Through Wind, Nor Storm, Nor Flooding

By Mary Ann caskey, USCG Credit Union

After a disaster is the wrong time to find out what insurance doesn’t cover or that the deductable is much higher than expected. How a homeowner policy is written determines coverage of everything from hurricane losses to spoiled food in the refrigerator and freezer from a power outage.

“When a policyholder receives their policy in the mail, it is very important that they take a moment to read any stuffers or documents that alert the customer to any changes to that policy,” says Mike Dacre of Mike Dacre Insurance, a local, licensed insurance agent of 24 years and member of The Pennoyer Group, Inc. He continues, “One such item of importance is whether the carrier has a wind or named storm deductible that is different than the deductible shown for all other perils on the policy.”

Some insurance companies policy clauses include a “cyclone, wind/hail, named storm, tropical storm” deductible. The clause can be part of the original policy or as an adjustment sent as a stuffer or document during a renewal period.

Dacre states, “The deductible for a named storm is a percentage of what the home is insured for rather than a flat deductible established by the policy holder of say $500 or $1,000 that applies to all other covered losses.” Then he gives the example; “If the home is insured for $200,000 and the insurance company has a 3% cyclone/named storm deductible, the deductible is $6,000.” Plus, it would need to be paid before the insurance will pay for the loss.

According to The Maryland Insurance Administration’s Frequently Asked Insurance Questions After a Weather-Related Loss (FAQs) there are two types of homeowner coverage – Replacement Cost Value (RCV) and Actual Cost Value (ACV). An RCV policy is usually paid in one lump sum and “will cover the cost to return your home to the condition it was in just prior to the loss.” Whereas the ACV is described as “the RCV minus a ‘hold back’ amount reflecting the depreciation that will be paid to the insured once the repairs are made.”

Named storms can lead to flooding, Dacre addresses that local issue, “Flood events are excluded on homeowner’s policies, but can be secured by an agent who writes flood policies for the National Flood Insurance Program under Federal Emergency Management Agency (FEMA).”

Dacre stresses, “Flood policies have a 30-day waiting period before coverage begins and a minimum $1,000 deductible.” Plus, “a flood is generally defined as general and temporary, and must affect more than just one property for insurance purposes.”

Another issue for policy review is spoiled food due to an electrical outage. It is addressed in the FAQs as, “If you lose electricity and the food in your refrigerator spoils, you may or may not be covered for the cost of the lost food, depending upon the language and terms of your policy. You should review your policy to determine if you are covered for food spoilage under these circumstances because any claims you file, whether paid or not, will be counted against your policy and considered by the insurer when determining whether to renew your policy.”

Homeowners have choices. These are just a few examples of how recent events in our area have brought the importance of reviewing homeowner insurance policies to the forefront. Be pro-active and talk to an agent. Review your policy.

“FEMA has great information on the flood program,” Dacre says you can find it at www.fema.gov.

Additional information is available through the Maryland Insurance Administration by calling 1-800-492-6116 or logging on the website at www.mdinsurance.state.md.us. Or contact your local agent for a policy review.

To find local agents, visit the Pasadena Business Association website at www.pasadenabusinessassociation.com or the North Anne Arundel Chamber of Commerce at www.naaccc.com or contact Dacre at 410-952-2997 or at miked@pennoyer.com for a policy review.

Don’t be left wondering how you’re going to pay for losses, rather be thankful your family is safe and your insurance is doing what you expected before Mother Nature sends Hurricane Irene’s sibling through Maryland.