusion. Unbeknownst to many people, the standard homeowner’s policy does not include coverage for flooding, leakage or broken pipes regardless of whether or not it is caused by a covered event such as a hurricane. Coverage for flood must be purchased separately and is generally available through the federal government’s flood insurance program. If you are not sure how to get this coverage you should speak to your agent or visit the Federal Emergency Management Agency site for more information (www.fema.gov).

Sinkhole: Regrettably, this year during the special session which was called to deal with the alleged “insurance crisis” the Florida legislature adopted new laws regarding sinkhole insurance which greatly limit the nature and type of sinkhole coverage that a homeowner is entitled to. Starting this year, new policies will no longer automatically include sinkhole coverage. Rather, homeowners will be required to specifically request and pay for this coverage when they renew or purchase new policies. Here in central Florida, sinkhole losses account for a substantial portion of property insurance claims that are made and homeowners should be vigilant to make sure that they have this type of coverage in their policy.

Dogs: Over the years insurance companies have become less and less enthusiastic about insuring certain breeds of dogs and some companies have excluded claims arising due to dog bites entirely. The breeds that many insurance companies have been known to disapprove of include Akita, Alaskan Malamute, Chow Chow, Doberman Pinscher, German Shepherd, Pit Bull and Rottweilers. If you have a dog, make sure you have insurance coverage in the unfortunate event that it bites someone.

Mechanized vehicles: For quite a long time, homeowner’s insurance policies have excluded from coverage any injuries relating to the use and/or ownership of motorcycles, ATV’s, boats, jet skis, and the like. You should always be certain that you obtain separate coverage for these at the time of your purchase.

Personal computers, phone systems, and security systems: These items are very often excluded in homeowner’s policies although you may be able to obtain coverage through endorsements and/or special limits on these items. You should make sure to ask if your policy has adequate coverage for these items.

Jewelry, furs and collectibles: Most policies only have a minimal payout that is available under the personal property provisions. However, additional coverage is almost always available for these items through an endorsement or rider also known as scheduled personal property insurance once again you should make sure that you have coverage for such items and that the coverage is adequate.

Hurricane deductibles: A recent occurrence in the state of Florida is that insurers were allowed to establish and charge for a different, larger deductible in connection with a hurricane loss. According to the Florida Insurance Council, 70% of Florida homeowners have different deductibles applicable to hurricane coverage at the present time. The deductibles often range from 2% to 5% of the overall loss and could prove to be a hefty dollar amount one would owe in the event of a hurricane. As an informed policy holder you can plan beforehand and set aside money to defray the costs of what could be a sizeable deductible in the event a hurricane strikes.

To get a better understanding of your homeowner’s insurance policy, you should talk to your insurance agent or licensed agent at your insurance company. It may even be good advice to schedule an appointment and go sit down with them so that you can discuss the ins and outs of your property and casualty insurance policy including coverage limits and exclusions. Each year there are more and more variables in the type of coverages you have and you should make sure to make educated decisions. In addition, researching homeowner’s insurance policy information is actually quite easy on the internet merely by accessing the Florida Department of Insurance at www.fla.org or other consumer oriented sites.