Is Your House Insured Against Animal Damage

Courtesy of iii.org

You may have read the recent story featured in the I.I.I. Daily about raccoon damage and homeowners insurance. The gist: raccoons got into a house and caused $80,000 worth of damage. The homeowners were surprised to learn that their insurance wouldn’t cover any of it.

So what’s the deal with animal damage and insurance?

Homeowners insurance

Let’s start with the easy stuff. If your dog Fido rips through your couch or pees all over the wall, you’re out of luck. Standard homeowners policies won’t cover any damage to your house or personal property caused by a pet. And”pet” is a pretty broad term. Doesn’t matter if it’s a Shih Tzu or a Clydesdale horse, pets are any animal you own.

What about animals that aren’t pets, like deer or birds or – God forbid – rats? That’s where things get interesting.

Building damage: You probably aren’t covered for any damage to the building caused by birds, rodents, insects, or vermin. There also probably won’t be coverage for any nesting or infestation. Insurance policies can vary widely, however, so make sure you ask your agent what is and isn’t considered a rodent or vermin (some insurers will say raccoons are vermin, some will say they’re not). The specific details of your policy will determine your coverage.

Damage to the building from other wild animals could be covered, though. If a moose runs through the sliding door to your deck, the damaged door would be covered.

Personal property damage: Unfortunately, your personal property is probably not covered no matter what kind of animal does the damaging. If a moose runs through your sliding door and wreaks havoc on grandma’s china, then you’re covered for damage to the door, but not the china.

Liability: You go to your friend’s house and bring Fido for a dog playdate. Fido then rips through your friend’s couch. Are you covered? Yes. Homeowners liability protection will cover the damage to other people’s property caused by your pets. Just not your property. Friendship saved.

Personal auto insurance

A squirrel chews through the wiring in your car. Fido dents your door chasing after a squirrel. A moose rams your car in a fit of rage, smashing the windshield. (Why do I keep thinking of moose scenarios?)

Does personal auto insurance cover animal damage? Yes, if you have optional comprehensive coverage. If you only have collision coverage, then you’re not covered.

Collision only covers damage when a car overturns or hits another car or object. Comprehensive covers…more or less everything else: damage from falling objects, fire, explosions – and birds and animals.

So if you paid the extra premium for comprehensive coverage (like most Americans do), then you’re covered for damage from chewing squirrels, incautious Fidos, and rampaging moose (meese?).

Insurance & Water Damage

Courtesy of iii.org

Pop quiz: what’s one of the most common types of homeowners insurance claims? (Hint: it’s not fire.)

It’s water damage. Maybe that’s not surprising – it rains a lot in many places. But what may surprise you is that things like pipe bursts and broken appliances are increasingly the main causes of water damage in homes.

In insurance-speak, these are called “non-weather water damage claims.” Worryingly, these claims are happening more often and are getting a lot more expensive. A Best’s Review article reports that the average homeowners water damage claim is now over $6,700. Large losses (over $500,000) have doubled in number over the past three years. Non-weather water damage is now costing insurers (and their policyholders) billions in losses every year.

This is happening for several reasons. Our housing stock is aging, as is our infrastructure. More houses are being built and they’re getting bigger – many houses now have extra bathrooms and second-floor laundry rooms, which means more piping. (The story is probably different in Florida. You can read why that is here.)

But the worst part is that many – if not most – water damage claims are preventable. Inspecting pipes or conducting routine maintenance can go a long way. That’s where the internet of things (IoT) comes in. Smart devices and connected sensors installed on piping can detect leaks before they occur or before they cause too much damage. They’re basically smoke detectors, but for water.

And they work. Best’s Review noted that installing IoT devices can reduce water losses by up to 93 percent.

The Review quoted an IoT company CEO who claimed that leak detection devices could save insurers and their customers $10 billion every year.

Homeowners have admittedly been slow to install IoT to help detect leaks. But insurers are hopeful that raising awareness about the issue, offering policyholder incentives like premium discounts, and encouraging IoT installation during home construction will begin to turn the tide.

Update: Of interest, Washington state adopted a rule in 2018 that specifically mentions water monitors and water shut-off systems as permissible tools for an insurer’s risk reduction program.

Hurricane Checklist

Courtesy of iii.org

You probably make a checklist for performing home repairs, a shopping list before hitting the grocery store, or perhaps a to-do list for work assignments?but do you have a checklist for reviewing your insurance coverage? The start of hurricane season is right around the corner (June 1 ? November 30). So now’s the time to check your homeowners or renters insurance?and this handy list will make it easy to be sure you’re well-prepared in case a storm comes your way.

HOMEOWNERS COVERAGE

Check your policy limit; is it enough to rebuild your home?

Make sure to have enough coverage to completely rebuild your home in the event it is severely damaged or destroyed. And, remember, the real estate value of a house is not the same as the cost to rebuild.

Consider these homeowners coverages to help protect against the costs of rebuilding after a hurricane:

  • Extended Replacement Cost Policy ? pays an additional 20 percent or more above the policy limits.
  • Guaranteed Replacement Cost Policy ? pays the full amount to rebuild your home whatever the ultimate cost.
  • Inflation Guard ? automatically adjusts the coverage limits to reflect changes in construction costs.
  • Ordinance or Law Coverage ? pays a specified amount for rebuilding to new building codes, should your community adopt stricter codes.

Do you know everything you own and how much it’s worth?

Imagine having to re-purchase all of your furniture, clothing and other personal possessions. Now think about what that would cost. Most insurers provide coverage for personal possessions?approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. Is this enough? The best way to determine what you actually need is to conduct a home inventory?a detailed list of your belongings and their estimated value. The I.I.I.’s free Know Your Stuff ? Home Inventory tool can help.

Check what type of insurance you have for your belongings:

  • Replacement Cost Coverage ? pays what it would cost to replace your personal possessions at their current value.
  • Actual Cash Value Coverage ? pays to replace your personal possessions only at their depreciated value.

Does your policy provide enough Additional Living Expenses coverage?

Additional Living Expenses (ALE) coverage kicks in if your home is rendered uninhabitable as the result of a hurricane or other insured disaster. ALE covers the extra costs involved in living away from home?hotel bills, restaurant meals and other expenses, over and above your customary living expenses?incurred while your home is being repaired or rebuilt. If you rent out part of your home, this coverage also reimburses you for lost rental income.

Check that the coverage is adequate for your needs:

  • ALE coverage is generally equal to 20 percent of the amount of insurance coverage that you have on the structure of your house; however, most insurers offer the option of higher coverage limits.
  • Many policies provide ALE reimbursements only for a specific amount of time; make sure you’re comfortable with the time limits in your policy.

What is the percentage of the hurricane/windstorm deductible stated in your policy?

Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies. Unlike the standard “dollar deductible” on an auto or home policy, a hurricane or windstorm deductible is usually expressed as a percentage. It is clearly stated on the Declarations (front) page of your homeowners policy.

Hurricane and windstorm deductibles generally range from 1 to 5 percent of the insured value of the structure of your home. A hurricane deductible is applied only to hurricanes whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.

Keep in mind:

  • If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage.
  • Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.
  • A deductible is basically the amount subtracted from an insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.

What disasters does your insurance policy cover?

Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and a host of other disasters. However, all policies also list exclusions?such as for flood or earthquake?which are NOT covered by the policy. Get to know the exclusions in your policy and either talk to your Insurance Professional about purchasing separate coverage, or be prepared to pay the cost of those damages out-of-pocket.

Important additional coverages to consider in hurricane-prone areas:

  • Sewer Back-Up Coverage ? Can be purchased either as a separate policy or as an endorsement to an existing homeowners policy. Sewer backups and damage from runoff water caused by major downpours are not covered under standard homeowners nor by flood insurance.
  • Flood Insurance ? Separate flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and from some private insurance companies.

But, wait, what about your flood insurance policy?

People tend to underestimate the risk of flooding, but 90 percent of all natural disasters include some form of flooding?especially hurricanes! If you live in a flood zone, or a hurricane-prone area, a separate flood insurance policy is a must. But it’s equally important to understand what it actually covers.

An NFIP flood insurance policy provides coverage for up to $250,000 in replacement cost coverage on the structure of the home and $100,000 in actual cash value coverage for personal possessions. Coverage for basements is limited, so make sure you understand what is considered a basement, as well as what is and is not covered in that area of the house. The NFIP policy also does not include coverage for ALE.

Additional tips about flood insurance:

  • There is a 30-day waiting period for a flood insurance policy to go into effect so don’t wait until a storm is imminent to apply for coverage.
  • The NFIP offers a range of deductibles; the deductible you choose will affect the cost of the policy and the amount of money you would receive if you file a claim.
  • If you require a higher amount of coverage than is offered by the NFIP, consider getting excess flood insurance which is available from private insurance companies.

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