Insurance Riders: Do I Need One?
Posted on | November 19, 2007 |
By Stephen Hadhazi, our guest insurance blogger, public insurance adjuster, and publisher of DocuDamage.com
You pay your homeowners premiums on time and feel reasonably comfortable that you are well covered should disaster ever strike, right? Wrong. Even if you think you have adequate coverage, you could be drastically underinsured. The typical homeowner’s insurance policy includes the basics that most people need and places limits on the coverage.
The basic policy offered should be considered a starting point, not the final solution. Endorsements (or riders) are important (but often overlooked) tools that modify the insurance policy to better meet your insurance needs. They don’t usually add a significant amount to your premium and most are put into effect immediately though this will vary from company to company.
Structural Limits
Does your policy cover water damage from burst pipes? Many bare bones policies don’t contain this important coverage and policyholders don’t find out until they file a claim.
1. Most policies cover water damage from windstorms such as when the wind blows out a window and the rain gets in – unless you live in a hurricane or tornado prone area where you might need to purchase windstorm coverage or pay extremely high “hurricane deductibles†which average 2% of the value of the home but can be as high as 5%.
- At an average home value of $200,000 this equates to some $4000 to $10,000 right off the top of any damages you incur. In effect, the cost of your roof has been deducted.
2. Floods and earthquakes are excluded from standard policies.
- This could even include flooding during a hurricane if it’s not wind related. In the Katrina disaster, many engineering firms were caught changing their reports to reflect the cause of loss to be from Flood rather than Wind, which is what the insurance companies needed to be able to justify the denial of millions of dollars in property damage claims.
3. Another potential problem with your coverage involves the cost of rebuilding.
- Do you have enough insurance to cover the cost to completely rebuild your home using current construction costs? If your home is older, you may be forced to upgrade to current building codes which can be cost-prohibitive.
Endorsements to consider:
- Earthquake insurance - usually covers earthquakes, volcanic eruptions, and landslides
- Flood insurance
- Inflation guard - ensures that your policy keeps up with inflation including building costs
- Law and code enforcement - pays to get your house up to current code during rebuilding
- Mold rider
- Sewer backup
Check back tomorrow for Stephen’s advice on personal property limits and endorsements (riders)!
Comments
Leave a Reply