There are three storms in the Atlantic as of today.  (Take a look for your self: http://www.stormpulse.com) The first one, Danielle, looks as if it will turn North before it hits the Eastern seaboard.  However, there are more coming.  Now may be a good time to review your homeowners insurance.  Most people get a contract at closing and put it in a drawer until something bad happens.  Then, ten years later when they suffer a loss and they haven’t reviewed their coverage they are stunned to learn that they have gaps in their coverage.  Of course it’s all the insurance company’s fault, or perhaps the agent, or maybe it was the realtor or even the loan officer.  In the end, if you have a loss that isn’t covered and you haven’t reviewed your coverage, it doesn’t matter whose fault you think it is.  You are ultimately responsible for the coverage on your policy! Let me say it again.  You, the homeowner, are responsible for the coverage on your policy.  So, if you don’t have the right coverage, you are self insuring.

What is the right coverage?  Well, as you may have guessed, that depends on the risk.  In order for an agent to make good,  professional recommendations regarding the coverage you have on your home, he or she must talk with you, ask some questions and probably take a look at your property.  It mystifies me how companies can sell homeowners insurance over the internet.  Would you trust a policy you purchased on-line?  To know that you are being covered correctly, you agent needs to assess the reconstruction cost of your home and the replacement of your contents.  Reconstruction costs are more than the cost to build your house as if it were new.  Reconstruction requires the hiring of a contractor and the purchase of materials specifically for rebuilding your house.  When your house was new, it is likely that there was a builder on site who was building your whole neighborhood.  That builder had the advantage of having all the subcontractors already under contract and all the materials purchased in bulk from the manufacturers.  So, just making sure your home is insured to the right value can be tricky and needs to be left to professionals.
Then, you have all those pesky endorsements.  Do you know which endorsements are on your policy and which were not included?  If you were trying to get the lowest price, as many consumers are, then it may be that you did not get coverage for sewer and water back up, or law and ordinance coverage.  You may not even have replacement cost on your dwelling much less your contents.  Not to mention flood and earthquake coverage, which hardly anyone buys unless a bank forces them too.
Do yourself a favor and get a second opinion on your homewoners insurance today.  The storms are coming and if a storm travels up the bay, we could be facing a significant disaster in the aftermath.  Your homeowners insurance policy coverage will determine your ability to rebuild following a storm.  Don’t wait until after you have a loss to find out what kind of coverage you have.

Yesterday our area was rocked with 70mph winds, 1 and a half inches of rain and lightning, all within about 2 hours in the afternoon.  A house in my neighborhood was struck by lightning and the entire roof and much of the top floor were severely damaged.  Fortunately, no one was injured.  Because the homeowner was home when the storm struck he was able to call 911 right away and the fire department did a terrific job of limiting the damage.  The home could have easily been a total loss if the call to the fire department had come 5 minutes later. Not to mention the possibility of the fire spreading to adjacent homes.   Living in Fairfax County has the great advantage of having one of the best fire departments in the nation.  They responded with 7 trucks and 3 other emergency vehicles.  There must have been 40 fire fighters on the scene.  They had the fire out within minutes of their arrival and they stayed to make sure there were no hot spots to reignite the home.  Our whole neighborhood was impressed with the professionalism of the firefighters and we are all grateful that they were able to contain the fire and get it extinguished so quickly.

Once the fire fighters leave, the insurance company sends in their adjusters and the job of rebuilding begins.  Most companies have employee adjusters whose job is to indemnify you to your condition prior to the loss.  However, not all companies have professional adjusters.  Some use independent adjusters which can complicate and delay claims settlements.  This is an important difference between insurance companies that most policy holders don’t understand until they suffer a loss. 

Typically, homes are not depreciated in value when they are rebuilt, but that is not always the case.  Personal property however may be depreciated unless you actually replace the items.  It is important to be sure that your policy has replacement cost coverage for both the “Dwelling” and the “Contents”.  Never assume that you have the right coverage just because you purchased your policy from a name brand insurer.  Sometimes there are mis-communications with agents and companies or even agents who do not understand the contracts.  Coverage issues need to be resolved prior to a loss.  Once you file a claim, whatever coverage is on your policy is all you’ve got.  So, be sure that you understand your policy.  The best way to know if you have a quality policy is to talk with a professional insurance agent.

An often overlooked coverage on homeowners insurance is the “Additional Living Expense” coverage.  This coverage will pay for you to stay in a temporary home until your home is repaired.  Some policies have very limited coverage.  Typically you will see coverage limits equal to or less than 50% of the dwelling limit or a limit defined by a period of time.  Often, it can take a year or longer to repair a badly damaged home.  If your “ALE” coverage runs out, you will be moving in with friends, family or paying a hefty hotel bill out of your pocket.  Be sure that your Additional Living Expense coverage is not limited by time and had a coverage limit of at least 75% of your dwelling coverage.  Of course, the more the better.  Nationwide has one of the most comprehensive contracts and provides 100% of the dwelling coverage.  This has come in handy for many of our clients who have suffered large losses. 

Knowing what is and what is not covered on your homeowners insurance is important.  Hopefully, you will never need to find out how good your policy is.  But, if you are faced with a large loss, like my neighbor, I hope you have a good policy.  You will know you policy is good if you also have a good agent and a good company that stands behind their policies.

I posted this article earlier this year.  With the recent earthquake in our area, I felt it would be worth re-publishing.  The core message is that earthquakes happen and when they do they damage property.  Most people who own homes do not carry earthquake coverage.  It can be added to your homeowners insurance for 10%-20% of your premium.  For most people, the actual cost is less than $20 per month.  It’s a no brainer!  Just buy it.  You will never regret having this coverage.

Have you noticed that every week there seems to be another earthquake or volcanic eruption occurring somewhere in the world? It seems that the earth movements are becoming more frequent and scientists do not have answers beyond explaining the obvious after the fact. There is no way to predict where or when the next quake will happen. Before the quake in Haiti, it had been more than a hundred years since the last quake. Did you know that about 130 years ago Charleston SC, suffered a major quake that caused catastrophic damage to the city? The point is that no one can predict whether we are safe from an earthquake and the prudent thing to do is to insure against the possibility. So, are you covered?

The short answer is probably not! Most homeowner insurers offer earthquake coverage as an option on their policies. However, most people on the East Coast don’t think the coverage is important or that it is likely that they will experience a loss. Well, it is true that serious earthquakes occur relatively infrequently around here, but when they do, it doesn’t take much to crack a foundation and cause a home to become condemned. Most people don’t realize that their is a fault line that runs just West of Sterling that extends from South Carolina all the way up into Pennsylvania. There are earthquakes along this fault almost every week, but they are relatively small so we usually don’t feel them. But, from time to time a quake will hit and shift the ground just enough to cause structural damage to a building or a home. Unless the property is covered by an earthquake endorsement, that property owner will have to dig deep into their pockets to pay for the repairs. The cost of the endorsement is usually about $100-$200 per year. The prices are relatively low for us because we have not had a major quake recently. Now is the time to buy the coverage. If we have a quake and you do not have coverage you can expect the rates to go up significantly. If we have a quake and you are not covered you will be at the mercy of financial aid from the government to get your home repaired. Also, because you don’t have the endorsement, your family may be forced into temporary shelters while your home is being repaired. (Think about the aftermath of Hurricane Katrina)

Do the smart thing and get this coverage in force now. Don’t try to save money in cases where the stakes are that high. For less than a $10 or $20 a month you can ensure that your home and your family will be cared for if we are hit with an earthquake.

I was driving through town and noticed that many residents are opening up their yards as parking lots during the Herndon Festival.  On the surface it seems like a great idea for picking up a few extra bucks, but what if someone’s car is damaged while it is parked on your property?  What if someone damages your house without your knowledge?   Or, what if a pedestrian is hit by car on your property?  You will find that your homeowners insurance will very quickly deny any claims resulting from this kind of business run from a private residence.  You will probably also find that your policy is cancelled soon after you file the claim. 

Most people don’t realize that as soon as they start charging people for a service or a product they are in business.  Chances are, they will need some kind of business insurance to provide coverage if something goes wrong.  There are exceptions for incidental activities, but if you are going to hold yourself out as a business you had better have your insurance lined up or you could very will find yourself facing a law suit and no insurance to back you up.  Legal fees alone can easily run into the thousands of dollars and if you are found to be responsible for someone’s serious injury, you could be paying them for the rest of your life.

The short take away message is that if you are going to charge money for a product or service, especially if you are going to use your private residence or vehicle, check with your insurance agent to see if you have coverage.  It may just save you from a legal nightmare that could change your life.

Many homeowners use the warm months of the year to work on home improvement projects. Some projects are just a little too big for the average homeowner so we call upon local professionals to help us out.   Most homeowners don’t realize that they need to ask their contractors for proof of insurance before allowing work to begin.  You can ask your contractor to provide you with a Certificate of Insurance which lists you as a certificate holder.  You want to see that the contractor carries General Liability insurance and Workers Compensation coverage.  If the contractor is not insured, any damage he causes to your property, property of others or any injuries which occur could be your responsibility.

Recently, a friend hired a contractor to do some minor repairs in her home.  The contractor was a friend of a friend and came highly recommended.  While performing a repair her dog became excited and ran through the house knocking the contractor down which resulted him cutting his hand.  He required 22 stitches at the local emergency room.  He did not have workers compensation insurance or health insurance so my friend paid for his treatment out of pocket.  I recommended that she contact her homeowners insurance company because if the contractor is unable to work because of the injury she may find herself being served with a law suit claiming damages for lost wages.

Fortunately, this was a relatively minor loss, but it does illustrate how easily a simple temporary business relationship can turn into an unexpected financial burden.  Often, contractors will operate without insurance in order to keep their costs down.  Many times, these same contractors will attempt work that they are not qualified to perform.  The homeowner may think they are getting a great deal on the work but the reality is they may be saving money up front only to be faced with headaches down the road.   

When hiring a contractor make sure that the person you hire has the appropriate qualifications or licenses to perform the work.  Make sure that they have insurance for liability and workers compensation.  Receiving a recommendation from a friend or neighbor should not be the determining factor when you hire someone to work on your property.  To ensure that you are hiring a reputable contractor ask to see their license and insurance information.  Don’t worry, you won’t offend a  good contractor.   The ones who do get upset probably are the ones you really don’t want to have working for you anyway.