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    Personal Insurance Blog

    How Much Should I Insure My House For?

    Posted by Val Feeney

    Wed, Jun 27, 2012 @ 11:41 AM

    A Guide to Determining How Much Insurance to Buy for Your Home

    On nearly every homeowners quote I present to customers, the #1 question I receive is how I determined the amount of coverage to use for the home, or the “Dwelling Coverage” amount.

    What is Dwelling Coverage?

    The Dwelling Coverage (often referred to as the ‘Replacement Cost’) is not the market value of the home, the assessed value of the home, nor the mortgage amount used to buy the home, but the amount of money it would cost to rebuild the home if it is ever destroyed by a fire.  Land is also not a factor in this amount.

    Understand the cost of insuring your house with homeowners dwelling coverage from Andrew Gordon Inc Norwell MA

    How does Dwelling Coverage work?

    Your independent insurance agent will calculate the dwelling coverage by entering the square footage, year built, style of home, foundation type, garage type, # of bathrooms, type of kitchen, material of the interior & exterior walls, type of flooring, and energy infrastructure (to name a few) into a replacement cost calculator provided  by the insurance company.  The insurance companies keep up to date replacement cost calculators by continually updating the current prices for building materials and labor.  The insurance companies create these calculators to ensure that their customers are getting the proper protection and so the insurance company is covering homes to their proper replacement value.

    Now, here is the important part.  Once the agent presents the quote to the customer, the customer decides if they are happy with the dwelling coverage.  I would urge, if you trust your agent, to use the dwelling coverage amount the agent has come up with. After all, this is what an agent is for.  This will ensure that you have adequate coverage for your home. 

    Cover your house with the right pricing of home dwelling coverage with homeowners from Andrew Gordon Inc Insurance Norwell MA

    Can't I opt for less dwelling coverage?

    In a tough economy, customers try to find savings anywhere possible, and one area is their insurance.  Most homeowners believe they can simply lower their insurance coverage (dwelling coverage) to save some money.  This is true, but it comes with a heavy cost due to the coinsurance clause

    Insurance companies require homeowners to carry at least 90% in coverage of the dwelling/replacement cost, which is the coinsurance clause. So in our example of $300,000, the insurance company would require at least $270,000 in dwelling coverage to satisfy the 90% or more insured-to-value requirement.  Insurance companies offer discounts for homeowners who insure to the full replacement cost.  The customer will sleep easy having full coverage on the home.

    What does that mean in a claim?

    Now let’s say that the homeowner decided that he/she wants to lower the dwelling coverage to $250,000, which is 83% of the replacement cost.  Let’s also say the homeowner suffers a $100,000 claim. The insurance company will penalize the homeowner with a penalty of 17% taken directly from the claim.  It is calculated by the following:

    ($250,000/$300,000) X $100,000 = $83,333.

    The homeowner may have saved a few hundred dollars in premium by lowering their dwelling coverage to $250,000, but have now taken a penalty of $17,667 at the time of the loss, vastly eliminating the saving they thought they found earlier.  Instead of receiving $100,000 for the claim, the insured is now only receiving $83,333.

    In conclusion, it may seem like the obvious area to save money on your homeowners insurance, but lowering the dwelling coverage on your policy can negatively affect you during a time of a claim, or a total loss.  That is not the time to realize you made a bad decision. 

    Use an independent agent to ensure you are getting the best coverage available for your home, and allow the agent to find discounts for you that don’t affect your coverage.

    Top 10 Things to Know about Homeowner's Insurance

    Val Feeney

    Tags: house, home, cost, how much, insurance, coverage, homeowners, premium, dwelling, agent

    Liability Issues: Safety Around Your Home

    Posted by Donna Bellavance

    Wed, Apr 25, 2012 @ 05:52 PM

    Liability issues and claims are proving to be more costly than actual physical damage losses under homeowners insurance policies. 

    Be aware of the many hazards your home may have with personal and homeowners from Andrew Gordon Inc Insurance Norwell MAAccording to the Center for Disease Control there are 4.7 million dog bites each year, and 50% occur on the residence premises. According to the Insurance Information Institute, dog bites or dog-related injuries account for approximately 1/3 of all homeowner liability claims, and the average cost is more than $37,000. Carriers often decline writing coverage if there are particular breeds within the household, such as Bull Dogs, Pitbulls, German Shepherds, Akitas, Rottweilers, Doberman Pinschers, Siberian Huskies, and others that may exhibit aggressive behavior or have previously had a biting history.  Some companies may accept such a breed if they are provided evidence of the dog’s participation in an obedience training course.

    Another major issue of concern for homeowner carriers are swimming pools, since drowning is the leading cause of fatal injury to children between the ages of 1 and 4. Homeowners are required to comply with local regulations regarding the pool such as fencing and locked gates.  It is also worthwhile to note that homeowners can be held liable for injuries to strangers using their pool without permission.

    Trampolines account for over 100,000 emergency room visits per year according to the Consumer Product Safety Commission. Companies can refuse to provide coverage for homes that have trampolines on the premises or may place exclusion clauses or require safety measures, such as nets surrounding the apparatus.

    trampoline pic

     
    The National Safety Council has reported that falls account for 26% of injuries and deaths in the home. Approximately 2.8 million children were treated in the emergency room last year for fall injuries. Tree houses have been the cause for many of these injuries due to the height of these structures, so carriers may exclude or decline coverage, or apply a surcharge for these risks. 


    Homes with guns on the premises increase the risk of homicide by 40% according to the New England Journal of Medicine. Insurance companies require that guns remain properly secured with safety locks and kept out of the reach of children.

    Heating fires account for approximately 36% of home fires. Since many insurance customers use wood stoves as a secondary source of heat, companies now require proof that these were properly installed, adhere to town building codes, and have been inspected.

    Other causes of potential declination of coverage are the presence of zip-lines and exotic pets at the home.

    Homeowners (and renters!) should make it a point to discuss with their agents if any of the above situations apply to them. It is not worth jeopardizing coverage or having a liability claim denied if the carrier was never made aware of all exposures. To discuss your own liability safety, call a Gordon Atlantic Insurance professional toll free at 1-800-649-3252. Prefer to type versus talk? Click below!

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    Tags: home, dog, fall, safety, homeowners insurance, insurance, massachusetts, liability, animals, trampoline, pool, agent, tree house, gun, fire places, wood stove, zip line, swimming, bite

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