Monthly Archives: January 2013

Ask Sherri: Does My Homeowner’s Policy Cover My Wedding Ring

Wedding_ringsQ Dear Sherri: I am getting ready to pop the question and have already purchased an engagement ring. Does my Homeowner’s policy cover the ring?

A How exciting and romantic. Let me start with a BIG congratulations! Most Homeowner’s policies cover jewelry on-premises for limited perils, which means causes of loss. However, there is a limit on the overall amount and a limit for each individual piece of jewelry. I’m sure (I hope, for your sake) that your engagement ring is way over that individual limit.

The best way to properly insure an engagement ring is to purchase an Inland Marine Policy or add a “Floater” to your existing Homeowner’s policy. To do this, you will need an appraisal giving a detailed description of the ring and its value. Since yours is a very recent purchase, you can use your receipt as long as the receipt provides a detailed description of the ring and the correct replacement cost value.

Some of the nice features of an Inland Marine Policy are that it is “Special Risk” coverage, meaning that if the peril or cause of loss is not specifically excluded by the policy; it’s covered! Also, you will have world-wide coverage, which may be important for that special honeymoon (don’t go cheap on us!) and usually a deductible is not applied if there is a loss.

Your Fire and Liability Policy: Deductible and Coinsurance

439D Fire BellLast week we discussed the importance of noting the policy’s “Valuation” and “Form” when determining which policy is best for you and for performing an accurate apples-to-apples comparison when you receive multiple quotes. This week, I’m going to discuss two more important items to look at when comparing various insurance quotes for fire and liability policies.

DEDUCTIBLE – Deductibles are the amount you pay when you put in a claim. Some policies only have a property deductible, some have a liability deductible, and some have both. For example, let’s say you purchase a policy with a $1,000 deductible. Later on you’re in the bathroom and your hair drier falls in the sink full of water, short-circuits, and causes a small fire with damages that total $2,800. You put in a claim with all the appropriate proof of damage and you receive a check from the insurance company for only $1,800. Why? Remember, you are responsible for your deductible, which was the missing $1,000. Obviously the lower the deductible, the more the premium will cost, but make sure you can afford that deductible when recovering from a disaster.

Imagine you have a $1,000,000 building. We’re not talking market value because market value includes land and land doesn’t ever require rebuilding. We’re talking about how much it would cost to rebuild your building exactly as it was before any disaster. You decide to insure it for $500,000 in order to save money. How smart! Or is it? Most insurance policies have what is called a “Coinsurance Clause” in order to stop people from doing exactly that. How does it work? If your policy has an 80% coinsurance clause, that means that if you insure your building for LESS than 80% of its true value, you actually become a co-insurer and you are responsible for that portion of the value you didn’t insure. Thus, a coinsurance clause penalty kicks in and you are responsible to pay the penalty. For example, imagine that one of your large trees falls on your $1,000,000 building during a storm and caves in the entire corner of the building causing $50,000 in damage. You submit a claim expecting $49,000 (Don’t forget that $1,000 deductible.). However, since you violated your coinsurance clause and only have 50% of the insurance you are supposed to have, your insurance company is only going to pay you 50% of your damages minus your deductible. In other words, 50% of $50,000 is $25,000 minus your $1,000 deductible; you are going to get a check for $24,000 to fix that $50,000 worth of damage! Coinsurance can be 80%, 90% or even 100%. Obviously the lower the coinsurance percentage required, the more expensive your policy will be. Whatever it is, make sure you don’t even get close to violating it or it’s going to cost you money in the long run.

As you can see, covering the same building can get you many different premiums by just changing the four items we have mentioned in these two blogs. You must look at the details to see WHY one quote is less expensive than another. Is it a less expensive rate or is an important coverage missing? Next week we’re going to discuss how your broker or agent fits into all these choices and what you should expect from him or her.

– Ray Alvarez

Two Important Items To Look At When Buying A Fire And Liability Insurance Policy

fire-and-liabilityWe’ve all seen the commercials with cartoon military officers, reptiles, and bugging devices telling us their policies will save you money. However, how do you really know if you are getting the RIGHT insurance to protect you? While price is important, should it be the only criteria when picking a policy? Would you buy a new car if the only thing you knew about it was its price? Of course not! Yet, at times, that is the only thing we understand about a policy.

Therefore, this week, I’m going to discuss two of the more important items to look at when comparing various insurance quotes for fire and liability policies. Each will affect the premium, but once you know what they mean, you can determine if you want to pay the extra premium for that coverage or not. Also, this will help you make an apples-to-apples comparison with all the quotes you receive.

Policies usually determine a loss in one of two ways: Replacement Cost or Actual Cash Value. A Replacement Cost policy pays you the actual cost to replace an item; while an Actual Cash Value policy takes depreciation into consideration. For example, let’s say you insure a $30,000 Home Theater and you’re the envy of the neighborhood! Unfortunately a fire destroys it and you put in a claim. A Replacement Cost policy is going to give you $30,000 once you go out to replace the system and submit the bill showing the actual replacement cost. An Actual Cash Value policy is going to determine that this Home Theater is now over two years old and due to depreciation and newer models now available, your Home Theater is only worth about $2,000, so that is what they are going to pay you. The premium is less, but there is a big difference as to what you will be paid when presenting a claim. Is it worth it? That’s up to you.

Policies are written on a “Basic Form”, “Broad Form”, or “Special Form”. The “Basic Form” covers 11 perils. They are fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. “Broad Form” also covers these 11 perils plus breakage of glass, falling objects, weight of ice, sleet, or snow, water damage, and collapse. “Special Form” is different. This form protects you from all causes of physical damage unless otherwise specifically limited or specifically excluded in the policy. In the first two types of forms, you have to prove that the policy covers it in order to get paid a claim. With “Special Form”, the insurance carrier has to prove that their policy specifically excluded it in order to not pay the claim. Which do you prefer? You get what you pay for.

That’s why it is so important that when you receive a quote, you review the form and valuation. If they are quoting you “Special Form”, you need to see the exclusions so that you can decide if the price is right for you. And these are just two items to take into consideration. Join our agency again next week when we discuss a few more items that you want to consider before laying down your hard-earned money!

– Ray Alvarez

Floater Policy: Insuring Your Valuables

floater-policyLast month, we wrote a blog discussing the proper way to insure an engagement ring or any other valuable item you were fortunate enough to receive over the holidays. The response was so overwhelming that now that Valentine’s Day is coming up we want to continue the discussion of insuring valuables. For those of you who have already had these items insured for some time now, you still need to keep the values up-to-date and this blog is to help you do that.

We understand that everyone’s definition of “valuables” is different so we thought it prudent to list a few:

  • jewelry
  • watches
  • rings
  • bracelets and other trinkets
  • furs
  • antiques
  • musical instruments
  • and collectibles of all kinds may also qualify for Floater coverage. Even valuable pieces of art, camera equipment, stamp and/or coin collections can be insured. This brings us to the issue of establishing the “value” of what we already have insured.

    For instance, many of us have a Personal Articles Floater, Inland Marine or Scheduled Items Policy already in place. Some of these policies have been in place for so long that we just pay the premium every year and don’t give a moment’s thought as to what they actually cover. Having said that, any given item may have been adequately insured when it was first put on the policy, but how adequately is it insured today? For example, what about the fluctuation in gold prices? When I received my first charm bracelet, gold was selling for $30 an ounce. At its height it was almost $1,000 an ounce. I wouldn’t still want that charm bracelet to be insured at $30 an ounce! Many times jewelry appreciates in value. The same may be true of fine art, stamps or coins.

    January is a time of New Year’s Resolutions, personal reassessments, and introspections. So why not take this as an opportunity to also reassess not only the insurance coverages you have in place, but the values of the items specifically covered under those policies? Being “fully covered” is a relative term and one that scares those of us who deal with losses every day, because there is really no way to be fully covered for every eventuality. However, you can improve the coverage if you review your policy on an annual basis. For example, what items are covered on these policies? How are they covered, individually or as a group? Is the coverage subject to specific exclusions? If you travel, is the coverage worldwide? Have any of the items appreciated in value, depreciated in value? What would it cost if you had to replace these valuables in today’s market? These are just a few of the many questions we answer for our clients every day. So, why not take advantage of your broker’s knowledge and check with them regarding the insurance you have in place and the values stated. My guess is that you will be glad you did!

    Karen Skoler, CPCU

    A Message from Heidi Fox, President of Petschauer Insurance

    HF_SMILE BLUEAs we start the new year of 2013, I wanted to take a moment to share my thoughts with you, our loyal clients.

    First and foremost, I want to thank you for the trust and confidence you have placed in Petschauer Insurance. I can assure you that we will continue to earn that trust every single day as we have for the last half century.

    This past year brought some significant challenges to our global community, our local communities, and to each of us individually. In the Tri-State area, Hurricane Sandy affected every one of us. Even if you were not directly impacted by Sandy’s devastation, I’m sure you know someone who was. While Sandy brought so much strife to so many, it also brought forth an outpouring of support from friends, neighbors, family, and strangers; both locally, and from around the country. I believe that the power of generosity and camaraderie is far stronger and more enduring than any disaster could ever be.

    My wish for you and yours for 2013 is simple – a year filled with good health, great happiness, and no difficulties – but, if there must be some; I wish that they be few, and that you will reach out to us if we can help.


    Heidi Fox
    President of Petschauer Insurance