What Can I Do To Prevent Costly Damage?

The main purpose of insurance is to protect you from catastrophic risks like fires, hail, and wind storms. Insurance is not designed to cover wear and tear or to act like a home maintenance policy. Claims that arise from maintenance issues will likely not be covered by your insurance carrier. The best way to avoid that situation is to maintain your home and lessen the chance of those losses from occurring. We have compiled a list of maintenance tips that could save you from future headaches and prevent major losses!

  1. Prevent fire damage by regularly checking and cleaning the lint trap and exhaust duct in your dryer. Over time, ling can build up. As it heats, it increases the likelihood of a fire.
  2. Inspect & clean chimneys to prevent fire or dangerous fumes from entering your home.
  3. Inspect your roof regularly and repair any damage. Look for lifting shingles, missing shingles or damaged shingles.
  4. Clean gutters and downspouts. Clogged gutters cause water to sit at the foundation of the home. This can lead to seepage which is not covered by your homeowners policy.
  5. Inspect your deck. Replace rotting or damaged wood. Ensure that the support posts are still sturdy and attached properly.
  6. Regularly check on pipes and plumbing fixtures looking for cracks and leaks. If you do undergo a water leak, turning off the water as soon as possible will prevent further damage.
  7. Maintain pest control. You don’t necessarily have to pay for monthly or quarterly visits but the cost of termite and pest damage can be extensive if not detected early.
  8. Seal possibly water entry points. Where water enters, water damages. Sealing off windows, doors etc. with caulk or the like can prevent water from entering your home in unwanted places.

Rule # 4 When Buying Insurance

Many people feel that insurance is a “necessary evil” because their premiums continue to go up every year. They turn in small claims but have to pay a deductible. Once they pay the deductible the insurance portion is minimal. So why bother?

Rule # 4- Sometimes a small loss is worth taking. 

This rule appears to be counter intuitive. A loss, no matter what the size, is unpleasant. It seems that common sense would say that no loss, no matter how small, is acceptable, if instead it could be paid by an insurance company. But you have to understand that insurance is designed to protect against catastrophes. It is not designed to be a maintenance policy. You are better off paying small frequent  losses out of your pocket. If you increase your deductible, you can help yourself in a couple of ways. First, it will decrease your premiums. Secondly, by turning in less small claims, your cost of insurance will be reduced over the long run. The summation of this rule is that insurance is most effective when it is used to protect against large unexpected losses.

Rule # 3 When Buying Insurance

The purchase of insurance is to protect you from catastrophic loss but you also want to protect you and your family in the most economical manner possible.

Rule # 3- Don’t Risk A Lot For A Little

Sometimes, when you do your risk evaluation, the potential loss is big, but the cost of insuring against it is cost prohibitive. Take Long Term Care insurance; the potential cost of nursing care is very large, but if you have health problems and are over 75 years old, then the cost of insurance is probably too expensive. But, there are many circumstances where there is potential for a very large loss, but the cost to cover it is minimal. An Umbrella policy, for instance, provides catastrophic liability protection. A $1,000,000 policy might cost a couple hundred dollars a year. (You can get a much higher limit of Umbrella coverage if needed.) In essence, the third rule states that there should be a reasonable relationship between the risk of the loss that is transferred to the insurance company and the cost involved in transferring the risk.

Rule # 2 When Buying Insurance

The purchase of insurance does not reduce the chance that you will incur a loss, but it does reduce the financial risk associated with the loss. You simply cannot go out and spend a budgeted amount for insurance in a very haphazard and nonchalant manner, and expect to be fully protected.

Rule # 2- Consider The Odds

Obviously, when thinking about what risk you want to guard against, you will consider how likely the loss is to occur. But, just because the odds are relatively small, don’t forget rule number one. Considering the odds doesn’t mean you automatically purchase the insurance. Take Long Term Care insurance for instance- even though the odds are greater than 50% that you will need nursing care, if your assets are below a certain level, it would not be a wise purchase. Flood insurance is one type of insurance that many people avoid, even though the potential for loss is huge. If you live on high ground, you may decide not to purchase flood insurance because the risk of a flash flood is so small. So in considering whether to transfer the risk to an insurance company or retain the risk personally, consider both the odds of a loss occurring, and the odds of how bad that potential loss will be.

Rule # 1 When Buying Insurance

For many people, the purchase of insurance is a “necessary evil”. It is something they know they need, but they don’t really want to think about it and they really don’t want to spend “too much” money on it. This leads to the all too common problem of spending more than enough for insurance and still not getting proper coverage. Insurance and Risk Management is not rocket science, but there are a few basic rules to follow in order to get the most “bang for your buck” on insurance purchases.

Rule One- Don’t risk more than you can afford to lose.

This is the first and most important rule. The primary purpose of insurance is to protect you from catastrophic loss. If you are looking to reduce your insurance premiums, don’t do it by reducing or eliminating coverage on an exposure that could financially bankrupt your family if it were to occur. Following this rule would dictate purchasing enough liability protection to cover your assets in the event of a lawsuit and having enough life insurance to take care of your family in the event of the breadwinners untimely passing. Disability and Long Term Care insurance are two other types of insurance that could help you deal with a very severe hardship. However, Disability and Long Term Care, along with Life insurance are forms not everybody will need. Before purchasing these lines of insurance, check with your trusted agent, as to whether, in your particular financial situation, you need a certain type of insurance. Beware of any agent that always touts a particular type of insurance without first questioning you about your own financial situation.

What Liability Limits Should I Carry on My Homeowners Policy?

When you begin reading your insurance declarations page you may come across the phrase “Limits of Liability” listed at the top of the page. While this is not incorrect to call all coverages on an insurance policy limits of liability, this post is referring specifically to the Personal Liability listed on a homeowner’s policy. If you are wanting more information on the property coverage provided by your homeowners then you can find that here: https://www.bradshawweil.com/blog/a-basic-guide-to-your-homeowners-insurance/.

By definition Coverage E- Personal Liability covers 2 areas:

Bodily Injury- bodily harm, sickness, or disease, including required care, loss of services, and death

Property Damage- Physical injury to or destruction of tangible property, including loss of use.

This coverage applies to bodily injury or property damage that arises out of the insured’s personal activities that occur anywhere. The same coverage also applies at the insured location. This coverage does not include liability for any business activities the insured is involved in, no matter the location.

In order for a claimant to collect a payment from an insured’s Coverage E- Personal Liability they must be able to prove the insured negligent. Was a handrail loose that the insured should have had fixed? Is the tree limb hanging over the driveway dead and should have been removed? In the event that the insured was doing everything a prudent person would have done to maintain their property then the injured party would not have a claim under Personal Liability.

The question then becomes, “Why carry such high limits for Personal Liability if I am maintaining my home as a prudent person would?” The answer has multiple parts. First and foremost, Personal Liability Coverage also states that the insurance company will provide a defense for the insured at the insurer’s expense even when the charges are groundless.  Legal costs are high. Enough Said. Secondly, you cannot limit or know what someone could sue you for. In the event that they do sue you and win, you will need protection from your insurance policy.

Personal Liability is usually sold in limits of $100,000, $300,000 or $500,000. Bradshaw & Weil, Inc. strongly recommends at least $300,000 for most cases. You should consider your assets and net worth when deciding on the limit you purchase. You should also consider if you have additional liability in place in the form of an umbrella policy.

What Is Loss of Use or Additional Expenses?

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!

 

Why Pay More for Replacement Cost Insurance?

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.

Why Is My Home Insurance Value So High?

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.

What Qualifies as a “Home-Based Business”?

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