Despite meteorological early-warning
systems, hurricanes, flood-producing
storms and wind events are unpredictable and often change course, leaving
little time for homeowners to prepare.
What if the worst happened and your home
was destroyed?
“One of the biggest mistakes homeowners
make is failing to record the contents of
their home,” says Michael Gigliotti, president, HRH Gulf Coast — Tampa and
Sarasota.
“The other major mistake is failing to
keep these documents and crucial insurance agent contact information in a safe,
reachable place in the event of a disaster,”
adds Wendy Bryant, ACSR, Private Client
Group manager, HRH Tampa.
Smart Business spoke with Gigliotti and
Bryant about the importance of documenting your possessions and purchasing insurance coverage to best weather any storm.
Why is it crucial that homeowners document
their contents?
Bryant: After a catastrophic loss, depending on the age of the item, the insurance
companies will usually require receipts. We
recommend that homeowners videotape
their belongings, jewelry and fine arts, and
keep the tape off site. Because of the devastation, confusion and trauma after a catastrophe, homeowners may not remember
everything they own. And once the claim is
closed, there’s usually no getting any reimbursement for what was omitted.
Gigliotti: The more documentation you
have ahead of time, the better off you’ll be
at time of loss and the quicker you’ll get
paid. It’s important to remember that jewelry, watches and antiques are probably not
adequately covered in a normal insurance
policy so those items specifically should be
scheduled onto the policy. Antique vehicles
should also be valued and covered specifically at a stated value.
What’s the difference between hurricane and
wind deductibles?
Gigliotti: It’s a big difference. In coastal
areas, wind and hurricane coverage is written with a higher deductible. So on a standard homeowner’s policy you’ll have two
different types of deductibles. One is your
normal homeowner’s deductible, with a
second deductible specifically for either
wind damage or named hurricane damage.
That second deductible ranges from
approximately 2 percent to 10 percent of
the structure’s value. For example, a
$750,000 house with a 5 percent wind
deductible is liable for a $38,000 deductible
for any type of wind loss.
Bryant: If a homeowner with wind damage has the hurricane deductible, then only
the normal policy deductible would apply.
It basically means the smaller homeowner’s deductible will apply to every loss
except hurricane damage, and this is a
tremendous difference. Additionally, if
there are multiple hurricanes during the
season, the hurricane deductible will apply
only once.
How does flood, water and sewer backup
coverage come into play?
Bryant: One of the most under-purchased and overlooked type of coverage is
the flood insurance for Floridians. The
entire state is in a flood zone divided into
two categories. There is a 100-year flood
area and a 500-year flood area. The 500-year zone is considered the low-risk zone,
which in our eyes means nothing, because
30 percent of the floods that happened in
the last eight years happened in that area.
Gigliotti: The first issue is purchasing coverage through the National Flood
Insurance Program (NFIP), which is in
play for the first $250,000 of the home’s valuation. We tell people that if they’ve elected not to buy the NFIP coverage they are
basically electing to take a $250,000
deductible on their home. Over that threshold there is very affordable excess flood
insurance available to insure the full value
of a home. Most people are not aware that
flood coverage — and water and sewer
backup coverage — is not provided in the
normal homeowners policy. Water and
sewer coverage is another important
endorsement to your homeowner’s policy.
How can homeowners compare the available
insurance carriers?
Gigliotti: Affluent homeowners with
combined premiums over $10,000 have
access to AM Best Rated carriers like AIG,
Chubb, Firemen’s Fund and a newer carrier called Pure Insurance. Homeowners
who don’t meet their requirements are left
with Citizens, the state insurance program,
or a number of Demo Tech rated carriers
which are not recognized or rated by AM
Best.
How often should homeowner’s policies be
reviewed?
Gigliotti: A thorough review should be
performed once each year. Due to the higher costs in Florida, it’s important for affluent homeowners to have a broker involved
for the purchase of their insurance.
Bryant: A good broker also can assist
with the documentation process and offer
advice with respect to the right limits for
the value of the house. These limits should
be kept up to date due to the increased
costs of construction that rise dramatically
in the wake of a major catastrophe.
MICHAEL GIGLIOTTI is president, HRH Gulf Coast — Tampa
and Sarasota. Reach him at (813) 261-7969 or [email protected].
WENDY BRYANT, ACSR, is Private Client Group manager, HRH
Tampa. Reach her at (813) 864-2746 or [email protected].
