ANSWERS TO YOUR QUESTIONS ABOUT OREGON HOME INSURANCE
Below are some of the common home insurance questions that get asked about home insurance policies.
- Why does the insurance replacement cost differ from my homes appraised value?
- Are there any special limits to personal property coverage and is all property covered?
- Does my home business have protection under my home insurance policy?
- How much liability coverage is necessary?
- Does the home insurance policy provide coverage for earthquake or flood?
1. Why does the insurance replacement cost differ from my homes appraised value?
The purpose of home insurance is to provide you a means to replacement your home due to a loss from a catastrophe. A home's replacement cost value is only for the cost of the rebuilding the structure. Appraised value takes into consideration the cost of the land beneath the home as well as the home.
The calculation method that is used to determine insurance replacement of a home is based on 'Reconstruction' costs, not Market Value or the cost of New Construction. The reconstruction cost of a home is the cost to rebuild today with similar materials and craftsmanship, used during its original construction. Building experts say that reconstruction can cost up to 30% more to rebuild a house than to build it new.* Builders hired for reconstruction require a higher skill set since they are required to work around existing structures, landscaping and power lines. They also need to be able to match up new materials to existing materials.
*Researched by Marshall & Swift/Boeckh
2. Are there any special limits to personal property coverage and is all property covered?
Certain types of property have specialized limits that are lower than the stated personal property limits on your policy. The items that often have what are called 'Special Limits of Liability' include:
- Money & related items
- Securities, accounts, deeds, and related items
- Watercraft, including their trailers, furnishings, equipment, and engines
- Other trailers
- Jewelry, furs, and related items
- Firearms and related items
- Silverware and related items such as China and Crystal
- Business property on the premises
- Business property away from the premises
- Electronic apparatus while on a motor vehicle
Personal property that you would want to consider to schedule would be:
- Artwork
- Jewelry, furs and leathers
- Firearms and related items
- Antiques and collectibles
- Unusual collections, hobby materials or tools
- Computer systems
If you find items that require more coverage than your policy provides, you can obtain coverage by increasing your property limit by scheduling items separately through the purchase of an endorsement. To get more information on the benefits of scheduling property click here.
3. Does my home business have protection under my home insurance policy?
If you operate a business in your home, even if you consider it a sideline or more hobby than business, you should not assume that it will be covered by your homeowners policy. Some companies do offer business insurance as part of the homeowners policy, this would be for incidental businesses. Most homeowner policies limit the amount of property that would be paid out due to a loss if it were for business use. If you have more than $2,500 in property that is used for a business such as web design & marketing, photography, or selling items on Ebay, you should consider have a business policy to provide you protection to avoid a gap in coverage.
4. How much liability coverage is necessary?
You can purchase liability coverage at limits from $300,000, $500,000 & $1,000,000. The key to consider about liability is that you want to consider purchasing enough to cover the value of all your financial assets -- home, savings, investments, etc.--which are all vulnerable to a lawsuit. Understand that your insurance company is liable only up to the limits of your policy. You would be liable for anything above that.
Tip: Additional liability coverage is called an umbrella policy and is not terribly expensive. Learn more about umbrella policies by clicking here. |
5. Does the home insurance policy provide coverage for earthquake or flood?
All home insurance policies are going to exclude coverage for flood and earthquake. You must purchase separate coverage to be protected due to a loss by earthquake and flood. Click here to learn more about earthquake and flood insurance.
