Open
peril coverage provides coverage on all other perils not specifically excluded
in the contract. It is the most popular type
of coverage.
Casualty insurance usually
contains eight exclusions to the contract. If building codes have changed and
the insured property no longer meets the code, the insurer will not cover increased
costs of meeting the current building codes without an added endorsement to the
policy. Damage caused by an earthquake is not covered. Homeowners living in high-risk
areas for earthquakes can consider purchasing earthquake insurance. Water damage
is not covered. This includes floods, backed up sewers or drains, and water seeping
into the home below ground level. Flood insurance is available in areas that have
adopted flood plain management regulations under the National Flood Insurance
Program. Damage caused by power failures, war, nuclear reactions or contamination
and radiation are not covered. Lastly, losses caused intentionally or through
neglect are also excluded from coverage.
There
are three ways that casualty insurance can be paid out: replacement cost, guaranteed
replacement cost, and actual cash value. Replacement cost simply pays the policyholder
the cost of repairing or replacing the damaged house. It is limited to maximum
dollar amount. Guaranteed replacement cost covers the full cost of replacing the
property even if it exceeds the policy limit. Some policies do not have a dollar
limit. Others have a limit of 15% or 20% in excess over the insured amount. Homeowners
are required to insure the property 100%. Actual cash value pays the policyholder
an amount equal to the replacement value minus depreciation. When purchasing a
homeowners insurance policy, you will need to decide how you want the policy to
pay in the event your home is damaged or destroyed.
The
Henssler Financial Group recommends that you take the time to look over your homeowners
insurance policy and understand exactly how your home is insured. Purchasing a
home is often very stressful, so when preparing for closing, taking the time to
secure the right homeowners insurance policy is not a high priority for most homebuyers.
If it was not a high priority for you, then we suggest you take the time now to
review and if necessary revise your current homeowners insurance policy.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler
is not licensed to offer or sell insurance products and this overview is not to
be construed as an offer to purchase any insurance products.
