Special Limits in Your Homeowner Policy

Your homeowners insurance policy places limits on certain types of property. In your policy there is a section titled “Special Limits on Certain Property.” This section will list various items and place a dollar limit on each type of property- such as jewelry, fine arts, guns or money.

Why do insurance policies contain such provisions? The homeowners insurance policy is written to provide coverage for the average policy holder. Most of us do not own collections or keep large amounts of cash at our homes. While the policy provides some limited coverage for special types of property, it in no way serves the needs of the unique collector.

There is, however, a solution for the collector or owner of unusual property items. It is possible to amend your homeowners policy, by endorsement, to provide special coverage for unique collection items such as coins or stamps. By asking your agent to include a schedule property floater in your coverage, you can specifically insure items of special interest. The personal property floater also expands coverage for perils not included in the homeowner policy.

Taking Energy Efficiency to the Next Level: Furnace-less Homes!

Want to save a bunch on heating and cooling costs in a home, even in cold climates? Build the house without a furnace. It’s possible now, and a the Cleveland Museum of Natural History has just built one. In fact, thousands of furnace-free homes have already been built in Germany, but only 15 U.S. buildings have this same level of extremely low energy use.

The house in Cleveland has walls that are more than a foot thick, big triple-pane windows, doors that resemble bank vaults and engineering that cuts heating and cooling costs, as well as pollution, by 90 percent.

These futuristic dwellings are known as “passive houses”, and cost about 20 percent more than conventional housing to build. The museum decided to give its visitors a look at what the future may hold as energy costs skyrocket.

“We have to get beyond incremental improvements to get a dramatic breakthrough,” said David Beach, the museum’s director of sound urban practices. This houses, he said, is “an example of a new way of living.”

Special Insulation is the Key

The house has an insulation system with a sealed air barrier that makes it work like a thermos. A ventilator exchanges the heat from the stale, outgoing air with the fresh incoming air, allowing very little heat to be lost. Two ductless heat pumps, one upstairs and one down, supply all the heating and cooling necessary no matter how hot or cold the outside air is.

The doors are extremely think to insulate well.

The house features huge south-facing windows which allow maximum solar heat in winter, when the sun is low in the sky. A ridge over the windows blocks much of the sunlight in the summer months, when the sun is higher in the sky.

Cleveland endures some of the harshest winters in the U.S., so if this house can achieve certification here, chances are it can do it anywhere.

A certified passive house must meet the same stringent energy-saving standards as in Germany. To qualify, a house must meet or beat 80 to 90 percent reduction of heat-trapping gases, the amount needed by mid-century to avoid creating dangerous climate shifts.

Return on Investment

The Department of Energy estimates it costs more than $900 a year to heat and cool an average house in the Ohio area. A passive house is approximately 15 percent more energy efficient than homes built to code. The cost of building a passive house is about $10,000 more, so the point at which the extra cost is offset by the energy cost savings is about 10-11 years. Of course, as energy prices increase, the efficiency of passive homes will make it pay off in even less time.

Source: Renee Schoof, McClatchy Newspapers

Our 100th Blog Post!

We have now reached 100 posts on the Fey Insurance Services blog. Over the past few years we have posted about a variety of insurance and risk management topics. We have helped to educate businesses and individuals on how to best protect their hard earned assets such as their home, cars, and businesses. We have also give tips on how to stay safe in an ever changing world including tips on online identity safety and how to best prepare your home for the winter months.

Our hope is that you have enjoyed the 99 other posts and found some information that was helpful in each one. For the years to come we will continue to add helpful content so that our clients and readers can enjoy a safe and protected life.

Business Income

Calculating the appropriate business income limit does not have to be a mind-numbing process. To understand business income coverage limits, you must simply understand that the coverage is almost entirely based on time. The amount of coverage and the correct coinsurance amount can be calculated once a reasonable estimation of the time necessary to return to full operational capability is determined.

Four Key Objectives must be accomplished as quickly as reasonably possible:

1) Rebuild the building, or find a move to an alternate permanent location.
2) Find, purchase, and have operational, replacement machinery and equipment.
3) Replace and/or replenish stock (raw materials for manufacturing operations).
4) Return operations to the same level existing just prior to the loss.

Business Income’s Necessity

According to the Federal Emergency Management Agency (FEMA), there is a structure fire ever 4.5 minutes. Approximately 25 percent of businesses never reopen after a shutdown of just 30 or more days, according to the insurance industry. When you include the number of business failures within five years that are directly traceable to the same kind of claim, the number could approach 40 percent.

Business closings as a result of natural disasters also reach 25percent. The U.S. Small Business Administration reports that more than 90 percent of small businesses fail within two years after being struck by a disaster. Combining these two pieces of statistical data, losses can lead to the closure of thousands of business in any given year due to an interruption in operations.

The Calculation

Once total revenues and the total amount of non-continuing expenses (production-related expenses that do not continue during the interruption) is known and applied to an honest worst-case scenario estimate of the time necessary to resume operations, the correct coinsurance percentage can be calculated. Coinsurance percentages, in 10 percent increments, can be from 50 percent to 100 percent- each representing a proportion of one year (50 percent equals six months; 60 percent equals 7.2 months; 100 percent equals 12 months). It is also sometimes possible to obtain a 15-month business-interruption period at a corresponding coinsurance limit of 125 percent.

The Reality

Most businesses that close and never reopen after a catastrophic closure (30 days or more), don’t close because of the lack of building and business personal property coverage. They close because there is no money coming in the door. Few businesses can remain viable without a source of income. Many business expenses continue even during the period of temporary closing.

Obviously, the optimal goal is to have the building, contents and business income all properly insured. Ultimately, only the business can provide these figures, but this simple approach can make this exercise much easier. Once you accept the reality that loss of income is as important to the insure as insuring your property, we can help guide you to the proper coverage to further protect your business.

Extended Replacement Coverage on Home Insurance

The recent devastation caused by the spring tornadoes is a sobering reminder that catastrophes can strike at any time. When a total loss occurs, homeowners coverage is designed to reconstruct a home under normal conditions. But following a catastrophe, increased demand for building materials and labor can cause these costs to rise significantly, potentially leaving policy limits inadequate.

Fortunately, many insurance companies offer extended dwelling coverage to help prevent such shortfalls.

How it works

Two coverage levels give you options: Extended dwelling coverage is available at levels of 25% or %50% of additional Coverage A amounts, allowing people to choose the level that fits their needs.
Example: A home is insured for a Dwelling Limit (Coverage A) of $100,000. Following a total loss, reconstruction cost amount to $120,000. Without extended dwelling coverage, the policy holder could incur significant out of pocket expenses or be forced to make difficult rebuilding choices to reduce the costs. With 25% or 50% in extended dwelling coverage, the home would have those extra costs covered (i.e. 25%-Dwelling is increase to $125,000 or 50%-Dwelling is increased to $150,000).