WILL YOUR HOMEOWNERS’ POLICY COVER YOU IN ANOTHER BIG STORM?

In the aftermath of Hurricane Sandy, you may be asking yourself whether your current homeowners’ insurance policy will provide protection in the event another big storm hits New Jersey, or what you need to do to ensure that you have the coverage you need. You want to take a close look at the language of your policy to determine what risks are covered.

WHAT YOUR POLICY COVERS

Property and casualty policies provide coverage on either an “all perils” (also called “open perils”)” basis or a “named perils” basis. An all perils policy covers you for any loss incurred. A named perils policy limits coverage to those losses either specifically named or not specifically excluded.

THE TYPES OF DAMAGES INCURRED

In a hurricane, the most common types of losses come from flooding and wind damage. As a general rule, flood damage is not covered under most traditional policies. To protect yourself in the event of flooding from rain or tidal waters, you must typically purchase a policy of flood insurance. The premium will depend on the likelihood of flooding in the area in which you live. Insurance companies designate areas based on the potential frequency of flooding. If you live near the coast, or have property in low-lying areas around a river or anywhere that rain water may collect or drain to, the cost of coverage will likely be very expensive. Flood insurance can run you anywhere from $500 a year to $5,000 or more, depending on where your property is located.  Flood maps are being re-evaluated after Sandy and you may be in a flood zone now even though you weren’t before.  If you no longer have a mortgage on your property you may not be aware of this change. Most homeowners’ policies do provide coverage for wind damage, including damage caused when a tree or other object is blown into your house. Typical policies also cover broken windows, roof damage, and any water damage inside a home due to broken windows or torn roofs.  It is not unusual for insurance companies to require that you pay a higher deductible for any damage caused by a hurricane. New Jersey law allows a mandatory 5% deductible on hurricane coverage (5% of the insured value of the home). Your insurance company must give you a brochure that explains the hurricane deductible program.

SECOND HOMES MAY HAVE INCREASED COVERAGE NEEDS

If you’ve been following the published reports about recovery efforts after Sandy you may have seen that property owners suffering losses to retirement or vacation homes are not benefiting from State and federal recovery funding.  You may need to take the absence of alternative means of funding a catastrophic loss into mind when deciding how much and what type of coverage to purchase.

Contact CockerillCraigMoore Law

Our attorneys can help you determine whether your homeowners’ policy meets your needs. To set up a private meeting, contact us online or call our office at 856-429-1060.