Page 14 - West Virginia 811

Insurance - The Current
Word
It went up HOW much?”
By Virginia Reams The Policy Center Jackson, Mississippi
adequate coverage to match the rising costs of goods & services just makes a Perfect Storm.
The past several years have been something called a “soft” market. This means there is fierce competition for the premium dollar, and companies either don’t raise rates, or actually reduce them to attract customers. Add all that together, toss in supply chain issues raising costs of materials, (bought any eggs lately? Oh wait – that’s coming down ...) and while the timing could be better, you are going to see it on your renewal bills! No way around it.
But – if you have to pay high rates
– make sure you get back enough if
you have a large loss – and the way to do that is to make sure the coverage amount is enough to rebuild your home/building like it currently is. Don’t worry about changes in building codes – there is coverage built-in to adjust
for that. (Look for “Law or Ordinance” in the extensions!) If you can’t find it, be sure and ask your agent. Because you definitely want it. Almost all Homeowner or building coverage will have it. It’s “built-in”, and there is no extra charge. Also, make sure you have Replacement Cost coverage – never mind “ACV” (that means “depreciated”).
One last note to make sure you have the correct coverage on your Homeowners’ policy is guns, art, jewelry, electronics. Most policies come with “sub limits” – meaning they will only pay a certain amount (usually $1,000 tops) on
those items, regardless of the cost or value. If you have expensive items in that category, tell your agent. He will write something called a “Floater” to attach to your Homeowners’ and yes, you’ll probably have to have the items appraised, but do it. You spent good money on what you have acquired, and you want to have it fully protected.
Don’t think “it won’t happen” – it happens every day. Ask the folks in Rolling Fork, Mississippi – or what used to be Rolling Fork....yes, it happens.
“mention Homeowners or any other property coverage! Unless you live 500 miles from the coast, on top of a mountain that doesn’t have any trees, you’re probably wondering if there is nice side job you can grab so you can afford to pay the bill!
It means that, unless you have insurance coverage of at least 80% of the Replacement Cost of your building, the check you will receive for that
bad damage will be reduced by the percentage you are out of co-insurance. And that bites, my friend...hard!
In the last 5 years, both materials
and labor costs have escalated so dramatically that I would venture to say that those little “cost of living” increases you have on your property policies – likely in the range of 2-4% - won’t touch the increase in the labor and materials.
To the insurance company, it isn’t
about the sales value of the property, it’s about what they are on the hook
for if the thing got leveled/totaled –
fire, tornado, whichever. And whether there is enough insurance to pay for
the rebuilding of it – along with the replacement of the contents. That’s the problem on your end to fix. If there isn’t enough insurance, you’re the one that’s not going to get paid enough to replace what was lost.
Now the problem on the insurance company’s end is whether or not they can pay claims and expenses, and
still make a small profit. If they can’t, rates go up. If your state has had some devastating weather hits – wind, hail, hurricanes, wildfires, you might have noticed a few insurance companies withdrawing from your state. It’s happened in several states – Florida, Louisiana, California to name just a few. Hard weather hits, coupled with the low rates we have had over the last few years, made worse by not having
No one has avoided sticker shock when they got this year’s insurance renewal no one. And don’t even
a
To begin with, we haven’t kept our property values up to meet increased prices, not only to sell the property – but to repair or replace it in case of a large loss. Yeah, we know values in our neighborhoods have gone way up – and we sure like knowing that. But did we increase the coverage on our homes to match? Bet not. I bet it never crossed your mind.
How about that office building?
Have sales prices gone up in that neighborhood, too? They probably have, since they have gone up country- wide – some higher than others. But they have all gone up. That’s the good news.
Now here’s the bad news:
Suppose for a minute something
really bad happened – fire, tornado
– something really bad. There’s something called “co-insurance” in
the body language of your policy. You know, all those pages that go on and on and are just so boring that you haven’t bothered to read them. It has its own paragraph, but the point is not whether you ever read them – but what “co- insurance” means.
12 • West Virginia 811
2023, Issue 3