Protection with New Construction or Remodeling Insurance
Policies Include Dwelling and Personal Property, Owners and Landlords Liability, and Workers Compensation
© 2011 by Kelly Smith all rights reserved; content may not be copied, rewritten, or republished without authors written permission. Authors Google profile
Not only is your home your castle, its also an investment, possibly your largest and most important. With that in mind, know that it can be a monster of a liability if you are under-insured.
And that is precisely why home improvement as well as new construction lenders will likely insist that you are sufficiently covered. When shopping for coverage, locate an insurance agent that specializes in construction if possible.
There are many types of policies out there, but in this article we will discuss the kinds that you should be familiar with. A basic rule of thumb, if you have to do any value estimation, is to over-insure your property rather than go low.
Standard Dwelling and Personal Property Insurance
This is your basic homeowners insurance. Its designed to cover the replacement cost of your home and property in the cased of destruction or damage because of hurricanes, theft, hail, wind, fire, and so on. In the case of new construction, the monetary value of your homeowners policy ought to be large enough to replace it to the identical condition.
Critical note: this policy does not automatically cover flooding. For flooding, you will need a stand-alone policy. The good news is that it is very affordable. For me, the bad news is that earlier this year my State Farm policy was nationalized, so good luck to me if I ever need to file a claim.
When a remodeling project has been completed, the monetary value of your house, your appliances, and the rest of your personal property needs to be reassessed. Next, the value of your coverage should be adjusted to reflect the new numbers.
Landlords, Owners, and Tenants Liability Coverage
These types of coverage is intended to protect you legally in the event of property damage and/or bodily injury if the decision to lease or rent out any part of your new or updated property. Consider the sign of the times in this downward spiraling economy, a great many adult children are reduced to go home, rent out a room, or even take up residence gratis.
In the reversal of that scenario, financial situations may require parents to move in with their children. Retirement homes and assisted living facilities are just too expensive, particularly when pensions are disappearing.
Workers Compensation Insurance as a Protection Strategy
Many homeowners, particularly handy ones, choose to serve as their own building contractor. If this describes you, in most cases youll have to hire at least some subcontractors. For example, licensed electricians or plumbers for some work. And dont forget delivery of building materials; those people are connected with your project.
Workers compensation coverage is protection against being sued for damages if any of these workers get injured while present on your property, even in cases where they themselves were negligent.
If they have their own coverage, satisfy yourself that its current and adequate. Remember, we live in an increasingly litigious society where judges are known to make calls that are far from what the normal man-on-the-street would call rational.
A similar kind of insurance is known as contractors liability. Ensure that you have it, in writing, that in any contracts that contractors sign, they agree that they are responsible for providing this coverage.
There are municipalities that employ what is called umbrella coverage. This is a blanket style of coverage that simply supplements all exiting policies. It usually comes with quite a high limit.
Is it required coverage? No, but it is prudently recommended. It is useful to think of it as insurance insurance. The bottom line? You must protect yourself from lawsuits and contractors as well as mechanics liens (see link below).