Home Owner’s Insurance – What You Need to Know
We have all seen the recent surge of emails and circulars being distributed by local Insurance agencies advertising their Homeowner’s Insurance policies.
Our firm regularly deals with the terms and conditions of these policies within our litigation practice. In this Article, we will share what we have recently seen and what may be the rationale driving the changes in the industry.
Over the past few months, the insurance industry has modified some of their Homeowner’s Insurance coverages to include a few important limitations:
- Doubling, or in some cases tripling coverage deductibles from 1% to 2-3% for certain risks, such as coverage for windstorm or hail damage.
- Adding a schedule of available coverage for roofs even within the context of the Replacement Cost Language otherwise existing within these types of policies, as it relates to Replacement Cost Value (RCV) Policies.
For example, if your home value is $500,000, the 1% deductible when applied to a hailstorm or wind event could cost the homeowner $5,000 out of pocket for a roof that may cost $10,000. A 2% deductible would result in the Homeowner paying the first $10,000. If your policy is an actual cash value policy, then the insurer traditionally could reduce any amounts they may owe by depreciating the age of the roof.
Now, even though you may have the favored replacement cost type policy, many carriers now have a “ladder” of depreciation for roofs. If your roof is 5 years old then, even when you have an RCV policy, they can reduce the amount of coverage.
One may ask, “Why these changes”?
Since the hurricane season of 2005, many lawyers, roofers, and public adjusters collaborated to increase the cost to the insurers including but not limited to attorney’s fees, public adjuster fees, and grossly inflated estimates from some of the roofers. Therefore, the insurers feel they have no recourse except to pass along these charges to the homeowner/policy holder.
It’s important that homeowners are aware of what their policy covers and the specific language within that could be a heavy hit on their wallets when they file a claim.
Thomas M. Fountain & Associates, PLLC are not agents; however, we have handled thousands of related claims for our clients over the years, and we are here to help should you need legal advice.
The best start, however, is to contact an agent who can quote you with a policy that still maintains the 1% deductible for all risks, and a more reasonable approach to roof damage.
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