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are family.
Everett  (425) 745-3366
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9101 Evergreen Way
Everett, WA 98208
2027 196th St SW, #R-6
Lynnwood, WA 98036

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Key Considerations for Home Insurance

Home insurance, as with all types of policies, are only going to cover certain types of losses. The worst time to find out a loss isn’t covered is after your property is destroyed. Some polices will cover only the types of losses that are listed in the policy jacket. However, it is more common to see policies that will cover everything except what is listed as being excluded. Common covered losses on a standard home policy include fire, theft, vandalism, wind, tree damage, falling objects, wild animals, sudden and accidental water losses. Commonly excluded losses include insect infestation, rodents, pollution, police or military action, civil unrest, terrorism, as well as wear, tear, maintenance and neglect.

Flood is an excluded loss on almost all home policies. Flood includes rising ground water & natural bodies of water, storm runoff, tide water, sewer and gutter backup, as well as landslides. Flood policies are sold by a number of personal lines insurance companies, but all of the policies are offered through FEMA’s flood program. Contrary to popular belief, you don’t have to be in a flood plain to qualify for a flood policy, rather the home just has to be in a district that participates in the flood program. It is also possible to get a flood policy on your personal property for renters.  

A number of insurance companies have started excluding “wind” damage from home policies as a result of the large catastrophic losses.

A home policy, whether it is a primary home, vacation house or rental, all start with coverage for the structure itself. The limit of coverage should be the estimated cost of rebuilding the structure. This has nothing to do with the market value, county assessed value or the land. The considerations that went into the purchase of the house, such as location, view, curb appeal, aesthetics, school district, neighborhood, etc., are not relevant. What should go into the amount of coverage is the size of the house, the quality of the materials and finish work and the various trade labor rates in the area. Most homes in Western Washington cost $100 to $200 per square feet to rebuild. A standard track home would be closer to $100 per a square foot and a custom home closer to $200 per square foot with the sky the limit depending on the taste of the builder.

Most home policies today are “replacement value”, meaning they do not deduct depreciation from the settlement amount. However, older homes, geographically isolated homes, manufactured or mobile homes, rentals or seasonal dwellings can often be “actual cash value” policies, which means they will subtract depreciation from any settlement. As a general rule, foundations, joisting and walls don’t depreciate. However, roofs, carpet and appliances can depreciate significantly, and can severely impact your ability recover from a claim on an actual cash value policy. A replacement cost policy will not pay out beyond the total dwelling limits stated on the policy even if exceeded by the rebuild costs (it is a different story for personal property, which we’ll get to in a minute).  

Most replacement cost policies will have addition coverage beyond the stated limit. Extended building limits will add an addition 5 – 25% to the dwelling limit in the event of a total loss to help account for major market fluctuations, such as those caused by a natural disaster, or just the dwelling value falling behind rebuild values. Most policies will have an automatic feature that increases the dwelling value to help adjust for rising costs, but this is something that should be reviewed every year to make sure it is relevant to your house in your geographical area. Your home policy might also have addition building coverage for things such as demolition and building codes.

Detached structures include any structure on the property that is not permanently fixed to the primary house. This can include a garage, deck, gazebo, greenhouse, shed, fence, mother-in-law, etc. Typically the limit for detached structures is 10% of the dwelling limit. It is usually very reasonable to add additional coverage for detached structures. You should have enough coverage to replace all the structures on the property that are important to you, even if they are spread out. A fire loss can cover a lot of space in a short time.

The home policy premium can be offset by the size of the deductible. The most common deductibles are $500 or $1000, but can range up to $5000. A new trend in the industry is a deductible that is a percentage of the dwelling amount, generally ranging from 2 – 10%. However, this could result in a large out-of-pocket expense before the insurance will kick in. So make sure to ask your agent what it will save over a straight deductible before going that route. Unless you have a high value house or a house in a high risk fire district, the savings usually doesn’t make sense.

Personal property coverage on a home policy is usually a percentage of the dwelling limit and can range from 50 – 75%. Specialty policies, such as landlords, seasonal dwellings or older home policies may offer a different percentage for personal property, so you need to check with you agent to make sure the coverage is sufficient for your situation. Most landlord policies are going to come with a limit of 5% of the dwelling value for personal property. This allows the insured to adjust the property coverage for the specific rental. Most rentals are offered unfurnished, so personal property offered with the rental is typically limited to a refrigerator and washer/dryer. You would want to add personal property coverage if you are offering a furnished rental. Other specialty policies may offer personal property as a separate selection, though this isn’t very common. 

With the value of homes in Washington, there is usually more than enough coverage for your personal property. However, most policies will limit the amount paid out for certain kinds of property, such as boats, motors, cars in dead storage, tools, computers, ect. There are also limits on theft losses for certain categories of property, including jewelry, furs, guns, silver, tools, cash, etc. It is also possible to expand the covered losses on specialty property, including cameras, sporting goods, musical instruments, art, collectibles, etc., including losses such as accidental breakage. There are a number of different options to add coverage for a lot of these types of property, so discuss the type of property you own with your agent.

On a cash value policy, the lost property will be paid after deducting depreciation. Most types of personal property has a pretty short useful life, say 5 to 10 years, so the amount of depreciation often exceeds the settlement amount. A loss to a structure or to property that appreciates or holds its value over time on an actual cash value policy might not be all that bad as you might get paid more than the original purchase price, but usually actual cash value settlements on personal property don’t go well for the insured and should be avoided where possible. When you think actual cash value, think garage sell prices!

A replacement cost policy does not simply reimburse you for the present cost of the lost property. Rather in the event of a loss, the insurance company will ask you to list all the property lost to the best of your ability, including when it was purchased, what it cost and the brand and model. You do not have to provide evidence in the form of receipts or pictures that you owned the property, but you might be asked to provide proof of loss, such as a police report or evidence of physical damage. Once the insurance company values your property, they will write you a check, less depreciation. You can then replace the lost items with like quality and kind, regardless of the cost up to the limits of coverage, and the insurance company will reimburse you the difference. If you decide not to replace the item, the insurance company will only reimburse you the depreciated value. So to get the full value of a replacement value policy, you will need to replace the items lost.

A home policy usually comes standard with liability coverage, which covers damages in which you are legally responsible for that are not intentionally caused or are illegal. The exception is a secondary home will often not have liability, as it would extend from your primary home. The liability options usually range from $100k to $1m and is relative inexpensive. Most people think of liability as covering damages to other parties that happens on your property, such as someone slipping in your driveway, falling down your stairs, getting bit by your dog, etc. However, liability can cover you off your property, as well. So, if you accidently trip someone at the mall, scratch someone’s car with your grocery cart, miss the deer you were aiming at shoot your friend’s truck or blow someone’s knee playing soccer, your home liability would apply.

A few words 
about Liability

• A very important aspect of liability protection is coverage of expenses beyond actual damages, including legal bills, pain and suffering. We are seeing more and more cases of legal action accompanying a loss or a presumed loss. The complexities of our legal system, in particular the variability of case law, make it impossible to list the types of liability claims that may or may not be covered. The cost of liability coverage is a relative bargain, especially when you consider the outcome can often come down to the quality of your legal representation. So like stated in the auto section, don’t scrimp on liability! Teen Driver

"There is nothing worse than coming home to find your house flooded. However, the Family First team went into action, getting a claim started and an emergency service crew out immediately. They helped my family through the process from start to finish, making a nightmare situation as manageable as possible." 
Jerry & Brynne