November 22, 2017

Home Insurance and Water Damage

Image of the outside of a beautiful home.

Water is essential for many things in life, yet it is one of the most frequent causes of damage in homes. Consider how many rooms in your home are connected to an inside water source or are susceptible to water coming in from outdoors, and you will quickly realize how vital water damage prevention should be.  When water goes where it shouldn’t, even a small leak can become a major problem. Some damage from water is covered by your homeowners policy, some is not. Either way, most damage from water is preventable.

Quick action helps in water emergencies.

It has happened. There is water everywhere — in your walls, under your carpets and soaking into your belongings. Whether caused by a burst pipe, a broken water heater or a flood, there are things you can do immediately to salvage belongings and limit damage or loss.

  1. Stop the water. If the water is coming from inside your home, such as a burst pipe or water heater malfunction, shut off the main water valve immediately. (Make sure everyone in your home knows where the shutoff valve is located.)
  2. Turn off the utilities* – if the situation calls for it. In a serious water event, turning off the power or natural gas might be necessary to ensure your and others personal safety.
    *In the case of a minor water situation there may not be a need to shut off the utilities, and doing so may leave your home without power until the utilities can be turned back on again.
  3. Prevent electrocution. Do not use any electrical appliances if the carpet or flooring surfaces are wet. Use a wet vacuum to remove water, but check the manufacturer’s instructions before starting.
  4. Use fans to circulate air and encourage drying. This is especially important in the first 24-48 hours after an indoor flood.
  5. Get water out quickly (and safely). Fast action on your part can prevent further damage, help you save more of your belongings and minimize the time and expense of repairs. Clean up as much water as possible by mopping or blotting with towels.
  6. Get property to a dry location. As much as possible, move belongings to a dry area. Put furniture on blocks or slide a square of aluminum foil under furniture legs to prevent the wood stain from bleeding into carpeting.
  7. Remove area rugs from the floor. The dyes in carpets can stain flooring, carpeting or wood floors.
  8. Do not lift tacked down carpet without professional help. It could cause carpet to shrink.
  9. Launder any clothes or other washables that have been soaked as soon as possible.
  10. Wipe excess water from furniture. Open drawers and cabinet doors for faster drying. Spread out books to speed drying and prevent further damage.
  11. Watch for debris and pests. If water is flowing in your house there may be dislodged materials such as nails, or pests such as snakes or vermin.
  12. Report claims as soon as possible. The sooner you report damage, the sooner we can help you get your home and life back to normal.
  13. Keep track of the time spent cleaning and save receipts for the costs of any rental equipment or payments to professional services. Take photos of any damaged items you may have to discard before an insurance adjuster sees them, and make an inventory list of any damaged goods.

Why Is My Home Insured For More Than It’s Worth?

Image of the outside of a beautiful home.

My home is worth $275,000. Why does my insurance company want me to insure it for $375,000?

This is probably the most frequently asked question among our Homeowners Policy clients today. We will usually respond with…“and be glad that it is, let me show you why.”

Comparing market or real estate value of a home and replacement cost of a home is like comparing apples and oranges. Market value is the price for which you could sell your home. Market value takes into consideration land value, neighborhood, comparable sales, and more. Replacement or reconstruction cost is the amount of money it would take to rebuild your home, with like kind and quality, at today’s costs. Replacement cost reflects the cost for building materials, code compliance, demolition, construction labor, and more.

In the current economy, many people are under the assumption that construction costs have reduced as much as property values. This is simply not the case. The fact of the matter is, today, you can buy an existing home for much less money than it would cost to build that very same home. Although you may hear from a friend that they got someone to do some work for “super cheap,” this is the exception to the rule. Contractors’ overhead hasn’t reduced much, and cost for building materials hasn’t decreased dramatically either. Contractors are just like everyone else, they need to put food on the table, and I don’t know many non-profit construction companies out there.

The amount of coverage you need should be based on the true reconstruction costs of your home, regardless of current market value.