Back in September I posted about the importance of personal liability coverage on your home insurance policy. A client was sued by a contractor who injured himself on his property while doing work on a project.

When you hire general contractors and subcontractors to work on your home you need to be aware of the large exposures that could result in hiring an unlicensed or uninsured contractor. As my client found it when you hire an uninsured contractor working on your home they may sue you for damages if they are injured on the job. The following key rules should thus be followed when selecting a contractor to work on your Oregon home.

• Be wary of contractors who solicit business door-to-door or via cold calls. In addition, avoid contractors who quote you a price that will automatically go up the next day or week if you don't accept it immediately.
• Obtain recommendations from friends, family members, and neighbors about experienced and reputable contractors who have performed excellent work for them.
• Ask for a written estimate from the contractor that includes any oral agreements the contractor makes in this process. The estimate should contain a line-by-line breakdown of costs, including materials and labor.
• Verify that the contractor is licensed, bonded, and properly insured. Ask for certificates of insurance for workers compensation and general liability policies. You should also receive these certificates for any subcontractor the general contractor may hire to work on your home.
• Contact the Better Business Bureau to see if complaints have been filed against the contractor. This can be performed via the bureau's Web site at www.bbb.org.
• Get a copy of the proposed contract. Ideally, it should include a hold harmless clause in your favor, particularly for major work such as when heavy equipment will be used in constructing a swimming pool. A hold harmless clause specifies that the contractor will indemnify you with respect to your liability to members of the public who are injured or whose property is damaged during the course of the contractor's operations. The contract should also explicitly establish an independent contractor relationship.
• Ask a knowledgeable friend, relative, or attorney to review the home repair contract before you sign.

Contact me with your Oregon home insurance policy and insurance liability questions.

On many occasions I have had my clients ask about why is the replacement cost coverage of their Portland home more than it costs to build the same house when it was new.  The reason is not only will materials and labor fluctuate in cost due to availability but other factors would include the age of the home, the materials used to build the home, as well as any code changes that have been adopted by the municipality since the home was originally built.

Here are some other subtle reasons why your home might have a higher insurance replacement cost:

• Temporary repairs: After a loss your Portland home may need to be boarded up. In the most severe of losses the home may need temporary electrical and heating. These costs are not normally included in the cost to build a new home.
• Demolition: In the event of a serious loss the home may require to be partially or completely demolished prior to starting the repairs. The debris from the demolition has to go somewhere and there is additional expense to haul the debris off to a landfill, these days landfills are not cheap. Also with older homes there is an increased possibility of some homes containing asbestos which must be removed and disposed of in a special way that often adds additional increases to the cost of demolition and debris removal.
• Engineering & Architectural Fees: In the event of a total loss the municipality will require a set of working drawings in order to secure a building permit to replace or even repair your home.
• Building Permits: A permit will be required to repair or replace the home after a loss.
• Code Compliance: Most insurance policies contain Ordinance and Law coverage up to a specified percentage, this allows for upgrades to the home after a loss to bring the home into compliance with today's building standards. Depending on the age of the structure and the amount of damage quite often these upgrades can cost much more than you think when you consider electrical, tempered glass, asbestos abatement, etc.
• Economies of Scale: When your home was built brand new your builder probably enjoyed discounts on materials, and possibly labor due to the fact that they were purchasing multiple quantities of materials at once. A repair contractor will have only to buy one or two and most likely does not keep an inventory of supplies.
• Foundations: If you suffer a large fire it is not unusual for the foundation of the home to be called out for replacement by the engineer inspecting the home. Even though it is rare for concrete used in basements, crawl spaces, or concrete slabs to catch on fire but what does happen is that heat due to a fire causes moisture inside the concrete and heats to a point where it turns to steam, expands in size, and will literally blow up the concrete from the inside out. This condition is referred to as 'sprawling' and will adversely affect the structural integrity and esthetics of the concrete.

Today I read an interesting article in The Oregonian that speaks to the topic of personal liability. The article addresses that some homeowners in SW Portland have given permission to a neighborhood association to build a series of walking trails throughout their SW neighborhood. The catch is that these homeowners were not aware that they are responsible for any bodily injury that might occur on the portion of the trails that is located on their property. Yikes!

Whenever I speak with clients I provide the same risk management clarification about personal liability, which is the following:  As an Oregon homeowner you are responsible and liable for any accidents or injuries that might take place on your property which includes your front yard, your side yard, your backyard, as well as the sidewalks that border your property.

All home insurance policies provide you coverage for liability (each policy is worded differently so please read your policy carefully.) Below is sample language from a Safeco Insurance policy.

If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which the insured is legally liable; and
2. Provide a defense at our expense by counsel of our choice even if the allegations are groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.

The possible saving grace for the homeowners in SW Portland who have part of the SW walking trails going through their yard is that they may be designated as walking trails by the city. If this occurs they will be treated similarly to recreational trails in city parks where the liability is held by the trail user.

If you ever have questions about your home insurance and liability claims that might be brought against you give me a call.

There is no shortage of flood and landslide headlines in The Oregonian due to the after effects of the rain and snow that has dumped over the Portland area the past couple of weeks. Just last week Lake Oswego officials advised homeowners to take preacautions against flooding prior to the landslides that just occured over the past day. Based on the article Houses in peril, but owners are unaware published in today's Oregonian you would think that town officials would take heed in their own warning? Could these landslides have been averted?

The article states that  after landslides killed five people in 1996, the state launched a safety initiative that called for landslide hazard maps. I haven't seen these landslide hazard maps have you? I doubt it because the article states that the state never formally adopted these maps after some city and county officials complained that the maps represented a regulatory headache that might restrict development. Brilliant. It is absolutely fantastic when the local government bypasses the safety of its residents and issues permits to build in high risk areas to generate revenue for the town.

So the main culprit of these recent landslides is not just due to improper drainage but the fact that many of these homes should not have been built where they currently are situated in the first place. As I have previously posted home insurance is going to exclude damage and loss due to a flood or landslide. A flood insurance policy is not going to provide the protection you need because it will exclude damage due to landslide, a flood insurance policy will only provide protection for mudflow. The only type of insurance available for protection due to landslide is what is called a Natural Catastrophe Insurance Policy. Having a Natural Catastrophe Insurance Policy will protect your home and personal property against a loss from earthquakes, landslides, and floods. If you are homeowner and face the potential risk from any of the above you need to consider a Natural Catastrophe Insurance Policy.

Other than having the right insurance in place the best risk management to have in place for the protection of your home would be the following:

1. Address drainage problems. Rain and melting snow will stream itself into channels and if you don't divert this water from your home you will take on the potential for water damage.
2. If you build or purchase a home on, above, or below a hillside you take your chances. Make certain that the property site adheres to the state building codes from the setbacks from slopes.
3. Don't live on, above, or below a hillside. Consider the odds for a loss. The three ingredients of landslides are steep slopes, loose soil and water. We live in prime landslide areas.

To see how your home is rated for landslide risk, go to the Oregon Coastal Atlas and zoom to your property's location.

Recently I have been working with the Board of Directors of a homeowner association in advising and putting into place the insurance coverages that were necessary for the association. After we addressed the coverages that were necessary for the association I asked them about their personal insurance and if they had loss assessment coverage. The reason I brought this to their attention is because the insurance agents who insure the homes of those who live within the development are probably unaware that their clients are part of an HOA and should have loss assessment coverage on their home insurance policies.

The way that loss assessment works is if someone were to file a claim against the association, the association pays the deductible and the claim is paid out up to the policy limits that the association is insured to. If the claim amount exceeds the limits on the association insurance policy then the board of directors might have to assess the home owners to make up the difference. Loss assessment will provide you the difference that might be assessed to you from the association board.

Home insurance policies and condo insurance policies typically include a small amount of coverage for loss assessments. The amount of built in coverage varies from company to company, but the built in amount is usually $1,000 to $5,000.  I recommend the maximum amount of loss assessment coverage which is usually with the limit at $50,000.

These days you can get whip lash from turning your head at all the articles and reports about foreclosures on the national level. Today's Oregonian published an article titled The Stripped Away Dream which reports county records show  more than 2,800 homeowners defaulted on their mortgages in Clark, Clackamas, Multnomah & Washington counties in the third quarter of 2008. These individuals who are and have defaulted on their mortgages will unfortunately most likely foreclose on their properties which will then leave these home empty. Once the home is foreclosed the bank takes over the responsibility of the home. That means that the bank is responsible for obtaining an insurance policy for the vacant home.

If you are an investor or landlord and your home sits vacant you will want to make certain that your vacant home gets occupied as quickly as possible. The reason being is that each insurance contract might be worded differently but under the policy section titled 'Building Property Lossses We Do Not Cover' language is present protecting the insurance company from paying out claims on vacant homes.

Most companies I represent have wording similar to the following, "coverage is not provided for vandalism & malicious mischief or breakage of glass and safety glazing materials if the dwelling has been vacant for more than 30 consecutive days immediately before the loss."

Contact me for a review of your personal insurance coverages.

Many people overlook the need to properly insure their expensive jewelry, believing that it is automatically covered by their homeowners policy. While homeowners policies do cover jewelry, this insurance usually is subject to a much lower limit than the overall contents coverage. This reduced limit is called a "sublimit" or "special limit of liability", and a typical sublimit ranges from $1,500 - $5,000 for loss by theft of jewelry, watches, and precious and semiprecious stones. If your jewelry is worth more than the sublimit in your homeowners policy, you should consider purchasing specific insurance called a rider or schedule to cover it. The following is a good process to follow.

• Arrange an appointment with us to review your jewelry coverage. Bring as much information about your jewelry portfolio as possible, including any appraisals.
• If your high-valued jewelry has not been appraised within the last 3 years, consider obtaining an appraisal from a reputable jeweler. Insurance companies often require an appraisal on more expensive jewelry from a graduate of the Gemological Institute of America (GIA). The Institute's G.G., G.J., or A.J.P. designations at the end of an individual's name indicate that the jeweler has achieved a high level of professionalism with an education backed by a respected nonprofit organization.
• Make sure the appraisal has a description of the diamond's four C's --(a) carat, (b) cut, (c) clarity, and (d) color. The "carat" refers to the weight of the diamond. The quality of the "cut" of the diamond results from the way light enters the stone and is reflected back. "Cut" is also used to refer to the diamond's shape, such as round or pear-shaped. The "clarity" refers to the prevalence of minor spots, lines, bubbles, or other natural imperfections within the diamond. The "color" denotes the tint a diamond may possess. Remember that the better the appraisal, the fewer problems you will encounter with the insurer if you ever have to make a claim.
• Purchase the rider or schedule for your jewelry via an endorsement onto your homeowners policy. This endorsement (also available as a separate policy) provides much broader coverage than the limited protection found on the unendorsed homeowners policy.
• Consider keeping any valuable jewelry you rarely wear in a safety deposit box at your bank.

Review your jewelry protection with us at least every 2 years or whenever you sell or purchase high-value jewelry.

The following content has attribution to IRMI.

Yesterday The Oregonian reported a story West Hills Home Smashed in Landslide. I would say it is a very bad day when your home not just slides off of its foundation but also slides down an enbankment causing other homes to slide off of their foundations. This is the case of the home that is was located at 6438 Southwest Burlingame Place, a Portland Maps search for this address clearly acknowledges the hazard of the home being on a steep slope with the potential of it's location being involved in a landslide.

My hope would be that the home owner at the address not just knew of the risk living at that particular location but did the right thing and had the right insurance coverage in place to protect themselves. This is not always the case as many people prefer to gamble about risk than to protect themselves and their property.

If this home owner were to file a claim against their home insurance policy they will have a difficult time in finding insurance coverage for their loss as each policy defines it differently but a home insurance policy is going to exclude a loss to property due to 'Earth Movement'.  One of the companies I work with provides this as the definition:

"the sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, mudslide, sinkhole, subsidence, erosion, or movement resulting from improper compaction, site selection or any other external forces. Earth movement also includes volcanic explosion or lava flow."

I'm not a claims adjuster but based on the above definition I would feel confident saying that there is not going to be coverage for this home owner unless they have an insurance policy that covers landslide.  An insurance policy that covers landslide would be a Natural Catastrophe policy which would include a loss from Earthquake, Flood, & Landslide.

The Natural Catastrophe policy that I am reading defines landslide as "the natural and sudden fall, slipping or displacement of earth or rock, including mudflow and land collapse other than that arising out of Earthquake Shock." I did a quick quote for this property assuming that the insured value of the home is at least $500,000 and the annual cost comes out to about $2,100 with a 5% deductible.

In the early 1960's a manuel was written by Robert I. Mehr and Bob A. Hedges titled "Risk Management in the Business Environment". This book set three rules which have set the precedent in risk management.

• Don't risk more than you can afford to lose
• Consider the odds
• Don't risk a lot for a little

If you have the financial resources to replace your home after a loss of this magnitude I would say go ahead without the insurance coverage and selfinsure your home otherwise, why gamble?

Contact me for a comprehensive review of your home insurance and determine if your home is at risk to a landslide.

A client of mine is learning a lesson about how the liability portion of their home insurance policy works. My client was making an update to their kitchen and instead of using a licensed, bonded, and insured contractor they went with the lowest bidder to assist in the project. The individual of course did not have a contractor license, was not bonded, and certainly was not insured.

Lesson #1: Don't accept the lowest bid and absolutely make certain your contractor is not just licensed with the CCB but is also insured and bonded.

A few months after the completion of the project my client gets a letter from an attorney stating they have been retained by the man who had been hired by my client for personal injuries due to the work while employed by him.

This is where the liability portion of the home insurance policy comes into play and would provide protection. The insurance policy will cover a suit or claim made because of a bodily injury and the policy can pay up to the limit of liability that is on the policy for which they are legally liable. In this case the worker is seeking damages due to an injury so this could be to pay for medical expenses and potential lost wages. The result will be that the insurance company will investiage the claim and settle the claim with what they feel is appropriate.

I never enjoy taking these types of calls from my clients, these types of situations are stressful for both my client and me. Below are a few tips for you to consider if you are going to make home renovations and work with a contractor.

• Ask for references.
• Make certain your contractor is licensed with the CCB and has a surety bond, and liability insurance.
• Check with the Better Business Bureau at 503-226-3981
• Use a written contract and make certain you don't sign that contract until you understand everything.

CCB consumer information is available online by clicking here.

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