Feeling safe and secure about your house, knowing it is insured? Best dig out the old policy document from your filing cabinet and check it against these 5 common traps and see how exposed your really are!
Flood Protection
Gotcha! Say the insurance company executives when they add the no flood damage clause to your home insurance policy. This is the number one trap used by insurance companies to refuse a claim. Thousands of Hurricane Katrina residents were refused claims because the insurance companies claimed their house was damaged by flood waters alone. Think your home is safe from floods, check there are no storm water drain nearby, as if one of these overboard that's called flood damage! If in doubt call your insurer and modify your policy or take out a separate flood insurance policy.Hidden Caps
“They won't even know its there” laugh the executives as they pat themselves on the back over this clause. Basically, damage caused by various specific events are capped, despite the real cost of fixing. For example, some insurance companies have limited reimbursement for mold damage to as little as $10,000, while others have dropped it all together.Under Insured
To be "under insured" means to have your policy not cover the full replacement cost of your home and belongings. Up until about ten years ago most policy's gave a blanket payout covering your for the full replacement cost. Now days, you have to specify the replacement cost of the house and all its contents. If you under estimate that cost, then you'll be stung when you go to make a claim with a huge gap.Windstorm Deductibles
Unfortunately, these confusing words stung a lot of hurricane Katrina victims hard. This is a Large separate excess for any damage caused by wind storms, including hurricanes. Typically, they are up to 5% of the value of your home. So if your $300,000 home is damaged in a wind storm, you'll have to pay for the first $15,000, before the insurance company pays a cent.Anti-Concurrent Causation
The hidden meaning behind these baffling words is quite nasty indeed. Basically, it means that if you have any further uninsurable damage occur after an insurable damage event, you can't even claim on the insurable damage component. So if you have a hurricane come through and blow your roof off, you can claim. If the hurricane comes through, blows your roof off AND floods your house, then you cannot make a claim. Not even for the damaged roof.
So let me to encourage you to dust off those old policy documents, have a read and make a change if necessary. It really could save you thousands of dollars!
