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Common "What If" Questions for Home Insurance

Common

The Answers to the Most Common “What If” Questions we get in Insurance.

 

I know many people think that insurance is a dull industry. At times when consumed by paperwork, I think the same thing. But the truth is insurance revolves around drama. Every day our agents are dealing with weird situations and scenarios, trying to protect and advocate all the “what if” situations that come our way. This month we’ll explore the most common “what if” scenarios that we get asked. We’ll focus on home this month and auto and business next month.

The simplest answer to all of these is “its complicated”. There are short and long answers to these, and the preface is basically we can’t answer what if questions because every situation is different, the policy coverage could be different even within the same carrier on the same policy type, and there are other factors that come into consideration. So, in general, what my answers would be “here’s how this type of situation might be resolved”.

What if…

1. A hurricane hits. How much will I pay…

Check your policy for a “wind deductible”. It’s often a percentage, meaning a percentage of the Dwelling coverage (aka Coverage A. In reality, you probably won’t write a check, instead the insurance company would just deduct $3000 from the claim payout amount.

Some policies have separate “Named Storm” and “Wind” deductibles. These deductibles distinguish between hurricane/tropical storms and any other wind event, such as off-season storms or straight-line wind which has been occurring more in recent years.

2. What if my neighbor’s insurance premium goes down…

The price is dependent on a lot more than just location, your personal insurance claim’s history at this or any location may play a role, as well as coverage amounts/options selected, personal credit, differences in construction or design.

If your neighbor’s insurance goes down and you have the same insurance company, there is a chance yours may go down at renewal as well. Rates are applied very broadly over geographic areas, often by county.

3. My house loses power and all my food spoils…

Food spoilage is an optional coverage on many home insurance policies with limits usually $500 or less. The cause of the power-outage will be the determining factor in getting coverage or not, it usually needs to be a power-outage off-property.

4. I have to stay in a hotel during a remodel…

This coverage is triggered by an insured event causing your insured property to be uninhabitable for a time, which means more than one coverage is coming into effect. There is a limit on the policy for the dollar amount available for this coverage, it is up to you to allocate it between housing and extra expenses such as travel, restaurants and added costs of the inconvenience.

5. My toilet overflows while I’m out of town…

Water damage is becoming more limited on more policies. Your policy may include a maximum coverage limit for this type of damage in the $10,000 range so check the wording. Some policies are completely excluding water damage now.

6. Neighbor’s tree falls on house or car, or a neighbor cuts down a tree that falls onto my shed…

Your car insurance may pay out, but you would likely pay your comprehensive deductible. Depending on the situation, your auto insurance may subrogate against the property insurance for the neighbor.

7. My dog bites someone…

Many home insurance companies offer liability coverage for dog incidents. Typically, the person will see a doctor and send you the bill, which could be turned over to the insurance company. You may pay a deductible but often not.

It depends on the dog bread as some are excluded. There is usually a question on the application when you acquire the insurance asking whether or not you have animals and what type. If you said no but then later got a dog it could be a grey area of coverage.

8. A contractor working at my house injures themselves…

This will likely fall onto the contractor’s workers compensation insurance. It’s important to get proof of this before allowing someone to work on your property because if they don’t have it, it may fall within your medical coverage which is usually limited to $10,000 or less. Some policies may have exclusions for professional workers under medical coverage on your policy.

9. I lose an expensive watch on vacation…

Many home policies offer worldwide coverage for personal items and items like watches could be specifically listed on that policy for coverage. A deductible will likely apply. If the item is not specifically listed on the policy a maximum limit will likely apply, often $1000 or less. Separate jewelry or collectibles can be placed with a stand-alone insurance policy as well for better terms or lower deductibles

10. My rental property is empty for more than three months…

Most policies have a vacancy clause that severely limits coverage for things like vandalism, theft, spoilage, mold, liability, or more if the property is not inhabited for a certain period, often 90 days. A contract with a property manager may allow this to be waived if the property is being periodically inspected, often at disclosed intervals such as weekly. Basically, an inspection restarts the clock.

11. If I start renting out my house…

This requires a completely different type of policy which will likely require the current policy to be cancelled and obtaining a new one which allows for the rentals. If it is a secondary home and you allow friends and family to stay at no charge then you would probably be ok without having to change anything.

12. I rent out my carriage house but not the main house…

The carriage house is usually included with the main dwelling on one policy. If you wish to rent it out it would likely need to be removed from the homeowner’s policy and placed on a separate policy allowing for rentals. If the main house is also used for rentals then you would just want to be sure to disclose the number of families the property as a whole can be rented to at any one time.

13. My car runs into the house…

This is a tough one, there are clauses in many policies about insured vs. insured events. For example, if your wife rear-ends you, there may not be coverage. At worst it could be denied completely, but since most insurance companies don’t want the bad PR, they may still cover it. That would make it two separate claims, one on home and one on auto, with two separate deductibles.

14. Squirrels destroy my roof or bed beds infest my rental property…

Unfortunately, the answer to both of these questions is the same. These scenarios aren’t covered under normal circumstances as they are considered the responsibility of regular maintenance of the owner.

As agents, we’ve experienced all these scenarios. One of the benefits of having an agent with decades of experience is knowing how to answer all these questions. Our agency has been here on the Emerald Coast since the 1980’s so we’ve been through more than forty hurricane seasons and thousands of claims. We’d be happy to put our knowledge to the test if you have any questions about your current policy or potential policy.