Your homeowner’s insurance policy includes Coverage D- Loss of Use. Some insurance carriers call this Additional Expenses but the same coverage rules apply. If you suffer a covered property loss that makes your residence uninhabitable then your policy will provide reimbursement for the expenses you incurred relating to maintaining your normal standard of living. Some examples we have seen of this were expenses for apartment/hotel rental, laundromat and food. The key word is uninhabitable. If you have covered damage to your kitchen but all your appliances are still in working order and your kitchen is still accessible then you would not be eligible for reimbursement of food expenses under loss of use coverage.
Let’s look at a different scenario. If you own a home that you rent to others then you might see Fair Rental Value in the place of Loss Of Use on the insured properties declarations page. Damage that makes the rental home you own uninhabitable may not directly affect you. Your home is still livable. Your appliances are still working. You are still able to take care of your daily needs; however, you have lost the rent income from your rental home when the tenants had to find another place to live during repairs.
Another place you will find coverage for loss of use is on your auto policy. On the auto policy loss of use falls under the coverage named Transportation Expense. You might also see this coverage labeled Rental Reimbursement. The reason it is considered loss of use is because this coverage only comes into play when your vehicle is “out of use” due to a covered claim. You cannot collect rental reimbursement for a vehicle you rented to take a trip in simply because you didn’t want to put mileage on your vehicle. You can collect rental reimbursement when you had to rent a car while your vehicle was in the shop for 2 weeks after you were involved in a collision.
Contact your agent if you have more questions about loss of use coverage and when it applies!
We are asked all the time, “What deductible should I carry on my auto policy?” The standard auto deductibles we see at Bradshaw & Weil, Inc. in Paducah, KY are $500 or $1000. When choosing your deductible you want to consider the value of your vehicle and the impact of claims on your premium. Insurance is designed to protect you from catastrophic loss not as a maintenance policy. Turning in small claims all the time will inevitably impact your premium and hurt you in the long run. Higher deductibles not only save you a little bit of premium but they also discourage you from turning in small claims.
You also need to remember that insurance settlements for vehicles are typically done at an Actual Cash Value basis (unless your policy specifies Agreed Value or Replacement Cost loss settlement. These types of settlements for auto policies are not standard.) It is a good idea to check a third party source to determine if the value of your car is worth paying premium for comprehensive and collision coverage. If your vehicle is only worth $1,000 and you carry a $500 deductible then the most you could receive from insurance at a time of total loss would be $500. Would that be worth paying $200 or more every 6 months to include that coverage on your policy?
One major myth about insurance is that replacement cost policies are much more expensive than a market value insurance policy. This is not always true. In many cases, we have found that replacement cost companies offer a very competitive premium for a much more valuable policy, especially when considering the companies we work with at Bradshaw & Weil, Inc. We have experience with both market value and replacement cost companies in Paducah, KY.
But why pay even $1 more if you don’t intend to rebuild your home? When insurance is advertised you are often hearing about “total losses.” What most people don’t consider is that a partial loss is really much more likely to happen. Insurance is not only designed to cover the materials used to repair your home but also to reimburse for expenses that were used to prevent further loss. Debris removal from water damage or fire damage can get very expensive very quickly. Even when only a small portion of your home was damaged. A contractor hired to do reconstructive work after a claim is working on a much tighter time frame. He doesn’t have months to negotiate prices. He also isn’t working with a fresh and clean building plan. A specialist may have to be brought in to figure out how to piece things back together. These are all expenses your insurance is designed to help with after a covered loss.
Even though you don’t intend to rebuild after a total loss, you very likely will need the extra thousands of dollars provided by a replacement cost policy in the event of a partial loss. Another issue you might get into with a market value policy is having a partial loss settled at market value. In this situation, being reimbursed on an actual cash value or market value basis might not be enough to cover the full replacement cost of the damage. We are looking at the value your insurance policy provides not just the dollar signs listed on the declarations page.
Contact Bradshaw & Weil, Inc. of Paducah, KY if you have more questions about what type of policy best suits your needs.
At Bradshaw & Weil, Inc. in Paducah, KY, we write insurance policies on a replacement cost basis. Meaning, they are designed to completely rebuild your home as it were if you had a total loss. We work with local homeowners reviewing construction materials and special features of their home to determine how much it would cost to rebuild their home completely. When you are going through the home buying process you will be talking with Realtor’s and Mortgage Lenders who will refer to your home value at a much lower limit. This is the market value of your home or what you paid for your home. We have found that market value limits not only significantly reduce the coverage you have on your home but also that the premium with companies who write at market value is often the same as or only slightly less than a replacement cost policy with a preferred company.
Contact Bradshaw & Weil, Inc. to ensure you have the right type of policy for your needs.
Your homeowner’s policy is designed to only provide coverage for personal exposures. That means it is not extended to offer coverage for any event that arises from a business exposure. Many individuals have home-based businesses and don’t even realize it. Are you part of a direct sales company like Mary-Kay? Do you have a hobby that you are particularly skilled in? So skilled that people will buy your product? Do you own a small business and work from a home office where your files are stored? If you can answer yes to any of those questions, then you are involved in a home-based business.
When you leave your home to hold a product party at a friend’s house, your homeowner’s liability will not follow you. If you store inventory in your basement it would not technically be considered personal property in the event of a home loss. The client files and office equipment you keep in your home office would also not be considered personal property in the event of a homeowners loss.
If you are concerned about whether or not your homeowner’s policy would provide coverage for a certain risk then you should contact your agent right away. Business owner policies are available for a very reasonable price when considering the alternative debt you could be in from liability or property losses.
Getting The Right Insurance For Your Home-Based Business