2005-03-04 / Columnists

Notes On Consumer Affairs

By Assemblywoman Audrey Pheffer

Audrey Pheffer
Audrey Pheffer If you asked most people about their homeowner’s insurance policy, they could probably tell you little about the policy and what it covers, except that the premium is too high. It is well worth the time to become more familiar with your homeowner’s insurance policy since most New Yorkers’ homes represent their largest investment. Being more informed about your insurance policy will ensure not only that you receive all applicable discounts, but also that your home and its contents are properly protected.

In reviewing your policy, consider whether your limits are sufficient to allow you to purchase a similar home or rebuild in your area, and whether your limits are adequate to replace your home’s contents. Homeowner’s insurance also includes personal liability, which can help to protect you in the event of a lawsuit. Be sure that your policy limits are high enough to cover your exposure. Landlords, business owners, and households with dogs, young children, or young drivers are all people who may have increased exposure and may benefit from increased personal liability coverage.

The insurance discounts offered differ by company, so be sure to check with your agent to find out what discounts your company offers. Many companies offer discounts for home security features such as dead bolt locks and security systems, as well as for home safety features such as fire extinguishers, smoke detectors, and carbon monoxide detectors. It is also common for insurance companies to offer discounts to customers who have multiple policies, such as automobile and homeowners insurance, through the company.

You can also save money by changing your deductible, the amount that you pay when making a claim on your homeowner’s policy. The higher your deductible is, the cheaper your premiums will be. However, be sure that when you choose a deductible, you choose an amount that will not impose financial hardship in the event that you do have a loss. You can also help to keep your homeowners insurance premiums low by only filing claims that you cannot afford to cover. For example, if your deductible is $250, and a rainstorm causes $300 worth of damage, it would not be worth it to make a claim. After paying your deductible, you would only be receiving $50 from your insurance company, but the claim could remain on your record for an average of three years, and the claim could even cause your premiums to rise. Consult your agent for advice when making claims.

Many people make the mistake of failing to keep their policy current. If you make any renovations to your home, such as adding an extra room, remodeling the kitchen, building a deck, or adding a swimming pool, you may want to call your agent to see if these additions are covered under your current policy or if changes need to be made to cover these additions. Also, certain items in your household may need or be eligible for special coverage. Such items may include jewelry, furs, antiques, collectibles, electronics, and other items of high value. Homeowners policies often have low limits that may be insufficient to cover the full value of such items, and in order to properly cover them, extended coverage may need to be purchased. If you are concerned about your coverage limits on such items, call your insurance company.

It is very important that you understand what your homeowner’s policy covers. There are certain perils that homeowner’s policies do not cover in New York, such as earthquakes and floods. In order to be covered against either of these perils, a separate policy must be purchased, or your home and its contents will not be covered. What surprises many people is that for insurance purposes, “flood” refers to any rising body of water. This means that if heavy rain creates water run-off that floods your basement, your homeowner’s policy would probably not cover the damage. If your basement has a sump pump, some companies offer separate protection through your homeowner’s policy in case flood damage occurs and the sump pump fails.

If your insurance provider does not offer flood insurance, the New York Property Underwriters Insurance Association (NYPIUA) offers such coverage. To learn more about NYPIUA call 800-522-3372, or visit their web site at www.nypiua.com.

For further information on insurance in general visit the New York State Insurance Department’s web site at www.ins.state.ny.us.

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