You should know…

Even though we all had a week’s warning, the majority of the people hit by Hurricane Sandy were not prepared. Some of the greatest areas of concern were not having the appropriate insurance coverage in place. The following are some key items that you need to be aware of:

We are all in a Flood Zone. It is just a matter of whether you are in a catastrophic zone or not. Pricing for flood coverage with FEMA varies depending upon the Zone – preferred zones are B, C X. The average cost is $417 per year. Catastrophic zones are A, AE, V, VE. Rates will vary according to elevation.

Homeowners’ policies exclude flood coverage. Make sure that you have an “All Risk” policy that includes unlimited backup of sewers and drains and sump pumps. If there is a power failure that causes pumps to fail and you have flooding in the basement, this could be a way for the loss to be covered.

For High Net Worth individuals – you should be with one of the top insurance carriers that have customized products – Chubb, ACE, PURE, Fireman’s Fund and Chartis (now AIG). Some also offer additional coverage called “DIC”. Difference In Conditions coverage will cover contents in the basement and over ride the FEMA form. We recommend that you try and have your flood coverage by one of the five listed above. The ease of doing business with one adjuster is critical during a storm.

FEMA Flood covers you for a maximum of $250,000 on dwelling and $100,000 on contents. It excludes contents in the basement except for items that service your home such as water heater, furnace, air conditioning unit, washer and dryer.

FEMA flood also excludes sea walls and docks. You can purchase additional coverage for other structures but they are all separate policies.

You can purchase another policy that sits over and above the FEMA policy called Excess Flood which you can purchase up to 100% coverage, but it is costly and many people chose to self-insure due to the costs.

Most standard Homeowners policy has limitations under MOLD of $20,000 in New York State, $10,000 in Conneecticut and $10,000 in New Jersey. This can be increased by an endorsement for an additional premium. Where there is a water claim, more than likely the mold will happen pretty quickly.

Make sure that you have a homeowner’s policy that has Guaranteed Replacement cost to rebuild with no cap. That way if the coverage is up to date and there is a serious catastrophic situation and the construction costs go up substantially, you have a safety net in place.

If you have an HO3 policy it will be subject to a set of coverages (named Perils) versus a set of exclusions under an HO5 All Risk policy. Most of the HO3 policies can have optional coverage that you can add on such as backup of water – which usually has a small limit of $5,000 to $10,000. All Risk policies with the top carriers will have unlimited coverage up to the policy limits under dwelling and contents.

Make sure that your coverage is up to date. If you are doing any type of renovations, make sure that your broker and insurance company are aware of the changes. Some of the insurance companies will have a surcharge under your deductible if they find out that work was done and there is a claim.

Review your contents coverage. Make sure that you have the proper coverage such as Fine Arts, Collectibles, Musical Instruments, Wine, and Jewelry etc. By putting on a rider, there is no deductible – it is worldwide and does not exclude flood on most of the high net worth carrier’s forms unless special terms are in place.

FEMA flood policies do not cover “Additional Living Expenses” therefore if you had to move out while your home is being repaired; you need to be aware that this is an expense that is not covered by FEMA. If you have other coverage that came into play during the storm such as Wind, your primary homeowner’s policy with a good insurance carrier may offer this coverage. This has to be due to a covered loss and will be the call of the adjuster considering the circumstances.

With regards to Watercraft, make sure that you have the proper coverage in place. Some people assume that since a boat is parked in their yard or up on blocks that it is automatically covered under their homeowners. You need to purchase extra coverage for physical damage and also extend your policy to protect for Liability, depending upon the horsepower of the boat. If your boat is parked in a marina and blows into another boat or the engine explodes and causes damage to property of others or bodily injury, you need to make sure that you have this coverage in place. You will also need excess liability or umbrella liability to sit over top in the event of a serious injury or property damage.

With regards to Automobile, there are two types of insurance policies: ACV, Actual Cash Value less depreciation; and Agreed Value, the stated amount on the policy itself with a new vehicle that locks in the purchase price or sticker price of the car. If there is a total loss the company writes a check for the stated amount on the policy. Chubb, ACE, PURE, Fireman’s Fund & Chartis (AIG) offer these coverages. This is where one needs to be aware of the difference in costs in direct writer policies from companies such as Geico, Allstate, and State Farm.

Overall, it is critical to have a knowledgeable insurance broker who will be your advocate to the insurance company to help pull as much coverage as they can from the policies, conduct a comprehensive review of all of your exposures and explain the risks to you so that are no surprises in the event of a serious situation. If you are aware of your options and choose to self insure, it is different from not knowing that you could have bought the coverage to protect you.

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