Statewide Insurance Agency offers Oklahoman’s that are looking for home insurance options so that the proper balance between cost and coverage is achieved.
The discussion that follows explains the difference between Replacement policies and Market Value/Actual Cash Value policies. We understand that no one size fits all Oklahoma consumers when you are getting quotes for your homeowners insurance.
It is quite common for insurance companies to offer quotes on homes in Oklahoma City for more than the market value. This often poses the question from Oklahoma homeowners, “Why is my house being insured for more than it is worth?” Before determining how much to insure a house for, it must be decided how the insurance company will value the house if there is a claim. One method offered is to value the property at Replacement Cost, which as the name implies, is intended to pay to replace the property, without regard to the original or current purchase price and without regard to depreciation.
In most situations, the Replacement Cost option is going to result in a higher claim payment then if the property was insured at its current value (sometimes called Actual Cash Value coverage – ACV). An insurance company is only obligated to pay up to the limit of insurance; therefore, the house may need to be insured for more than it is worth. In order to obtain Replacement Cost Coverage, the house will need to be insured for the amount it would cost to replace it.
Most property depreciates in value over time. A television set would not be sold today for the same amount it was purchased for ten years ago; it would be sold for less, most likely much less than the original purchase price. A policy containing a replacement cost provision would pay today’s cost of a new television set of like kind and quality which would be more than if the policy only paid for the value of the ten-year old television set (see ACV coverage above).
On a larger scale, the cost to rebuild or replace an entire home could be significantly more than the home was purchased for or could be currently sold for. Even for a home built this year, the cost to rebuild it very easily could differ from the original cost. There are several factors to consider when making an attempt to measure the cost of replacing a home, such as:
No economies of scale
Cost of preparing the home to be rebuilt
Access to the home site may be limited or obstructed
Increase in labor costs due to high demand, as in the event of a catastrophic event
Increase in material costs, possibly due to shortages or discontinued
There are several methods used to estimate the replacement cost of a home. Some of the factors insurance companies use are:
Type of foundation
Attached or detached garages
Location of the home
Number of rooms and baths
Replacement Cost Coverage is an option many homeowners should consider when looking for homeowners insurance. Obtaining this coverage will require the house be insured at the estimated Replacement Cost value, which typically is a higher amount than the market value. With the limit of insurance being higher, the premium will also be higher. Certainly no one wants to pay more for insurance, but the difference in a claim payment could be several thousands of dollars.
Off-Premises Coverage Includes Theft and Damage from Perils Listed In Your Oklahoma Homeowners Insurance or Renters Policy
While self-storage units may be a useful way to de-clutter your home, having the right insurance coverage is the best way to financially protect your belongings—no matter where they are.
If you are planning to rent a storage unit for your belongings, take the following steps:
• Ask your insurance professional about off-premises coverage. Some standard Oklahoma homeowners insurance and renters insurance policies include coverage for personal possessions kept off-premises including a storage facility. Off-premises coverage includes theft and damage from fires, tornadoes and other perils listed in the policy. However, it does not cover for damage caused by flooding, earthquakes, mold and mildew, vermin or poor maintenance. And check the coverage limits, as these vary by company.
• Find out what type of financial protection is provided by the storage facility. Most facilities provide reimbursement based on the square footage of the unit. Check both the coverage limits and whether it is provided on an actual cash value or replacement cost basis. Most storage facilities will also offer a variety of supplemental insurance packages; ask your insurance professional if it would make sense to buy this additional coverage.
• Consider special insurance or storage for expensive items. If you intend to store valuable property, such as art, antiques, jewelry or furs, there may be dollar restrictions under your standard Oklahoma homeowners or renters insurance policy for theft. Ask your insurance professional about adding a floater or endorsement  to your policy in order to fully cover these items. There are also specialized storage facilities available for these types of items, as they often need to be kept at specific temperature and humidity levels. Small items such as jewelry will cost less to insure if they are kept in a bank safe-deposit box. Keep in mind contents in a safe-deposit box are not insured by the bank.
• Create an inventory of items to be kept off-premises in storage. Add the items you’re moving to the storage unit to your home inventory so that you can keep track of your belongings and make sure you have the right amount of insurance to protect them. To make creating your inventory as easy as possible, the I.I.I. has a free home inventory tool, Know Your Stuff® , which includes secure online storage so you can access your inventory anywhere, anytime.
The I.I.I. offers the following tips for choosing a safe storage company:
• Look for a secure facility. Fencing that secures the entire property and access control are the minimum security measures a storage business should offer. But, ideally, the storage building should have onsite security features such as 24-hour video surveillance cameras and coded security pads. Also, find out about the facility’s procedures in cases such as a fire or flood.
• Look for a unit with climate control. Very high or low temperatures, as well as dampness can quickly cause damage to appliances and furniture. And make sure that rising ground water from snow or rain is unable to penetrate the storage.
• Consider a storage company that offers insurance. If your renters or homeowners insurance does not provide off-premises coverage, you may want to opt for one of the company’s coverage options. Keep in mind that any facility should also have its own insurance to cover damages to the property or injuries that occur on the premises.
• Check that the facility is clean and well-maintained. If a storage facility is not routinely and thoroughly cleaned, there is a good possibility no one is monitoring for bugs and rodent infestations. Verify that the facility has a permanent, reliable pest extermination contract in place before you trust them with your belongings.
Oklahoma Homeowners usually think about the insurance on their home twice — when they get new homeowner insurance quotes and when they need to file a claim. The first is often hurried; a policy is needed to complete the mortgage package or equity loan, and the driving concern may be cost and speed more than depth and type of coverage. The second is the day after the fire, hailstorm, or other natural disaster. Unfortunately, that hastily purchased cheap homeowners insurance policy may not be the bargain it seemed. The time to learn about the breadth and depth of coverage is at the time of purchase, before the loss.
There are two primary types of homeowner’s insurance: replacement cost and actual cash value. In a replacement-cost policy, the structure is insured for the cost of repairing the damage or building a comparable replacement, regardless of its age. If mandated by the local authorities, the repairs and construction will have to incorporate any upgrades required by the building codes in force at the time of the rebuild.
A key provision is that in a replacement-cost policy, there is no reduction in the payout because of depreciation. A 10-year-old roof is paid out the same as a nearly-new roof. For example, a 15-year-old roof is destroyed in a hailstorm. The roof has multiple layers of shingles, and the sheeting is deteriorated. New building codes require a full tear-off, including new sheeting and rafter repair. A replacement-cost policy will cover the supplemental work, even though the rafter damage isn’t a direct result of the storm.
As the name implies, an actual-cash-value, or ACV, policy pays out the fair market value of the damaged portion of the home at that time of the loss, minus depreciation. For example, a 15-year-old roof destroyed in a hailstorm may only be valued at $2,000 to $3,000. After the typical $1,000 deductible, the homeowner may only receive a single lump-sum payment of $1,000 to $2,000 to apply to the cost of repair or replacement of the roof.
Another consideration is the insurance coverage on the contents of the home. This comes into play after a major loss such as a fire or tornado. Replacement-cost policies pay for a comparable item, without regard to the age or condition of the original.
Some policies may be hybrids, with replacement cost on portions of the house, but ACV on other parts, such as the roof or windows. Contents are often rated at ACV. This is done for many reasons and there is nothing wrong or unprofessional about it. However, the policy owner needs to understand each part of the coverage — what is included and what is excluded.
The difference between replacement cost and actual-cash-value policies is significant, and homeowners need to make an informed choice. The primary reason to choose ACV is cost. The premiums for an ACV policy are significantly less than a full replacement policy. For many homeowners, ACV may be all they think they can afford. However, after a major loss, that cheap policy may not even pay back the premiums paid over many years.
Oklahoma City Homeowners shouldn’t wait for a disaster to take a second look at their insurance. A licensed agent can go over the existing coverage and explain not only what potential payouts might be, but also ways to economically upgrade. Feel free to call us at 405-285-2929 today, and we will answer any questions you have about homeowner’s insurance.
By the way, Statewide Insurance Agency offers Actual Cash Value home insurance policies as well as Replacement homeowners insurance policies!
“We shop up to 10 companies to find you the best coverage and price on your Oklahoma home insurance”
Statewide Insurance Agency https://okstatewide.com
Oklahoma homeowners often ask the question, “what does this home insurance cover?” Coverage’s can vary a lot from one policy to another. However, there are some things that are consistently limited or not covered at all in home policies. Therefore, sometimes I’ll answer the question by telling my customers about these limitations. Here are some of my top examples of things that are not covered or that have limited coverage under homeowners insurance policies in Oklahoma City, Edmond and the entire state of Oklahoma….. Rising Flood Water: Surface water and rising flood water damage is the # 1 uninsured loss in Oklahoma and the United States. Most flood victims will tell you that they thought their home was in an area that was high enough that it would not flood. Many Oklahoma home policies do cover damage that results from a sudden rupture of water from your plumbing system or air conditioning system. Shifting Soil: Much of the soil type in Oklahoma is clay. It expands with moisture and contracts as it dries out. Hot and dry Oklahoma summers can result in shifts in your foundation that crack slabs and crack walls. This type of damage is not covered by any home policy, as far as I know. Jewelry: Oklahoma home insurance policies limit coverage for theft of jewelry. Furthermore, mysterious disappearance or a stone falling out of a setting is not usually covered unless special endorsements are purchased. Most of your jewelry needs can be met by purchasing extra jewelry coverage. Jewelry is usually covered up to your Personal Property policy limit in a fire loss or a tornado loss. Tools and Other Property Used In Your Business: Coverage is very limited under most policies. You are expected to have a separate business insurance policy for these items. Sewer Back Up: This coverage is oftentimes available by endorsement. Some companies interpret this exclusion to mean back up of a city’s main sewer line and distinguish this from an “overflow” due to a problem within your plumbing system. I do represent one company, Safeco, that provides significant coverage for sewer back up without an extra charge. Motorized Land Vehicles: Be very careful here. You’ll usually need a separate policy for motorcycles, dirt bikes, ATV’s, boats, trailers, etc. However, you may be able to get coverage for a motorized wheel chair and a riding lawn mower. You might get some coverage for a tractor if it is used “exclusively” to maintain the premises. Business Liability: Liability which arises from your business activities is almost always excluded. Certain professions such as teachers and sales people might be able to purchase it with endorsement if you are an “employee” of someone else and not “self-employed”. Mechanical Breakdown of Appliances: This is not usually covered but is now being offered by endorsement by a growing list of companies. Damage Caused By Insects and Animals: Not Covered: This would include damage caused by termites, dogs, squirrels, etc. This is not intended to be a comprehensive list of Oklahoma home insurance coverages, limitations and exclusions. It is my intent to help you educate yourself so you’ll be able to shop more effectively by asking the right questions. Von Nix, CPCU Statewide Insurance Agency https://okstatewide.com
Oklahoma hail insurance claims down 76 percent in 2014, State Farm reports Oklahoma fell from No. 2 to No. 14 in number of hail claims from 2013 to 2014. by Don Mecoy, NewOK.com Modified: April 9, 2015 at 9:34 pm • Published: April 10, 2015 Oklahoma experienced a big decline in the number of hail-related insurance claims in 2014, according to figures released Thursday by the state’s largest provider of home and auto insurance. State Farm home and auto insurance policyholders in Oklahoma filed less than one-fourth the number of hail-related claims last year than they did in 2013, when Oklahoma ranked No. 2 overall in hail claims. Combined home and auto hail claims in Oklahoma fell last year to 8,089, which ranked 14th among states, State Farm reported. In 2013, Oklahoma State Farm customers filed 33,790 hail claims. “This past year was much better in the way of hail losses, obviously,” State Farm spokesman Jim Camoriano said. State Farm is Oklahoma’s largest provider of homeowners’ and auto insurance, with a market share of nearly 28 percent and 21 percent, respectively, according to the state Insurance Department’s 2014 annual report. Texas filed the most hail claims last year, with 51,193, followed by Illinois (43,821 claims); Colorado (42,365); Missouri (23,019); and Nebraska (21,326). Hail damage to homes and cars insured by State Farm totaled $2.4 billion in 2014. While hail storms most frequently strike the Great Plains and Midwest, every state is susceptible, State Farm said. According to National Oceanic and Atmospheric Administration’s Severe Storm database, the states that typically have the highest hail risk include Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, Oklahoma, South Dakota, Texas and Wyoming. Peak months for high hail activity are historically March, April, May and June, the NOAA said.
Why a Home Inventory Is Important For Every Oklahoma Homeowner Let’s try a little exercise: Can you list everything you own from memory? Didn’t think so. The fact is most homeowners own more things than they realize. It’s easy to remember the cars, the computer, the TV. But what about that holiday china in the garage? Or every pair of shoes? All of it is regarded as personal property for Oklahoma home insurance purposes. And if your Oklahoma City home is destroyed by fire or some other disaster, having a list of your possessions makes filing a claim easier — and helps you put your life back together. Why should I complete a home inventory? What’s the best way? Comparing the value of your belongings to the “contents” limit listed in your policy helps you make sure you have enough insurance to replace them if they are lost, stolen or destroyed as a result of a covered loss. The easiest way to take an inventory is to use a video camera, recording and describing items as you walk through your house. Or, you can use a regular camera and create a home inventory checklist. Here are a few tips for completing and storing your inventory: Add brand names and descriptions where you can, especially on large-ticket items. Serial numbers are helpful to note. Keep any receipts you have with the list to make the claims process easier. Store your video or photo inventory offsite so you won’t lose it if your house is damaged. Update your personal property records when you purchase new furnishings and valuables. Though the task may seem daunting, it’s important to try. An incomplete inventory is better than nothing at all. How much personal property coverage do you need on your home insurance? We can assist you in analyzing your insurance needs and help you decide how to most effectively protect your personal property. You should consider getting a quote for full-value coverage, which will pay for the replacement value of your personal belongings. A standard policy typically covers personal property only up to its actual cash value, determined by taking the replacement cost and deducting depreciation, which can be substantial. (For example, a 5-year-old TV is usually worth much less than what it would cost to purchase a new one.) Finally, remember your homeowners insurance policy covers valuable items such as jewelry, furs, art and antiques, only up to set dollar amounts. If the cost of replacing them exceeds these limits, you may want to purchase scheduled personal property coverage. The Insurance Information Institute has a FREE online tool that can help you create your inventory. Just visit www.knowyourstuff.org for more details. We hope you’ll never need the home inventory, but preparing for the worst can prevent a lot of hassle later! Statewide Insurance Agency in Edmond, Oklahoma specializes in home insurance and auto insurance. Because we represent multiple companies we are better at matching customers to companies.
Potential coverage for this situation varies from policy to policy so read your policy carefully. Many home insurance agents in Oklahoma give the wrong answer on this question.
Most quality home insurance policies in Oklahoma will extend the Liability Coverage from your Oklahoma home insurance to vacant property that is not being farmed. What is vacant? Is usually means absolutely no structure, no improvements. Some companies allow a fence. Therefore, if there is any farming or if there are any structures, you usually need a separate policy for this property.
Homeowner insurance policies typically limit coverage for certain types of Personal Property. Sometimes these limitations can be increased by paying additional money and sometimes another policy can be purchased to provide more comprehensive coverage in that particular area. Ask your agent about the personal property limitations within your policy. While the limitations vary from company to company, the types of limitations are very similar. For example, all policies will limit coverage for theft of jewelry, losses of cash and coins and theft of firearms, just to name a few. One of the companies we represent for home insurance is Travelers Insurance and I am copying an exert from their homeowners insurance policy that states their Personal Property Limitations within their home insurance policy…. 3. Special Limits of Liability. The special limit for each category described below is the greater of the limit shown below or the special limit for such category, if any, shown in the Declarations. Such limit is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability. a. $200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards. b. $1,500 on securities, accounts, deeds, evidence of debt, letters of credit, notes other than bank notes, manuscripts, personal records, passports, tickets and stamps. This dollar limit applies to these categories regardless of the medium (such as paper or computer software) on which the material exists. This limit includes the cost to research, replace or restore the information from the lost or damaged material. c. $1,500 on watercraft of all types, including their trailers, furnishings, equipment and outboard engines or motors. d. $1,500 on trailers or semitrailers not used with watercraft of all types. e. $1,500 for loss by theft of jewelry, watches, furs, precious and semiprecious stones. f. $2,500 for loss by theft of firearms and related equipment. g. $2,500 for loss by theft of silverware, silverplated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold, platinum or pewter. h. $5,000 on property, on the “residence premises”, used primarily for “business” purposes. i. $1,500 on property, away from the “residence premises”, used primarily for “business” purposes. However, this limit does not apply to loss to electronic apparatus and accessories described in category j. below. j. $1,500 on electronic apparatus and accessories, while in or upon a “motor vehicle”, but only if the apparatus is equipped to be operated by power from the “motor vehicle’s” electrical system while still capable of being operated by other power sources. k. $250 on tapes, records, discs or other media that can be used with any electronic apparatus, while in or upon a “motor vehicle”.