What Can I Do To Make Sure I Have Sufficient Insurance Coverage?
Make Sure You Have Sufficient Insurance Coverage
So often, we rely upon our insurance brokers to tell us how much insurance we need. It is critical that you ensure that your agent has secured sufficient coverage for your personal property. If you have jewelry or art, have it appraised and make sure your agent has a copy of the appraisals so that you are properly protected. Put yourself in the shoes of an insurance company/adjuster: If you were the insurance company and a claim for personal property damage was made, you would expect to have the proper evidence supporting such a claim.
There are many examples that we can illustrate for you. However, some examples include:
- Ensure that your insurance policy is a “Replacement Cost Value” or “RCV” policy, which pays full replacement value for property damage destroyed by a covered event, instead of “Actual Cash Value” or “ACV” policies that only pay the depreciated value of the destroyed item. For example, if your roof replacement would cost $50,000, and it has a 10-year life span and the roof is destroyed in year 9, your ACV policy may only pay $5,000-$10,000 instead of the full replacement cost of $50,000.
- Ensure you have sufficient coverage for payment of expenses for hotels and other places you are forced to live in during repairs. This is often referred to as “Additional Living Expenses” (sometimes referred to by the acronym “A.L.E.”) or “Loss of Use” coverage. This kind of coverage provides payments to you in the event that you have to move to a hotel or otherwise incur expenses living outside your home while it is repaired. You may also wish to have other “loss of income” coverage in place, including loss of rental income for a residential or commercial property.
- Make sure your agent has fully explained the “deductibles” (how much you have to really pay before the insurance company starts paying) because many times there are exceptions to the application of the deductible where you can get paid without satisfying a typical deductible. Additionally, in Association or Commercial claims, there may be claims by the insurance company that there are multiple deductibles. There are certain laws prohibiting the application of multiple deductibles in some cases, and in some cases, there are exceptions to the application of the deductibles.
- Confirm in writing with your agent and insurance company if specific representations are made to induce you to purchase the insurance policy (such as that a specific item will be covered at a certain amount, or to have an explanation in writing why a certain coverage is not needed).
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