On the Third Day of Insurance Christmas… Homeowner’s Insurance Policy

New Mexico Homeowners insurance“On the third day of Christmas my true love gave to me three French hens, two turtle doves, and a partridge in a pear tree”
In our continuing saga of insurance Christmas we now explore the three French hens.  Of course these three French hens do multiply as your true love gives tree more hens for another eight days, that’s a total of twenty-seven French hens, and if anybody has ever spent more than a few moments with hens, be they French or any other type of hens, you’ll agree that they are messy, smelly, and destructive creatures.   Now, to make this case even worse we’ll agree that you were away on vacation during the days just prior to Christmas so that when you come home you are greeted by all twenty-nine hens that have been busy for the last nine days destroying your home by now thousands of dollars of damage have been the end result of your true loves gift.  Just my opinion, but you must really love him if you still want to keep him around. 
The question is:  Is this covered under my homeowner’s insurance policy?  Well, to answer that question I’ll need to ask if you have an HO2 or an HO3.  The HO2 is an outdated policy that is rarely used except in some situations where the insurance company is unwilling to right an HO3 because they have questions regarding the general upkeep and maintenance of the property, or if the property has been uninsured for a considerable length of time.  The biggest difference is that the HO2 names specific coverages that are provided by the policy, they are as follows:  Fire; or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicle; smoke; vandalism or malicious mischief; theft; volcanic eruption; falling objects; weight of ice, snow, or sleet; accidental discharge or overflow of water of steam; sudden and accidental tearing apart, cracking, burning, or bulging; freezing; sudden and accidental damage from artificially created electrical current.  The three French hens don’t appear on this list and therefore the damage caused by them is not covered under your HO2.
The HO3 insures the property and then lists specific things that it won’t insure it for.  These exclusions are as follows:  Ordinance or law; earth movement; water damage; power failure; neglect; war; nuclear hazard; intentional loss; governmental action; loss to property as a result of faulty zoning, bad repair or workmanship, faulty construction materials and defective maintenance.  If you had been present during the nine days that you were receiving the three French hens then the insurance company could deny the claim based on neglect; but in our case you were away on vacation and had no idea of the damage, therefore the damage is covered under your HO3. 
Call your insurance agent and ask what policy form you have.

The Second Day of Insurance Christmas

Farmington New Mexico Homeowners Insurance“On the second day of Christmas, my true love gave to me… two turtle doves and a partridge in a pear tree”.
I realize that this song from an insurance point of view can be a bit twisted, but I am about to twist it a bit more.  I hope you like this version of the song and have a bit of patience with my take on it.  First of all, two turtle doves are supposed to mean a strong bond and eternal love – that’s why it’s a gift from your true love.  However I wouldn’t recommend that you give your wife or girlfriend a pair of turtle doves this Christmas because she won’t know what to do with them.  It’s not nearly as romantic as it was a couple of hundred years ago.  I would recommend a set of earrings as a Christmas gift or maybe an expensive Nativity set, if she’s into that type of thing; but something ornamental and not alive. 
What in the world does this have to do with insurance?  Well, it’s screaming:  Pair or set clause.  I know what you’re saying:  pair or set … what? I repeat, pair or set clause.  Here is a quick definition of the clause: 
It is a provision that is found in home insurance policies that deals with the loss of part of a set or one of a pair – such as the loss of one earring or the loss of the baby Jesus in a Nativity set – in the case of such a loss the insurance company has the choice to either repair or replace any part of the pair or set to restore it to its original value prior to the loss; or it may also choose to pay the difference between the value of the set or pair before the loss and after the loss.
Now there are some restrictions to this clause, and the first one is that the item must be scheduled.  What do I mean by scheduled?  It means that the item must be specifically listed on the insurance policy and given a value and a premium.  You specifically pay a separate insurance premium for this particular item; this will usually require a receipt at the time of purchase or a written valuation by an appraiser so that the insurance company knows beforehand how much it’s worth and therefore how much they will have to pay in the event of a loss.  It’s not hard to do but in the event that there is a “loss” filed against just a part of the item the pair or set clause comes into effect. 
Call your insurance agent if you have a valuable pair or set that needs to be scheduled this Christmas.

The First Day of Christmans From an Insurance Point of View

Farmington New Mexico Auto Insurance“On the first day of Christmas my true love gave to me… a partridge in a pear tree”
This will be a fun and unique twist on that olde Christmas Carole.: The Twelve Days Of Christmas Insurance Style. Now, I know how excited you can get when it comes to insurance so I’ll have to ask that you please control yourselves and remain seated (can you hear the sarcasm in my voice?), but seriously this can be a fun learning experience for all of us, and at the end of each day you’ll be encouraged to: call your insurance agent.
Today is the first day of Christmas and you know who just made its appearance on your front door; yes, the partridge in a pear tree. The unfortunate part is that this is an insurance Carole and so that beautiful pear tree was felled by a gust of wind and when through your front porch and landed on your band new Volkswagen. Yes, I know: insurance Caroles are pretty tragic.
All of this damage can be covered by your insurance, but is it really? And which policy? The answer to the second questions is that the porch should be covered under your standard homeowner’s insurance policy; both the broad and special forms (we’ll get deeper into that on day three) cover falling objects. Meanwhile the Volkswagen could have coverage provided for it by your auto policy. I say that it could have because the damage caused by our holiday pear tree would be covered by comprehensive coverage, but this is not always included on the policy. Comprehensive coverage will always be accompanied by a deductible and that deductible could range anywhere from one hundred to one thousand dollars per occurrence.
Some insurance companies will not provide either comprehensive or collision coverage on any vehicle that is more than twenty years old. Additionally, some insurance companies require that collision be purchased on any vehicle that carries comprehensive coverage. Underwriting restrictions will vary from company to company.
Sometime people will refer to the combination of comprehensive and collision as “full coverage”. I hate this term. There is nothing “full” about just having comprehensive and collision coverage. It does not include a whole host of value coverage: liability, uninsured motorist, medical payments, roadside assistance, and rental reimbursement. You will never see the term full coverage on any policy documents – it doesn’t exist.
Ask your insurance agent if you have comprehensive coverage on your policy, and by all means please make sure that your homeowner’s policy is in force this Christmas season.

New Mexico Auto Insurance Coverage: Why Buy the Uninsured Motorist Coverage?

Auto InsuranceWhat is uninsured motorist coverage? Simply put uninsured motorist coverage provides protection in the event of an accident with a motorist who does not have insurance. There are many reasons that the motorist was uninsured at the time of the accident: perhaps he simply did not purchase insurance, or maybe he was specifically excluded from the policy, or maybe you just got unlucky enough to be hit by a driver in the act of committing a felony; it really doesn’t matter why the motorist doesn’t have insurance just that fact that there is not a policy that will cover the other guy is the only relevant factor.
Many insurance agents believe that uninsured motorist coverage is unnecessary, but I disagree – passionately disagree. I would go so far as to say that anyone who sells you an auto insurance policy without uninsured motorist coverage is guilty of misconduct. There are several types of coverage that are only available through your uninsured motorist coverage. Health insurance, or accident insurance, or any combination of them will not replace this valuable coverage. Neither of the aforementioned will provide protection for lost wages if you must miss work, nor will they pay out any money for pain and suffering. The only protection you have against these two risks is via your UM (uninsured motorist) coverage.
I know what you’re thinking: But it’s the law, everyone has to have insurance or they can’t drive; and my answer to that is to simply state the facts. The Insurance Research Council has recently estimated that roughly sixteen percent of all drivers are uninsured – that’s nearly one in six drivers. Uninsured motorist are more common in the state of New Mexico than in just about any other state in the United States, and in this state it is estimated that nearly forty percent of all driver’s don’t have insurance. It other words it is nearly the flip of a coin whether or not that guy that hit you can pay for the damages, and let’s be honest if he can’t afford insurance he can’t afford to repair the damage he caused, nor can he pay for hospital bills that are not his own.
Additionally, in most states underinsured motorist coverage is also included as part of the premium paid for your uninsured motorist coverage. An underinsured motorist is someone who does in fact have insurance but maybe only at the minimum allowed by the state. If your damages are greater than those covered by the other policy you can ask for the difference to be made up via your underinsured motorist coverage.
In the State of New Mexico, and many states are similar, uninsured motorist coverage also includes uninsured motorist property damage coverage, this will provide protection for your car in case of an uninsured motorist accident.
UM coverage is not expensive, but it a whole lot less expensive than an accident that you have to pay for out of your own pocket; an accident that you didn’t cause, and that someone else should pay for but can’t. Yeah it will really chap your hide.

Am I Insured for This?

New Mexico Home InsuranceAs an insurance agent I am often asked about policy coverage as it pertains to a specific event.
First I would like to answer the question generally and then give four different examples of how this works in real life. Insurance coverage is intended for a specific unforeseen event that could happen to us but may never happen. Insurance is not intended for instances in which we know for a fact that it will undoubtedly happen. If we know that an event will happen then we should prepare for it in some other way, because it is not an insurable event. On the other hand, if an event happens to some people nearly every day, but you may go your entire life and not have it happen to you; well, that is an insurable event.
For instance: I was driving and ran into a patch of ice on the road and rolled my car, is that covered? This is an example of an event that happens to people every day, but you could go your whole life and never roll your car; therefore, it is an unexpected event. Yes, collision insurance will cover this accident.
In another example: a great big wind and hail storm struck my home and it damaged my roof and now I have a water leak, is that covered? Wind and hail damage is another example of an event that happens all the time, but not necessarily to us. Yes, wind and hail is a covered cause of loss in the standard homeowner’s insurance policy, you will need to pay your deductible and the insurance company should cover the balance of the damage.
A third example: My roof is leaking and has been for the last several months, I now have water stains on the ceiling of my home, and I don’t know when the roof started to leak exactly, is this covered under my policy? This is an example of an event that we know for a fact will happen to every home that was ever built; it will need a new roof. Notice, that there is no “event” here; the person cannot name a specific thing that happened that caused the roof to leak. This is a maintenance issue not an insurance issue. No, routine wear and tear, and maintenance of your home is not covered under your insurance policy. As a matter of fact, these issues are specifically excluded from coverage.
Finally: I came home from vacation and opened the door to my home and water came out, as it turns out the water heater sprung a leak and leaked the entire time that I was on vacation, is this covered? There are actually two different things that happened in this instance. The first loss is the damage to the water heater and the second loss is the damage caused by the leaking water heater. The first loss is an expected event: every water heater will eventually leak; and therefore it is a maintenance issue. Insurance will not cover the water heater. However, the second loss is entirely unexpected and it was caused by an insurable event, therefore it is covered. Your insurance company will pay to repair all of the water damage, but none of the plumbing.
Insurance can be a complicated contract, just remember that it is intended to cover a specific unforeseen event, and that routine maintenance issues are specifically excluded from coverage in the contract.

New Mexico Homeowner’s Insurance

The Standard home insurance policy offers broad coverage for your personal belongings as well as your home.  There are actually four different coverages that are included in the standard home insurance policy, they are as follows:  first, coverage for your home; second, coverage for your personal belongs; third, liability insurance; and fourth, additional livings expense coverage. 
The first and most obvious type of coverage is the one that covers the home itself; it is after all “homeowners” insurance.  This covers the structure of the home due to various causes of loss that include:  fire, wind, hail, freezing, lightning, falling objects, etcetera.  Coverage that is not included in the standard home insurance policy is damage caused by flood, earthquake, or routine wear and tear.  When purchasing coverage for your home makes certain that you purchase enough coverage.  You should evaluate your home and come up with its replacement cost value (or have your insurance agent do it for you) and then insure your home to that value.  It is important to buy enough insurance to rebuild your home.  Most homes today have detached structures like garages, sheds, gazebos, and etcetera.  The home insurance policy will usually cover these structures up to about ten percent of the value of the home.  Usually ten percent is sufficient but sometimes additional coverage is needed and can be added to the policy for a small premium increase.    
Your personal belongings are also covered by the standard homeowner’s policy for the same causes of loss as the home is covered; this also includes the same exclusions that the home has.  Generally speaking the limit on the personal property is about fifty to seventy percent of the value that the home is insured for.  Some types of personal property have limits of coverage that are dramatically different from the personal property limit; these types of property include, but are not limited to:  gold or silver bullion, cash or cash equivalents, firearms, jewelry, artwork, and etcetera. 
One of the least thought of, but most valuable coverage, is the liability coverage afforded by the homeowner’s policy.    Liability can be construed in any number of different ways, with the most common example being a slip and fall that is later blamed on the homeowner resulting in the medical expenses and pain and suffering being owed from the homeowner to the injured party.  It is unfortunate but we do live in a litigious society and this type of coverage is indispensable.  In my opinion you should have a limit equal to or greater than at least the value of the home.  Additional coverage is inexpensive and can be expanded upon with the purchase of an umbrella policy; there really is no excuse for having insufficient liability coverage. 
The final coverage afforded by the homeowner’s policy is that of additional living expenses.  If your home becomes uninhabitable due to a covered loss your insurance company will also pay for motels and food expense cause by the forced exit from your home.  Make sure that you keep your receipts.