Property Insurance Policies Are Not What They Used To Be

​If you live in Florida, you may have experienced sudden and catastrophic losses such as hurricanes, water damage and flooding. These events can cause damage to your property, and leave you in a position of possibly having to replace your roof, as well as repair damage to the interior of your home. The questions is … can you rely on your insurance company to cover all the damage?
 
During a recent conversation with my business partner Scott, we discussed the erosion of coverage that has gone on over the years.  More recently, insurance companies have added endorsements into their policies that most policyholders may be unaware about.
 
Will this affect my coverage?
Whether it’s water damage or roof damage, repairs or replacement is typically covered in the dwelling coverage of your policy, providing the damage has been caused by a covered loss. I cannot stress enough that you need to make sure you understand and know what your policy covers, limits, or excludes.  
 
Insurance companies are implementing Limited Matching Coverage Endorsements into their policies. Unbeknownst to many of our clients, when their policy was renewed, the renewal had the endorsement which reads:
 
Coverage A – Dwelling and Coverage B – Other Structures Limited Matching Sublimit
 
We will repair or replace undamaged property due to mismatch between undamaged material and new material in adjoining areas if repairs or replacement are reasonable according to items a. through c. below. In determining the extent of the repairs or replacement of items in adjoining areas, we will consider all relevant factors, including, but not limited to:
 
a. The cost and/or expense of repairing or replacing the undamaged portions of the property; and
b. The degree of uniformity of appearance that can be achieved without such cost and/or expense; and
c. The remaining useful life of the undamaged portions of the property.
 
The total Limited Matching Coverage is 1% of the Coverage A limit of liability for repairs or replacements of any undamaged part of the building or its components solely to match repairs made to damage as a result of a covered loss. This limit includes costs for tear out and debris removal.
 
This limit of liability does not increase the Coverage A or Coverage B limits of liability shown on the Declarations page, nor does it apply to damage otherwise limited or excluded in the policy.

What does this mean?
It means that you are paying higher insurance premiums for less coverage.  These endorsements and limitations in your policy are detrimental and could cost you large sums of money for needed repairs should you have a claim for property damage.  To add insult to injury, some policies have a $10,000 water damage limit which includes mitigation and mold coverage.  So, no matter how much damage you sustain, your claim settlement would be limited to only $10,000 with this coverage. 

What about my roof?
I previously wrote about the roof depreciation schedules that insurance companies have implemented.  If you sustain damage to your roof and it needs replacement, the amount of coverage to your roof will be depreciated by the age of your roof.  If you have a roof depreciation schedule in your policy, you will not be able to recover any of the depreciation that would be deducted, which could leave you with large out of pocket expenses to complete your repairs.

What can you do?
The bottom line is … make sure you understand and know the coverage in your insurance policy.  Contact us today for a free policy review and learn how we can help.