Ryan Hanley, Albany Insurance Broker - Guilderland Agency, Inc.

As I stare out my window and watch seven to twelve inches of white cover the greater Capital Region (Albany, NY), I begin to think about Debris Removal. After the 75 mph gusts we had yesterday there will be a significant number of trees, branches, bushes, and shrubs scattered, fallen and broken all over local property owners buildings and lawns. When the snow melts home and income property owners are going to want the "debris" littered across their property removed. So the question bears being asked, who pays for the Debris Removal after a storm?

The first call most people make is their town or city office. The town or city you live in is only going to pick up the bill if the debris has fallen on a power line or is in a public place.

The second (and in some cases the first) call home and income property owners make is to their insurance agent. So take yesterday for instance, after the 75 mph winds blew through the Capital Region I received two phone calls which both started the same way; "I have a tree fallen on my property. Does insurance cover the removal and for how much?"

In the first case the tree had fallen on the edge of the guy's house causing damage to the roof. In this case the answer is Yes the removal is covered. Any debris caused by a COVERED PERIL (very important, I will expand on this in my next blog) that causes damage to a covered structure has debris removal coverage. All Homeowners and Dwelling policies will have a sub-limit for debris removal ranging from $250 to $1,000 and will usually have a per tree, shrub, bush limit as well. So in the case the Homeowner had $500 per tree up to a total of $1,000 for all removal minus the deductible.

In the second case the tree had fallen and completely missed the house and landed right in the middle of the homeowners front lawn. It was not blocking his driveway but was a terrible eye-sore and inconvenience. In this case I had to tell the Homeowner that he had no coverage for the debris removal. The debris removal was not covered because there was NO damage to a covered structure and was NOT blocking a driveway and ramp. If there is no damage there is no coverage for debris removal. As with most homeowner policies this guy did have $250 to replace the tree once it was removed.

People say to me, "$500 is not alot of money for the removal of a tree." That is true, but its important for property owners to understand that their insurance policy is not designed for maintenance activities (The idea of "maintenance claims" will be expanded upon in a future blog as well). The reason that Debris Removal is covered on a homeowners policy is so the tree that damaged the roof of your house can be moved so the roof can be fixed. If you have many trees near your home or income property it may be worth your time to discuss endorsing your insurance policy with an increased Debris Removal limit. Real Estate professionals this is also another small bit of knowledge that may lend piece of mind to the new property owner and credibility to you, during the purchase.

Happy New Year.

An important feature of every Homeowners (and Renters) insurance policy is the Personal Property Limit. Labeled as Coverage C on your homeowners policy, this limit defines the amount of coverage you will have for all your "stuff" in the event of a loss. "Stuff" includes clothes, toys, furniture, art (some carriers limit fine arts coverage unless specifically endorsed), appliances, tools, etc. Computers and electronic equipment may also have a specific reduced coverage limit. It is a very good idea to sit down with your insurance professional to discuss your Homeowners policy and the coverage limitations your specific carrier may enforce. This way there won't be any surprises when you have a loss and certain items lost are not fully reimbursed. If necessary you can endorse your Homeowners policy to a coverage limit that meets your needs.

An example of this would be fine art. Let's say you have 3 paintings on your living room room wall totaling $10,000 in value and you have a replacement cost Homeowners policy with $150,000 in personal property coverage. There is a fire in your kitchen and the smoke ruins all three paintings to the point they can not be repaired. You assume that with $150,000 in personal property coverage you are completely covered on a claim for $10,000. But what you were not aware of is that the fine art coverage limit on your Homeowners policy is $5,000. NOW YOUR PISSED.

The majority of carriers in NYS have endorsements that will allow you to increase these specified reduced limits to meet your need. Another option is having high value items professionally appraised and scheduled to the policy. By scheduling a high value item to your Homeowners policy you eliminate any discrepancy from the item's value. I specifically recommend scheduling high value jewelry and fine art.

During the Holidays many high value and unique items are exchanged. This creates a wonderful opportunity to review your personal property and talk to your insurance professional about items that may potentially have reduced coverage limits.

Have a safe New Year.

A part of the Holiday Season that many home buyers are not aware of is that most agencies as well as insurance carriers themselves are on Holiday hours. This yearly ritual of paid vacation on the surface would not seem to have any impact on the purchase of a home or rental property and honestly it shouldn't. But what might seem like trivial days off can create headaches for last minute home buyers with a rapidly approaching closing. If you are a Real Estate Agent and not aware (you should be ashamed), every home buyer that is financing their payment (in the state of NY) must have proof of insurance (often times paid in full) effective the day of the closing. So on December 23rd at 230pm up until Monday December 29th it may be difficult to track down your agent/insurance provider. As most first time home buyers are not aware that they need proof of insurance on their day of closing this can cause a stress induced purchase with the first agent to answer the phone. Which can lead to shoddy coverage and high premiums. This presents an easy opportunity for Real Estate Agents to lend a value added service, make your clients aware of this closing day requirement.

So Real Estate Agents, to releave this unnecessary stress make sure next year you are informing all your clients who may have closings during the Holiday to secure proof of insurance well in advance of Hanukah and Christmas. The combination of the Holidays and Purchasing a Home is stressful enough. Having proper insurance coverage in place should be the last thing on your clients mind.

BTW, I will be working all day Christmas eve and the day after Christmas... hint, hint...

Happy Holidays

I see ever situation for the insurance exposures present. And the Capital Regions recent winter weather, including heavy ice storms and snow, has reinforced an idea I pitch to all my real estate contacts. Falling trees and branches reek havoc on homes and appurtenant structures every winter in the Northeast. So I advise my real estate contacts to point out dead trees, over-hanging branches, and any other natural pieces of the landscape that may cause damage to a newly bought home during winter. This is obviously just my opinion, but adding this type of disclosure to the sale could create an added level of trust between you and your client. Additionally, if the client acts on the recommendations, he/she may save thousands of dollars in debris removal and rebuilding costs. Not to mention the time spent reporting the claim and working with the claims adjuster. Making the real estate agent who pointed out the exposures a hero of sorts.

Just an idea I was reminded of while watching trees and branches fall all over my neighbors property.

From first-time-home-buyers to seasoned investors, there is a common misconception that the amount a building is purchased for is the same amount that building should be insured for. Though instinctively this may seem the proper course of action, I will explain how under insuring a home, dwelling, or apartment can have grave consequences.

For a HO-3 Special Form Homeowners policy the general definition of replacement cost is, "Replacement cost contents insurance pays the dollar amount needed to replace damaged personal property with items of like kind and quality, without deducting for depreciation. Replacement cost dwelling insurance pays the policyholder the cost of replacing the damaged property without deduction for depreciation, but limited by the maximum dollar amount indicated on the declarations page of the policy...."

What this means is that if your client is not insuring there property within the proper percentage of the "Replacement Value" of their property then the loss incurred will be reimbursed on a Actual Cash Value basis. Actual Cash Value takes into account depreciation of the structure and its contents. How do you think the phone call is going to go when you sold a house for $200,000, there is a total loss a month later and your client is only getting $40,000 back because the house was improperly insured? Try selling that person another house after their 3-bedroom raised ranch just became a mobile home.

Now when I said the "proper percentage" of replacement value, I was talking about co-insurance. Each insurance carrier has a co-insurance clause on their policies. Co-insurance is a percentage of the replacement value at which the carrier will still pay replacement cost instead of actual cash value. Take this example, the replacement value of a home is $200,000 and the co-insurance is 80%. The home must be insured at $160,000 or greater to receive replacement cost. If the home is insured for less than $160,000 the carrier pays actual cash value. The majority of all insurance carriers have a 100% co-insurance clause, however some still maintain 80% and a few others will go as low as 50%.

Since total losses are relatively rare, it must be mentioned that all partial losses (i.e. kitchen fire, tree through the roof, water-backup from the sewer) on an under insured home are also paid on an actual cash value basis. That means you might see pennies on the dollar for those 50-year-old oak cabinets your now going to replace with something from Ikea.

The best way to side-set this trouble is to advise your clients on the concept of replacement cost and to contact the insurance professional you do business with to ensure that agent is insuring your referrals at 100% replacement value. This way there are no concerns over a particular carriers co-insurance clause.

Please feel free to contact me if you have questions about insuring a home to value.

Ryan