5 Myths About NJ Real Estate Homeowners Insurance

Many NJ real estate homeowners believe their insurance policies will provide coverage for all damages done to their home, but the reality can be an expensive surprise

 

Homeowners insurance is one of the most common types of insurance yet one of the least understood. Many NJ real estate homeowners believe that their policies will cover them for virtually any damage done to their home or its contents. The reality is in fact that homeowners policies contain many exclusions and restrictions on coverage that can leave you with a coverage gap. Below are five areas where homeowners assume they have coverage but may not.

Valuation of Loss

When an NJ real estate homeowner has a claim, the insurance company sends out an appraiser to determine the extent of the damage and the proper way to fix it. The appraiser will assess a value to the loss, which will be the minimum the insurance company will pay in order to meet its contractual obligations. However, you do not have to take that value as final. If you can prove your loss should be valued higher, you can negotiate a settlement with the company. Keeping receipts and pictures of valuable items is important and will help you back up your claim. You should read your policy to be aware of what is contains. Look for exclusions in this coverage and decide how you will cover those risks. In some cases, your insurance company will have separate add-ons that it can attach to your policy, or you can get specialized insurance from another company. For risks that cannot be insured, analyze how you will financially cover those risks in the event they occur.

Flood Coverage

Almost all NJ real estate homeowners policies exclude flood coverage along with earthquakes and other natural disasters. Floods can occur from a number of causes, such as a sewer backup, hurricane, or burst pipes. A flood is one of the most common causes of home damage and the destruction of contents. Some companies specialize in flood coverage, and if you live in a susceptible area, you should look into having a separate flood policy. Your mortgage company may require this additional coverage.

Loss-Of-Use Coverage

If any damage done to your NJ real estate home deems it uninhabitable while it is being repaired, your insurance company may put you up in a hotel while this work is being done; however not all policies include a loss-of-use provision. If you have to pay for a hotel, meals and other services out of pocket, it can add up quickly and put you at financial risk. If loss of use is covered, it will be clearly stated in your policy, along with any limits of coverage.

Termite Damage

Termites live all over North America but are most destructive in the southern part of the US where their life cycles are not affected by cold weather. Termites can easily eat the supports in your house quickly. They live in large colonies and, collectively, can destroy the structure of your NJ real estate home. Repairing termite damage and eliminating them can cost thousands of dollars, and most policies exclude termites and other pest damage. If you live in a susceptible area, the best insurance is to have the house regularly checked and sprayed by a professional.

Replacement Cost

Replacement cost in a homeowners policy refers to placing a value on a loss and the amount it will cost to replace the item. For example, if a 3-year old laptop is destroyed in a fire, replacement cost coverage would allow you to purchase a new one with similar features. Most NJ real estate homeowners believe that is what will happen after they file a claim; however most policies do not carry this clause. If not included, losses will be valued at what they were worth in their condition before the disaster.

 

The real estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a real estate professional who will provide valuable information and trustworthy advice. For more information on NJ real estate, call us today or click here to be connected with one of our top real estate specialists.