Are You Covered?

In the past few years, Coloradans have suffered their share of natural disasters from wildfires encroaching on urban areas to mudslides and flooding. 

On the tail of each disaster I am always dismayed that so many people do not have the insurance coverage they thought.  

After the emotional devastation of losing a home and personal possessions, the last place you want to be is in Court trying to resolve your differences with your insurance carrier. 

Obviously, the time to consider your insurance coverage is before disaster strikes.  Below are some considerations whether you are buying, renewing, or merely reviewing your insurance policy.  

 

Water.  Whether it is a burst pipe or a flash-flood, cut backs on insurance coverage may leave you all wet.  Not only may your policy preclude coverage for claims from water leaks that occur over a period beyond 14 days; it likely excludes coverage for mold that may have grown in the damp spaces surrounding the leak.  Sewer and drain backups are also often excluded from policies.  Most homeowners insurance policies exclude flood damage so you need to purchase a special rider if you live near any body of water.  Understand that flood insurance has its own restrictions including exclusion of landscaping damage and additional living expenses.

 

Repair/Rebuild.  Insurers no longer guarantee to fix your home “no matter what”.  Rather, policies offer coverage at “actual cash value” (ACV) or “replacement cost” (RC).  What these terms actually offer is dependent on the definition in the policy but generally ACV is the cost to replace less depreciation for age, etc. while replacement cost can include an allowance for real-world replacement.  Even then, increases in repair labor and building codes (among other things) may mean your insurance check will not cover all the costs incurred during repair or reconstruction. Some insurers also impose strict deadlines for notice of intent to replace and completion of the work.

 

So when it comes time to buy, renew, or just review your policy for coverage make sure you: 

Understand what you are getting.  Actually take the time to read your policy. If you are purchasing a policy for the first time, ask for sample policies.  Also ask for a list of available riders.   Consult with a professional.  Even the most basic insurance policy is a literary quagmire.  If ther is any term you do not understand or you cannot decipher the “unless, but for, and excluding except” of your policy, sit down with your agent attorney and a copy of the policy.

Up your protection.  Talk to your agent about getting a rider that covers the specific excluded losses that are of a concern to you.    

Be vigilant.  Take precautions to protect yourself from uncovered losses – for example, place wireless water alarms under your sinks, behind the water heater and washer, and eye your water bill for unusual activity that can alert you to a larger problem.