“Sorry you don’t have coverage” is not what you want to hear when disaster strikes. Sadly last year about this time – when it seemed to rain every hour of every day – many homeowners were told this as their homes were filling up with water.
The primary reason homes were not covered was they didn’t have flood insurance. Flood insurance protects your home for water damage caused by the sudden accumulation of surface water or mudflow. What most people don’t realize is everyone is in a flood zone. If you are in a high risk flood zone and have a mortgage you must purchase flood insurance. If you are in a low risk flood zone or you don’t have a mortgage, flood insurance is not required however it can be purchased in most communities at a preferred rate.
Another coverage that may have helped some homeowners is sump-pump or water back-up coverage. This is an endorsement that can be added to your homeowner’s insurance for an additional premium. If added it provides coverage for the cost to remove water and for the damage that occurs if water back ups through your sump-pump or drains. Companies differ on what they cover and how much coverage they offer, but this coverage is extremely important especially if your home has a finished or partially finished lower level. (Unfortunately there is no way to insure against seepage.)
Water damage isn’t of course the only disaster that can occur to your home. What if your home is struck by a tornado or you have a fire? Thankfully in either of these cases you are probably covered pretty well provided your home is insured with a quality company. Yet it doesn’t hurt to verify that your policy provides extended or guaranteed replacement cost on your home and replacement cost for your contents.
Extended or guaranteed replacement cost coverage for your home covers the cost to rebuild your home even if the amount needed to rebuild is more than you’re insuring your home for. This may not seem likely but you would be surprised how much it costs to rebuild a home. How much additional coverage you have depends on the insurance company and the type of policy you have. Some companies provide an additional 20% while others offer policies that have no limit – obviously this is preferred if available.
Replacement cost on your contents very simply means you would receive a new recliner if damaged not $50 because that’s all your old recliner was worth at the time it was damaged. Now don’t start thinking this is your opportunity to upgrade from a cloth recliner to the leather you’ve always wanted. If you have the replacement cost coverage you would receive a recliner that is similar in style and quality as the one you lost. Without the additional coverage you would only receive the $50.
Thankfully the flooding that occurred last year was a rare occurrence but it was a reminder that disasters do happen. When it does will you be covered?
These are only a few items you should consider when purchasing homeowner’s insurance. If you would like to know more visit our website www.midwestic.com for answers to frequently asked insurance questions.
