Read Your Homeowners Insurance Policy | Brooklyn Covered

Why did they think their flood losses were covered? I’m sure their insurance agent didn’t tell them they were covered. Heck, I inform each and every one of my clients about the need for flood insurance, even if they live in the middle of Bedford-Stuyvesant, Crown Heights, or Prospect Heights. The usual response? I usually get a “Oh, I don’t need that. I’m not near the water.”, or “Why are you trying to take more money out of my pocket? I can’t deduct you on my income taxes!”

Read Your Homeowner’s Insurance Policy.

It’s amazing. We nearly go over the fiscal cliff, people are still without heat, hot water, or even a home,  and lawmakers in New Jersey propose legislation to make insurance companies produce a single-page summary of a homeowners insurance policy.

This bill, A-3642, produced by the Financial Institutions and Insurance Committee, would require insurers writing homeowners insurance policies in New Jersey to provide each and every insured with a consumer-information brochure “written in a simple, clear, understandable, and easily readable way”, explaining the hurricane deductible and the need for flood insurance.

What a bunch of garbage. Just read your homeowners insurance policy.

Now, I don’t know about homeowners insurance policies in New Jersey, but here in New York, the second page of the homeowners policy covers Policy Deductibles, including the Hurricane Deductible, and tells the client their homeowners or dwelling policy does not provide coverage for losses caused by flood or mudslide.

It even gives you the short definition of what a flood is.

Don’t believe me? Well, here’s the renewal homeowners insurance policy of one of my long-time clients:

Homeowners Insurance Declarations Page One
Homeowners Insurance Declarations Page One

 

Homeowners Insurance Policy Declarations Page Two
Homeowners Insurance Policy Declarations Page Two

My client and I speak every year, and every year I remind them of the need to purchase Flood Insurance. (Heck, we’ve got to increase the Liability Insurance too.) As you can plainly see, page two of the policy clearly describes the Policy Deductibles, including the Hurricane Deductible, and even states there is no coverage for losses caused by flood or mudslide in the bottom half of the page.  It even reminds you who your insurer and mortgagee are.

It’s not that it isn’t there. Policy owners just don’t read it.

After 30 years in the insurance business, I know one hard truth: Ninety-five percent of all policy owners will never read their policy (ies) until, and only when, they suffer a loss. And they’re told they’re not covered for what caused the loss. Then, and only then will they actually take an interest in their policy coverages.

Oh, and this is when they tend to get really ticked off.

Look at what happened with Hurricane Sandy. How many people, either while evacuating, or remaining trapped in their homes, shared the mistaken belief their homeowners insurance policy covered them for losses caused by flood? Only to get the shock of their lives when they learned their homeowners insurance policy offered them zero (0) protection for their losses?

Too dang many.

Why did they think their flood losses were covered? I’m sure their insurance agent didn’t tell them they were covered. Heck, I inform each and every one of my clients about the need for flood insurance, even if they live in the middle of Bedford-Stuyvesant, Crown Heights, or Prospect Heights. The usual response? I usually get a “Oh, I don’t need that. I’m not near the water.”, or “Why are you trying to take more money out of my pocket? I can’t deduct you on my income taxes!”

I remind them they’re not covered for flood, which includes the water flooding your basement after a heavy rainstorm, or when the 90 year-old water main running down the middle of your street finally decides to burst and send hundreds of thousands of gallons of water cascading into your basements and cellars.

What’s really sad is it’s not just insurance policies which consumers don’t read. Recently, a client purchasing a condo came in for insurance. During the conversation, the client made statements leading me to believe they thought didn’t have to pay for any necessary repairs  done in their unit.

Luckily, the client had Offering Plan with them which provided not only a drawing of the unit, but the condo association rules and regulations as well.

With minimum effort, I showed the client where repairs to their unit were their responsibility.

Lord, why did I do that?

“They didn’t tell me anything about that!”

“Didn’t you read this Offering Plan from cover to cover?” I asked.

“Man, I couldn’t be bothered to read that whole book. You’re looking at it. What does it say?”

And therein lies the problem.

Real Housewives of Atlanta or L. A.? We’re all over it.

The Voice and American Idol? We’re watching every stupid episode.

Watching virile athletes vie for athletic glory? Sure, while filling our kegs with booze from a keg.

Reading trashy romantic novels, getting all sweaty over the sex, while your sexually frustrated man (or woman) is lying next to you, waiting for you to read their pages?

Heading for divorce court.

But ask someone to read, question and understand their condominium association’s Offering Plan? Or read the two (2) pages of their policy called the Declaration Pages?

Can’t be so bothered.

Hated it. Two snaps down in the deepest, dankest, dungeon.

Now, this sad state of affairs does not apply to every client. It just applies to too darn many.

I am blessed with more than a few clients who meet with me every year for their annual  homeowners insurance policy review. They want to make sure they own all the coverages they need to be fully indemnified in case of a loss. They may not enjoy being told it’s going to cost them a little more, but most of them upgrade their coverage.

Most important, they know what is covered and what is not.

And, at the end of the day, isn’t that what counts?

So, don’t make insurers kill more trees. Tell policyowners it’s their responsibility to read their policies. If they don’t understand what they are reading, then they should call their agent and set up an appointment to review their insurance policy (ies). Heck, they should do that every year.

So, save the trees! Read your policy!

 

Your Duties After A Loss | Brooklyn Covered

If your policy includes coverage for additional living expenses (and if it doesn’t, go out today and buy a policy with this important coverage), you must again keep accurate records of your expenses for housing, food, and transportation.

Whether you rent or own your home, your insurance policy, in the Conditions section, lists your duties after a loss. Should you fail to comply with the duties which follow, your insurance company could deny you coverage.

  1. You must immediately notify your Broker, Agent, or your insurance company’s claims department of how, when and where the loss happened. Make sure to include the names, addresses and contact information of any witnesses and other injured parties.
  2. Notify the local authorities.
  3. You must protect the property from further loss or damage. This is where many people endanger their full indemnification after a covered loss. For example, if your roof has suffered damage, take as many photos as possible. Then, make reasonable and necessary repairs to prevent further damage. When this is done, take more pictures.
  4. Keep an accurate record of the expenses you incur to protect the property from further damage.
  5. If your home suffered water damage when the roof was compromised, make an inventory of the damaged property before you toss things out on the sidewalk, for example. Your inventory should include describe each item, and it’s cost. Again, take as many pictures as possible to prove your loss. Original receipts, and/or instruction manuals, are a terrific source of proof of ownership. I always tell my clients to prepare a complete Personal Home Inventory using a Travelers Insurance brochure as a guide. Your work at preparing a claim will go a lot faster and easier when you already have a prepared inventory.
  6. If your policy includes coverage for additional living expenses (and if it doesn’t, go out today and buy a policy with this important coverage), you must again keep accurate records of your expenses for housing, food, and transportation.
  7. Remember, you will be required to sign a sworn statement about all the damages and costs you’ve incurred. Don’t listen to anyone who tells you to inflate your loss and expense amounts. These are acts of fraud, and your company could refuse to provide coverage for any insured engaged in these acts.

Suffering a loss is tough, but you can make your recovery easier by following these tips.

Eustace L. Greaves Jr., LUTCF is a New York State licensed independent insurance agent and broker. To get a copy of the Personal Home Inventory Brochure, send Eustace an email to eustace@insuremeeg.com. Or, stop by his office at 651 Bergen Street, Brooklyn, NY 11238, for a hard copy. Just give him a call at 718-783-2722 so he can tidy up the office before you stop by

Wind vs. Water: Like Floods, A Debate Rages|Brooklyn Covered

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

 

Wind vs. Water Equals Hurricanes vs. Floods

 

By my estimation, at least 50% of the losses faced by those who lost property in Hurricane Irene’s aftermath are not insured. Why? The losses they faced are directly attributable to flooding, not the hurricane-force winds. And many people in the Northeast don’t own a flood insurance policy.

Former Hurricane and Tropical Storm Lee will bring similar financial pain to Louisiana, Mississippi, Alabama and other Southern states. For insurance purposes, the damage suffered by most will be considered  caused by water, not wind, and thus not insurable.

The wind vs. water rages on.

 

What’s The Difference?

 

Most people will ask, “What’s the difference?” or “I have a homeowners policy and I suffered a loss to my home, so this should also be covered.” Unfortunately, damage by flood is not covered by your typical homeowners insurance policy.

Many communities in New York, Pennsylvania, Vermont, and New Jersey are monitoring the rivers, streams and levees with trepidation. Many home and property owners will face the double whammy of losing everything, and not having the means to rebuild.

Insurance Policies Make Good Reading. Seriously.

Most people don’t really read their homeowner or auto insurance policies until they suffer a loss, whether the loss is insured or not. Take a moment, find your homeowners policy, and give it a good read. While most people feel they know what’s covered under their policy, they really don’t.

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of  water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

Your homeowners policy specifically excludes coverage when damage to your home results from a source of water from outside your home.  This is why every homeowner should own a flood insurance policy, with limits equal to at least 80% of the homes Replacement Cost Value. (I’ll be discussing just what Replacement Cost Value is in a future post.) Renters, and co-op and condominium owners whose units are below the third floor in an apartment building should also own a flood policy, as well as those who rent or own townhouses.

So, before the next hurricane comes a-calling, this is a great time to purchase flood insurance equal to at least 80% of your homes Replacement Cost Value. Also, arrange an annual homeowners insurance policy annual review with  your insurance representative to guarantee you own, at minimum, 100% of the Replacement Cost Value of your home in your Homeowners Insurance policy.

Hurricane Irene Was No Bo Derek|BrooklynCovered

When a storm forms off the west coast of Africa, it begins life as a Tropical Cyclone. Once the Tropical Cyclone reaches sustained winds of 39 mph, it becomes a Tropical Storm, and remains so until the sustained winds exceed 74 mph.

Once the sustained wind reach 74 mph, we now have a Hurricane. These are categorized according to what is known as the Saffir-Simpson Wind Scale which measures wind velocity and based on this measurement, places a hurricane in one of five Categories.

If Hurricane Irene Was A “10”…

Remember the 1979 movie “10” starring Dudley Moore and Bo Derek? In this movie, Moore’s portrays a man stupefied by a woman whom he considers the most beautiful creature on the face of the earth. A woman he considers a perfect “10.” Well, Hurricane Irene was no “10.” 

Affected property owners who wondered if and how much their homeowners insurance would pay for wind damage should thank their lucky stars Hurricane Irene was either just a Category 1 or a Tropical Storm.

Isn’t A Higher Number Better?

Only if you think a Class A felony is better than a Class E. The Class E felony actually carries a lot less jail time than a Class A.

Cyclones work much the same way, where you’re punished for getting a higher grade.

What Are Hurricanes, And How Do We Measure Them?

When a storm forms off the west coast of Africa, it begins life as a Tropical Cyclone. Once the Tropical Cyclone reaches sustained winds of 39 mph, it becomes a Tropical Storm, and remains so until the sustained winds exceed 74 mph.

Once the sustained winds reach 74 mph, we now have a Hurricane. Hurricanes are categorized according to what is known as the Saffir-Simpson Wind Scale. The Saffir-Simpson scale measures wind velocity and based on this measurement, places a hurricane in one of five Categories:

  • Category 1 has wind speeds ranging from 74-95 mph. It’s damage potential is minimal. Hurricane Dolly in 2008 was a Category 1.
  • Category 2 has wind speeds ranging from 96-110 mph. Its damage potential is extensive. Hurricane Frances in 2004 was such a storm.
  • Category 3 has wind speeds ranging from 111-130 mph. It’s damage potential is devastating. Also in 2004, we had Hurricane Ivan.
  • Category 4 has wind speeds ranging from 131-155 mph. It’s damage potential is extreme. Hurricane Charley, another 2004 hurricane, wreaked havoc in Punta Gorda, Florida.

The year 2004 was a hot mess, wasn’t it?

  • And finally we have Category 5, which has a catastrophic damage potential. It’s wind speeds? Anything over 156 mph. I’ll never forget Hurricane Andrew in 1992, and neither will anyone else who lived in Miami-Dade County then. Andrew’s devastation was so great, building codes in Florida, like many of the houses, were strengthened.

How Does This Affect What My Homeowners Policy Will Pay?

Your homeowners policy contains two (2) deductibles for windstorm-related damage. Any  damage caused by either a Tropical Cyclone or a Category 1 hurricane will have a deductible equal to the higher of your all-perils deductible or $1,000. So, if your all-perils deductible is $500.00, you’ll pay $1,000.00. If however your all-perils is $2,500 or higher, that’s the deductible

Should the damage be caused by a Category 2 or higher hurricane, you’ll pay a deductible equal to anywhere from two (2) to five (5) percent of your Coverage A, or Dwelling Coverage. So, if your Coverage A amount is $500,000, and you have a 5% windstorm deductible for Category 2 or higher hurricanes, your deductible, or the part you’ve contractually agreed to pay for this loss, will be $25,000.00.

Yes, I’m serious. $25,000.00. Now you see why so many people become angry with their particular insurance company after a Category 2 or higher windstorm. They, like many homeowners, didn’t know how their policy covered different causes of loss. It really pays to read your policy and ask questions of your agent or broker if there is something you’re not quite sure of. Better safe than sorry, or, better covered than uncovered.

What Coverages Are Affected By Windstorm Deductibles?

The following Section I coverages of your policy: Coverage A (Dwelling); Coverage B (Other Structures); and Coverage C (Personal Property). Check your policy as different companies apply these deductibles to other policy coverages differently.

What Are Coastal Counties?

No matter where your property is located, should both Category 1 and Category 2 hurricane force winds exist during the same hurricane deductible period anywhere in any coastal county, the deductible for a Category 2 or higher hurricane will be in effect.

In New York State, the coastal counties are the Bronx, Kings (Brooklyn), Queens, New York, Richmond, Nassau, Suffolk, and Westchester. So a Category 2 in any of the coastal counties means you’d better have significant dollars in the bank to handle your deductible.

So again, let’s be thankful Hurricane Irene, in New York State at least, was just a Category 1, and dropped down to a Tropical Storm and eventually a Tropical Cyclone. Based on the amount of wind-related damage in several states, the devastation could have been far worse.