Insurance Tidbits:

How Would Your Homeowner Policy Respond to a Total Loss?

Due to the recent firestorms in Southern California, many people have wondered how their homeowner policy would respond to such a catastrophe.   The following outlines some major coverages and endorsements your policy should have.

Dwelling- This covers losses to the main structure of your home.  The limit on your policy should be sufficient to rebuild your home if it were completely destroyed.  Based on the characteristics of your home, your agent will use a cost estimator to determine the proper replacement cost.  If your agent has never inquired about these characteristics, the replacement cost may not be correct. 

Personal Property- This covers losses to your personal belongings.  You should take the time to complete an inventory of your belongings.   Be sure to include everyday items like clothes, shoes, CDs.  Having an inventory will also help you determine if you have sufficient coverage and during the claim process as well. 

Loss of Use- This covers additional expenses you may incur as a result of a covered loss.  For example, the additional cost to cover an apartment while your home was being rebuilt would be covered.

Liability- This covers for bodily injuries to other people or damage to their property if you are found liable. 

In addition to the coverage described above, you should also look to see if your policy has Extended Replacement Cost and Contents Replacement Cost.  Extended Replacement Cost provides additional dwelling coverage over and above the limit on the policy.  This can be valuable during catastrophes where costs for materials and labor rise suddenly due to high demand. 

Contents Replacement Cost provides the opportunity to replace old items with new items.   For example, if you had a 10 year old sofa burn in a fire, the value of the sofa might be only $200.  However, it costs $750 to replace it new.  Without Contents Replacement Cost, you would be entitled to only $200.  With Contents Replacement Cost, you would be entitled to $750 if you bought the new sofa.

Your agent/broker should be offering to review your coverages on an annual basis.  Reviewing and understanding your policy prior to a claim may help prevent a disaster from being worse. 

Jon Gardner, CPCU is an Insurance Agent with Farmers Insurance who offers complimentary insurance evaluations.  His office is located at 27883 Smyth Dr. in Valencia.  He can be reached at (661) 775-9244 or at www.JonGardnerInsurance.com