The insurance policy is a contract between you and the carrier. Typically, you will make an offer to the insurance company to purchase insurance. They agree to insure certain risks, like fire and theft, and you agree to pay a fee based upon the amount of coverage and the risks you want to cover. You could choose to bare all of the risk yourself, or transfer some or all of it to an insurance carrier. If your offer is accepted, the company will issue a policy. They might counter offer and agree to insure you for a little more money or offer a reduction based upon the actual requirements. Your bank will insist on an insurance policy to protect their investment in your home or car. There are no laws requiring that you have insurance. There are laws that require you to financially protect others from losses, accidents, careless acts or injuries to others, whether financial or physical. An insurance policy is, for most of us, the lowest cost option.

There are two types of insurance policies for the home. These are actual cash value and replacement value. An actual cash value policy will replace your home at its depreciated, time worn state. A replacement value policy will replace your home based upon the value of the policy and the replacement value of your home. Your PRI Agent can help fully explain which you might choose and why. For the most part, an actual cash value policy might work better for a historical home, and a replacement value policy might meet typical residential and lender requirements.

It is important to note that like all insurance, the protections are used to put you back to the condition you were in prior to the loss.

You should also know that standard policies for primary coverage do not protect against flood, war, nuclear disaster, earthquakes, power failure, or termites. The typical policy does not cover neglect, disrepair and decay. You can, however, obtain protection from flood and earthquakes.

These are industry standard exclusions and every insurance company includes them in their standard policy.

There are tips and tricks, if you will, that will prevent you from experiencing loss against these uncovered “perils”.

1. Obtain coverage. While you can’t obtain coverage for neglect, deferred maintenance and insect damage, you can obtain protection from flood and earthquakes. These are called riders or endorsements. The insurance company formulates its premiums based upon the risk of loss for everything they insure. Insurance carriers can’t say which homes might experience a fire, or burglary. There are statistics and reports that help them determine the potential for loss and how much that cost might be. Maybe there were forty house fires in your city on average over the last five years. The insurer knows that the risk of house fires are in decline due to better building codes and standards. On the other hand, a large natural disaster is unforeseeable and yet possibly predictable. In this case it would be far too expensive for the insurance company to cover the loss on every home. So, they exclude these risks from the Standard Coverage. You can purchase coverage for these perils, and each policy holder that does so contributes to the collection of premiums for protection (indemnification). Losses are then covered such that you will be restored to your prior condition should the disaster happen.
2. Avoid the risk. Another solution is to avoid the risk. All too often the solution to avoiding the risk is to be aware of what the risk is and how to prevent it. Typical perils like flooding from outside the home can be avoided by making sure drains are clear BEFORE the rains come. The Fall season often brings flooding as storm drains clog with debris and leaves. Trees often lose large branches in seasonal wind storms. And snow melt can also cause flooding. Keeping these accidents from causing harm to you takes just a little additional forethought and planning. The insurance company can’t be there to clean drains and prune trees, so they leave that to you and do not offer to insure for these items.
3. Adequate locks will help keep burglars out and also avoid the risk of theft and damage. Security systems deter break–ins as well. Keeping bushes and trees trimmed away from the home will not only remove hiding places for thieves, it will also prevent insect infestation, fungal rot and moisture which often leads to mold. Additional lighting can deter crime while providing better lighting for your family and guests to your home. Some insurance companies reduce the cost of insurance (premiums) if you have these protection measures installed.

If your neighbor’s tree falls and damages your property, if water run–off or the city storm drain backs up and floods your property, there are insurance solutions for that as well. These would be their insurance policy!

Your PRI Agent is well versed in risk mitigation. You might sign up for the monthly newsletter. Each month is packed with the latest tips and industry knowledge to help reduce the cost of insurance, avoid risks, and keep you and your family nicely protected.

Additional ways to adjust the insurance policy are found in the coverage limits that affect the cost of premiums and the deductible.

Insurance policies often provide a Standard one-hundred thousand dollar limit for each occurrence. Many policies will allow you to purchase higher limits, at an additional cost. Many home owners are under insured and don’t realize it. Home owners can increase their coverage, adjust the deductible, and usually save money while getting better coverage.

Automatic-payments and online billing; Many insurance companies recognize that the cost of contacting their policy holders is getting expensive as the costs associated with mailing, handling and paper keep increasing. These hard costs are passed on to the consumer in the form of higher premiums. To offset the cost, and remain competitive most insurance carriers will offer a deduction to the premium if the policy holder (you) will make online payments and or receive Email notifications.

Your PRI agent is working hard to find every possible advantage to help you get the insurance coverage you need at the very best price.

Coverages

The most often asked question in the insurance industry is: Is it covered? Remember, insurance is purchased to set you back to whole. It is the sharing of risk. If you keep some risk to save costs, you bare some of the expense. Our agents can explain insurance coverage to you and shop for the very best insurance products to meet your insurance needs. Ultimately, we want your property and family protected and we see the problems that being underinsured for a few dollars can cause.

Home Owners Insurance is based upon “Open Perils” and “Named Perils” coverage.

Named Perils are specific and stated on the policy. If it is listed, it is covered. These are the only items included in the policy.
Open Perils is a broader form of coverage. If it IS listed, it is NOT covered— These listed items are excluded.

Simple insurance for Vacant Property would be a Basic Named Perils policy. This type of policy is used usually to insure for a complete loss. If something happens that is not on the list, you are not covered.

Basic-Form Covered Perils

• Fire
• lightning
• windstorm
• hail
• explosion (from a tank ie. like water tank)
• smoke
• vandalism
• vehicle or aircraft collision
• riot or civil unrest

Broad Named Perils

• Fire
• lightning
• windstorm
• hail
• explosion (from a tank ie. a water tank)
• smoke
• vandalism
• vehicle or aircraft collision
• riot or civil unrest
• burglary and break-in damage
• falling objects (like trees or branches)
• weight of snow or Ice
• freezing of plumbing
• accidental water damage (like a broken pipe)
• artificially generated electricity

An Open Perils Policy is also known as “Special Form All-Risk”. This type of policy covers everything EXCEPT what is listed on the Exclusions. These exclusions are:

• Earthquake
• Flood
• Neglect
• Power Failure
• War
• Nuclear Hazard
• Ordinance of Law
• Intentional Acts