The Leading Causes for Insurance Claims and What You Can Do About Them By
Richard Berroa
Why home owners file insurance claims? The answer to this question is
obvious; because of some kind of loss. Do you know what the leading
reason property owners filed claims with their insurance companies?
According to c 2005 fact book the answer is Fire and lightning counting
for 32.42% of all loss claims. The second leading cause of damage claims
is Wind with 22.8 % followed in third by Water damage with 21.74% and
finally theft with 4.54%(these figures are based on 5 year averages from
1999 to 2003). What does this mean? It means that statistically speaking
you have less to fear from your neighbor than you thought you did.
Knowledge is power; you are now empowered to protect your home from
these causes of home damage. How though?
One unsettling thought is how we are at the whim of natures’ wrath. Sure
you can install a lighting rod on your home to protect it from lightning
strikes but what do you do to protect you from the big ole tree next to
our house that just got slammed by lightning and is now not only on fire
but also falling onto your house. Cut the tree down, make a home out of
asbestos and open up a whole other can of worms or do you just try to be
prepared as best you can for disaster? Being prepared for disaster
sounds like the best option to me.
How do I prepare for eminent doom? You would start by taking care of
obvious holes in your homes safety net. For example if you don’t have a
grounded lightning rod installed on your house do that especially if you
live in a high risk area i.e. an area where there are frequent lightning
storms. Make sure that when you do tackle a hole in that net that you
fix it correctly the first time, otherwise you’ll learn the lesson my
grandma ingrained in me “the lazy person winds up working twice as
hard”. After patching up the apparent holes its time to shore up the not
so palpable ones; what I mean is doing the little things that will pay
back big dividends for your foresight. Or example making an inventory of
all your possessions is a great place to start. If the unthinkable
happens, with your home inventory you’ll have a record of everything you
had and what’s more your inventory is just the tool you’ll reach for
during the claims process.
The first thing your insurance company will ask you for is to compile a
list of all the lost or damaged items. No problem for you because you
have your home inventory! But what is this wondrous, magical tool? A
home inventory is simply a list of all of your possessions, with photos
and details such as make, model, serial number, all compiled in a neat
and organized fashion for quick dissemination. Imagine the claims
process without it; having to compile that list after the home was
burned down. Could you remember everything? Would you be even in the
right state of mind to be able to do this? Don’t wait if you haven’t
done this act now, later will be too late.
Another smart move would be to check out what disasters are actually
covered by your insurance policy. Listed below is a list of most of the
disasters covered by most insurance policies (from the Insurance
Information Institute’s website). http://
www.iii.org/individuals/homei/hbasics/whattype/
What type of disasters are covered?
Perils
1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
The following might not be covered by your policy!
11. Falling objec
t 12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a
plumbing, heating, air conditioning, or automatic fire-protective
sprinkler system, or from a household appliance.
14. Sudden and accidental tearing apart, cracking, burning, or bulging
of a steam or hot water heating system, an air conditioning or automatic
fire-protective system.
15. Freezing of a plumbing, heating, air conditioning or automatic,
fire-protective sprinkler system, or of a household appliance.
16. Sudden and accidental damage from artificially generated electrical
current (does not include loss to a tube, transistor or similar
electronic component)
Most policies cover only the first ten items on this list the rest are
extra’s. The next list covers item that are not covered by most home
policies.
Disasters not covered
1. Floods?
You can purchase flood coverage directly from your homeowners insurance
agent. However, the policy is provided by the Federal Flood Insurance
Program ( 800-427-4661, http://www.fema.gov/nfip ). You can get
replacement cost coverage for the structure of your home, but only
actual cash value coverage is available for your possessions. There may
also be limits on coverage for furniture and other possessions stored in
your basement. Flood insurance is available for renters as well as
homeowners. You will need flood insurance if you live in a designated
flood zone. But also consider buying it if your house could be flooded
by melting snow, an overflowing creek or water running down a steep
hill. Don’t wait until the evening news announces a flood season warning
to buy a policy. There is a 30-day waiting period before coverage takes
effect.?
2. Earthquakes?
Earthquake coverage can be a separate policy or an endorsement to your
homeowners or renters policy. It available from most insurance
companies. In California, it is also available from the California
Earthquake Authority ( http://www.cea.gov ). In earthquake prone states
like California, the policy comes with a high deductible.?
3. Maintenance damage?
It is your responsibility to take reasonable precautions to protect your
home from damage. Your insurance policy will not cover damage due to
lack of maintenance, mold, termite infestation and infestation from
other pests.
In light of recent disaster’s it might be a good idea in looking into
flood insurance coverage. You can find out if you live in a flood plain
by contacting your local government office, for that info if you’re not
sure. You can find their phone numbers listed in the blue pages of your
local phone book. Finally use your imagination as to how you can protect
and make your home disaster proof. There are countless other things you
can do inspite of the factors that you cannot control. Just use your
head and find the holes. Remember you are your homes first and last line
of defense; if you don’t take care of your home, who will? Be proactive,
that way you can be prepared for the worst of situations. Good luck and
be safe!
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