Our previous post discussed the various sections you’ll find in a typical Rhode Island homeowners insurance policy. This post looks at 11 additional forms of coverage you may want to consider to protect you, your family, and your home.
Guaranteed Replacement Cost
A homeowners policy usually pays out claims for damage to your home’s structure, less depreciation until you repair or rebuild, and it is subject to the dwelling limit on your policy. However, you can add on an endorsement to your policy called guaranteed replacement cost. The additional coverage guarantees the replacement value of your home, even if the cost of rebuilding after a loss is above your policy limit. This coverage varies from company to company. Some companies will pay up to 25% above your dwelling limit, others up to 35%, and some are unlimited to guarantee the rebuilding of your home.
Personal Property Replacement Cost
This additional coverage protects the contents of your home, without depreciation. Even if your sofa is ten years old, the insurance company pays for a new one of similar style and quality after a covered loss. The same applies to your electronics, appliances, etc. Personal Property Replacement Cost coverage may cost a bit more initially, but if you make a major claim it can save you a bundle! This coverage ensures you’ll be able to replace your belongings after a claim rather than having to find used items or items of lesser value. A homeowners policy without this add-on will still cover your personal belongings but the insurer will pay a lower amount for your contents based on depreciation.
Your homeowners policy normally covers things such as a burst water pipe in your home, but it does not cover sewer back-ups due to a municipal overflow or flooding. This can happen when there’s more rain than the sewers can manage, when snow melts quickly, or even when a component fails in a sump pump.
Backups cause great damage in a home and can create mold and mildew issues, too. Remedying water damage is often very expensive, so water backup coverage is a wise investment, particularly in areas prone to erratic weather. Without this extra coverage, you have little or no recourse in the event of a sump pump overflow or sewer back-up. Keep in mind water backup coverage is not the same as a Flood Insurance Policy.
Identity Theft Coverage
A 2014 Javelin Strategy & Research study indicated 12.7 million U.S. adults were victims of identity theft, and identity theft continues to increase. When cybercriminals obtain your personal information they can often access your bank account and credit cards and destroy your credit. Criminals assume your identity and it can take a very long time to restore it. Identity theft insurance reimburses you for the expenses you incur to recovery your identity up to the policy limit.
In the event of a theft claim, there are certain personal items that a homeowners policy restricts coverage on. These restricted items include jewelry, goldware/silverware, furs, guns, fine art, musical instruments, coin collections, and other fine collectibles. If any of these highly valuable items are lost or stolen, you can be left substantially underinsured. We suggest Scheduled Personal Property coverage to protect these valuables. In order to purchase this coverage, the items would have to be appraised and specifically listed on your policy. This broadens the coverage to include theft or lost items and ensures that you are paid the appraised value or paid to replace the missing item such as a missing diamond from a ring or missing one earring that’s part of a pair.
A typical homeowners insurance policy does not extend to your business, and if it does, the coverage limit may not sufficiently cover your loss. You will probably need additional liability coverage, particularly if clients visit your home. Also if you have business property in your home such as office supplies or inventory, you will need to purchase business coverage if your business contents exceed $2500. Lastly, if you use a detached structure on your property (such as a garage or shed) for your business use, your homeowners policy will no longer provide coverage if that structure is damaged or destroyed. In this instance you can get business insurance to cover that structure separately. Your homeowner’s policy normally will not cover risks such as injury to an employee or stolen computer data, either.
Your insurer can either offer an endorsement of your homeowner’s policy or suggest a separate policy which can protect you against liability, data breaches, damage or theft to business property, and even business interruption.
Equipment breakdown insurance covers your important home systems and property due to loss by mechanical or electrical breakdown. This may include appliances, heating systems, cooling systems, swimming pool equipment, water heaters, well pumps, home security systems, home communications systems, and electronics.
As a homeowner you rely on many types of mechanical and electrical systems to provide comfort, convenience, and safety in your home. These modern day essentials are all subject to potential mechanical or electrical breakdown that is not typically covered by a standard homeowners policy. You can purchase individual warranties on items which is often costly and burdensome to manage or you can purchase equipment breakdown coverage for your home. This is an affordable alternative to individual warranties that will give you added peace of mind.
Service Line Coverage
Service line coverage protects you if underground piping or wiring on your property fails. You’re legally liable for repair or replacement of water pipes that connect to the public water system, a well, cistern, or retention pond, and any heating system outside of your dwelling. You are also responsible for the sewer pipes that connect to the public sewer system or septic tank and drain pipes that move water away from your dwelling. These service lines are not covered for damage under a homeowners policy unless you have added on the optional Service Line Coverage Endorsement. Not all insurers offer this coverage but it’s a good one to have it if it’s available. Be sure to ask your agent.
Your homeowners policy provides liability coverage if you were held legally responsible for causing bodily injury or property damage to someone but what if you were negligent and liable for personal injury instead? Personal Injury includes libel, slander, invasion of privacy, and more. You can add Personal injury liability insurance to your homeowners policy to cover this added liability exposure.
Lawyers, legal fees, and court fees add up quickly if you find yourself with a liability claim. Most homeowners policies offer $300,000 or $500,000 liability coverage. Although this sounds like a lot, when it comes to being sued for injuries or damages you cause to someone, you can quickly find yourself underinsured. Most homeowners should consider purchasing an umbrella insurance policy to give them an added layer of $1 million or $2 million liability coverage. Some insurers add umbrella coverage to a homeowners policy with an endorsement. Other insurers offer a standalone policy. Either way, it is an important tool for protecting yourself against catastrophic financial loss. Umbrella policies can extend the liability limits of your homeowner insurance but it can also extend the liability of your personal auto, boat, motorcycle, travel trailer, or rental property insurance.
Earthquake damage is not covered under a typical homeowner’s policy, but most insurers offer an endorsement to your existing policy that can give you this added protection.
Premiums vary by region and and type of construction and are calculated based on a percentage of your property’s value. If you live in a seismically active zone, you shouldn’t overlook earthquake insurance. Even a minor earthquake can cause major damage.
Discuss your current coverage with your insurance agent to ensure you have the coverage you need. If you are comparing quotes from several companies, know that not all policies are created equal. The optional coverage’s added to your policy can make a difference in your premium but also a big difference in your level of protection! Your agent can suggest affordable ways to fill coverage gaps so you’re well-protected against the risks most likely to affect you, your business, and your property.