We have all hired contractors to do work around our homes, some jobs big, some small. Did you ever think to ask them if they have insurance? Did you ever ask for proof of that insurance? It is second nature for contractors to provide proof of insurance for commercial work to general contractors or business owners, but for our personal homes most people never ask. So, what is the risk?
What if the contractor does damage to your home such as starts a fire? He is responsible but does he have insurance to pay for that damage? What if the contractor had an employee or day laborer to help him on the job and that person was injured. If the contractor does not have workers compensation coverage, that employee is looking to get reimbursed by someone, most likely from you as the property owner.
As a homeowner, you should always ask for proof of insurance coverage to protect you. The terminology to use to ask the contactor to provide you with a Certificate of Insurance, usually provided by his insurance agent or insurance company.
While utilizing a licensed, insured contractor usually cost more, you are properly protected. Keep in mind, if a contractor has no license, has no insurance and hires cheap unqualified help, what do you think the chances are that the job or work is going to be done to your total satisfaction? When something goes wrong, you are the one holding the bag.
Did you know that one of the most damaging claims you can have on a homeowners policy, is also preventable?
Water damages to the interior of your home is likely the homeowner insurance claim you will experience. Statistics show that there is almost a 70% chance you will experience some type of water damage claim, large or small. One statistic, which is extraordinary, is that the EPA estimates that over 25% of homeowners have a water leak to which they are unaware. Scary isn’t it?
Water damage claims can make you home unlivable and in the long run can also bring on hidden mold damage. Mold damage is usually not covered under a homeowner’s insurance policy. There are steps you can take to prevent and minimize the chances for a water damage claim coming from leaking or burst pipes. Many water damage claims occur when your home is unoccupied for a period of time.
Here are some tips for both cold weather and warm weather areas:
- Insulate your pipes which are most exposed to cold temps
- Turn off water supply to your washing machine, icemaker, toilets and other bathroom fixtures
- Install a leak detection system – there are many in the market today. These devices will automatically turn off the water supply should a leak be recognized, perfect for secondary or vacation homes
- If you have a sump pump test it throughout the year
- Turn off water to the house and drain pipes if you will be gone for an extend period of time such as months
- Check you hose fittings to your washer – metal fittings are preferred
- Shut off supply line to any water softener
- Replace the water heater per mfg recommendations – may leaks occur due to faulty water heaters
Yes, water damage claims from pipes or internal fixtures are covered by homeowner’s insurance, but put up with the inconvenience and the indirect costs associated with a water damage claim. Any ounce of prevention is always preferred.
There are a number of insurance carriers who advertise on TV, but what exactly is there real message? After all, these ads cost millions, so they are all looking for a return on investment.
Call me a skeptic but here is the formula as I see it, premiums – claims – operating costs = profit.
So, I promise cheaper premiums, my operating costs include millions in advertising and my shareholders want a profit. The only cost variable remaining is claims. I wonder after 15 minutes of saving 15 percent while being by their side if I really am in good hands?
Direct writers of insurance are the top spenders of advertising dollars on TV and other media. They will sell you what you ask for, but maybe not what you need. Can you imagine that philosophy if children were raised that way?
Independent insurance agents take the time to address you total risk and financial exposure. More options, more ideas, for their clients.
How to maximize your recovery and ensure a smooth claim process:
- Take photos of the damage
- Protect your property from further damage – this may entail some temporary repairs
- Do not allow the disposal of any damaged property until the claim is settled
- You, the insured, control who can do temp repairs or mitigate cleaning. You have the right to approve anyone who works on your property
- Can you still occupy the premises? If not make arrangements for temporary accommodations
- List and inventory the damaged items – remember it is your responsibility to prove your claim
- Identify items damaged by Make or Model # if available – if possible use an Excel spreadsheet
- Pricing of the items can be found on the internet – remember we want the current replacement cost value of the item
- Remember you are paid on the replacement cost value only if you replace the item, otherwise you only receive the depreciated actual cash value
- Document every phone call, email or contact with the insurance company and adjuster
- Do not sign any documents that state it is final payment of the claim
- Consider hiring a public adjuster if the claim is too large or complicated. The public adjuster represents your interests
- You have the right to request a new adjuster or any expert the insurance carrier sends out if you are not comfortable with the level of expertise
- Always be in attendance when the adjuster visits
- Always get permissions granted by the insurance adjuster in writing
- Request a copy of the adjuster’s report to the insurance company
- Always insist on the level of quality and tradesmen who built the house or certain parts of it. You are not required to accept lesser quality.
- If you feel you are getting the runaround, seek out the department of insurance and or local attorney who specializes in property insurance claims
Did you know that if a person knew the date of their death, it drives up the possibility that they would buy life insurance by over 60%? If people knew there was a disaster coming of some sort, they all want to run out and buy insurance. Why is that? Maybe not as simple as so they can cash in on the event.
Most individuals who don’t buy insurance or put it off, just do not believe an unfortunate event is going to happen to them. The problem with unfortunate events, we never know when they are going to occur. Most people are terrible planners when it comes to events which have a low probability of causing a loss. They just don’t think it will happen to them.
There have been studies that show insurance buyers will most likely look to insure against common perils or risks which usually cause small losses, instead of large catastrophic risks which have a very low chance of occurring. In essence, people buy based on the chance they can cash in on the insurance, rather than the principle of protecting against catastrophic loss.
If a consumer considers buying insurance, the same way they consider gambling, there is a good chance they will not purchase the insurance. These individuals are looking to invest a small amount of money with the hopes of a large payout. We have all heard the buyer state “I paid in thousands of dollars over so many years and never collected a dime because I had no claims.” In retrospect that is a good thing, since you did not suffer the direct and indirect losses a claim can cause.
What do you think is one of the biggest mistakes that homeowners make? Not keeping a home inventory! You might say “I’ve never made a home inventory!” or “I don’t know anyone who has a list of all of their belongings!” Well, we are here to tell you that a lack of home inventory could cost you a large amount of money.
This might be hard to do, but picture a fire destroying your entire home. You call your insurance company to file a claim on your Hilton Head homeowners insurance and the adjustor asks you for your list of personal property in the home. If you haven’t made your home inventory list, you are going to have a difficult time reconstructing from memory a list of every single item that you own. This, in turn, means that you will not receive reimbursement for everything to which you are entitled. A home inventory list could also speed up the process of your claim and get you back on your feet quicker.
At Beacon Insurance Group, we highly suggest that our clients create a home inventory. Use a smartphone to take pictures or videos and email them to yourself and someone else so that they can be kept “on file.” There are also several applications that you can add that will help you create the home inventory and keep it organized for you. We have used “Know Your Stuff” from the Insurance Information Institute and you can organize items by room, add photos, add price of the items and insert seriel/model numbers. With this app, you also get free online storage so you can access your inventory anywhere, anytime.
A home inventory is your only backup in a time of loss, so prepare yourself now so you don’t have to deal with the hardships later.
Actual Cash Value is a method of valuation that recognizes the reduction of value of property as it gets older and becomes subject to wear and tear. Actual Cash Value is calculated by taking the current replacement cost and subtracting depreciation.
Replacement cost is the cost to replace damaged property with like kind and quality at today’s price, without any deduction for depreciation. Following a loss, it may provide the insured a settlement in excess of the property’s actual cash value.
Here is a quick claim scenario: You have a fire in your home and you made a claim to your insurance company and your deductible has been paid. You are now replacing your damaged furnishings, including the $1000 sofa your purchased 5 years ago. If you have actual cash value, the company might give you $500 because that is the actual cost of that particular sofa today. If you have replacement cost coverage, the company will pay $1,200 because that is what it would cost to buy a similar sofa today.
What kind of coverage do you have on your South Carolina Home Insurance?
Due to the excessive use of heating appliances and decorative lights during the months of December and January, electrical fires are very serious problems. In fact, the US Fire Administration states that there are 28,600 electrical fires a year, causing $1.1 billion in property damage and loss.
Here are 5 ways to prevent electrical fires not only during those months, but throughout the year.
- Keep an eye on old, outdated appliances and faulty electrical outlets. If you notice a worn or frayed cord, replace it! Floors, curtains, and rugs can catch on fire due to the heat it projects. Old receptacles and switches could also ignite.
- Replace that outdated wiring. If a home is over 20 years old, increased amounts of electrical appliances will most likely be too difficult to handle. Homes built back then weren’t made for all the technological advancements we have today!
- Avoid the misusage of extension cords. Try plugging appliances directly into and outlet and not into an extension cord for an extended period of time. Use them only as a temporary measure.
- Space Heaters! Since they are portable, they are more than likely put too close to materials that can easily catch fire such as curtains, clothing, beds, couches, rugs and chairs. Try using the radiator-type rather than space heaters with coils, they are less likely to ignite.
- Watch the wattage you are using for certain lamps and light fixtures. Installing a bulb with a wattage that is too high can easily cause electrical fires. Also keep cloth or paper away from the lampshade.
Many South Carolina home insurance carriers request electrical updates on older homes. Unsure how susceptible your home is to an electrical fire? It wouldn’t hurt to have an electrician over to evaluate your electric.
Home buying is less than overwhelming – but we are here to help, at least when it has to do with South Carolina home insurance. If you are searching for a home and looking to keep your insurance premium affordable we have a suggestion: before purchasing a home, determine if the home has any construction enhancements which make your home eligible for wind mitigation credits.
If you are coming from an area that does not have coastal exposure, you probably have not heard of wind mitigation, so here is a quick run down:
What is wind mitigation? Basically, wind mitigation means the steps that are taken to make the home more resistant to hurricane and high-wind damage. A strong home has the necessary items to protect for this kind of damage. Fewer damages result in lower or fewer insurance claims and will ultimately reduce the insurance premium.
How do I know if a home has wind mitigation? You can ask your real estate agent if the home has any wind mitigation features or if there has been a wind mitigation inspection completed by the previous homeowner. If you are really interested in the home, you could contact a licensed contractor and ask them to perform a wind mitigation inspection for a fee.
What should you look for in terms of wind mitigation?
- Exterior wall opening protection: hurricane-rated window shutters and impact resistant windows
- Exterior doors: hurricane-rated garage door rather than a standard garage door
- Strength of your roof deck attachment: type of nails and/or longer nails that will help prevent shingle and roof plywood from being blown off in a hurricane
- Roof Cover: Having thicker and stronger hurricane-resistant roof shingles, attached with properly sized and properly applied roofing nails to reduce the chance of your roof shingles blowing off in a hurricane. A newer roof is also helpful!
- Braced gable-ends in the roof framing: Usually done inside the attic to decrease chances that your roof will collapse under hurricane wind
- Reinforcement of roof-to-wall connection: metal tie-down straps that attach roof rafters to wall studs to decrease chances that all or a portion of your roof will lift off of your house during a hurricane
Not only do these steps help you gain a lower insurance premium, but they also help in other areas. South Carolina Department of Insurance states that the Homeowners who select to replace their windows with impact resistance systems and hurricane shutters have reported savings up to 29% in their energy costs.
As we slip into the fall months where we all enjoy the scent of fall candles burning in our homes and the holidays where we use decorative lights, it brings up the topic of fire safety. Whether the fire is from leaving that great smelling candle unattended or from a short in an electrical outlet that your Christmas lights are plugged into, this is the season when house fires increase. it is important that all household members are educated in fire prevention and safety.
As adults, we have been reminded of these things our whole lives, which is why we are responsible for passing along the information and educating the children around us. Here are a few topics you can discuss with others:
- Smoke alarms should be installed throughout the home including the kitchen, basement, and every bedroom and outside sleeping area.
- Never remove or disable smoke alarms.
- Test smoke alarms at least once per month by pushing the test button.
- Interconnect smoke alarms so if one sounds, they all do.
- If smoke alarms don’t work, replace the correct size battery or the entire smoke alarm unit.
- Don’t play with fire.
- Don’t leave cooking items or clothing irons unattended.
- Place a portable ladder in each second floor room.
- Have an updated, emergency first aid kit.
- Develop a family plan and conduct a home “Fire Drill” at least twice a year.
- Check fire extinguishers for expiration and replace as needed.
- Handle gasoline or propane-powered equipment cautiously.
- Install carbon monoxide detectors.
Thank you to Paul Davis Restoration & Remodeling for these great tips!