Homeowners Q & A

[Q] How much insurance should I carry on my house?

[A] You should insure your house for the full amount required to rebuild it in the event of a total loss. No more and no less. If you over insure your dwelling, you will only collect the amount required to replace it. Remember that the value of the land is never figured into the replacement cost of the dwelling. If you under insure your dwelling, you may not collect the full amount needed to repair damage sustained from a partial loss. In order to eliminate any deduction for depreciation, you must insure the house to its” full replacement cost rather than actual or market value amount. We can assist you in determining the replacement cost.

[Q] Does my homeowners policy cover any damage from flooding?

[A] No coverage for flooding, seepage or backup from sewers and drains is covered by the standard homeowner’s policy. Some limited protection from sump pump backup or failure is offered by many companies for an additional premium. There is usually a $2500 maximum limit for damages. We recommend you consider the value of flood insurance.

[Q] Can I add flood insurance to my homeowner’s policy? When do I need it?

[A] No. Flood insurance is only underwritten through FEMA and there are strict limitations on what types of dwelling and personal property is covered on a Flood policy. Generally, only property normally located in a basement level such as a furnace, hot water tank, washer and dryer is covered. Most other personal property beneath the first floor would be excluded. You would be required to purchase flood insurance if you carry a mortgage and the dwelling is located in designated “Flood zones” “A” or “V”. Your zone is predicated on the base flood elevation of the first floor as well as the annual risk of flooding over the life of a 30 year mortgage. Base flood elevation is established by an engineering survey.

[Q] Is my personal property covered for replacement cost? What about my house?

[A] Your furniture and personal property is not generally covered for its replacement value unless you purchase an endorsement to the homeowners policy which enhances the coverage. Without this endorsement you would receive “actual cash value” at the time of loss which is calculated as replacement cost minus depreciation. This endorsement is one of the best additions available to improve your policy and we recommend you consider the value it provides. As long as you insure your house to at least 90% of the calculated replacement cost, standard policies will provide full coverage for the cost of most repairs.

[Q] What is meant by a special “named storm or wind deductible”? How is it applied?

[A] If your policy carries a special “named storm deductible” any damage caused by a storm which has been specifically named by the National Hurricane Center (NOAA) will be subject to that special deductible instead of the regular “all perils” policy deductible as shown on your policy. The special deductible is determined as a percentage of the coverage “A” amount carried on the dwelling. If the policy carries a special wind deductible, any loss caused by the “peril of wind” would be subject to that deductible in lieu of the regular “all perils” deductible regardless as to whether or not the storm was given an official name.

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