With hurricane season coming up, I thought it would be a good time to review insurance. Most Homeowner policies written recently contain high wind deductibles, which apply to damage caused by wind, such as a hurricane, tropical storm, or tornado. These wind deductibles are often 3-5% of the insured value. This means that all but significant damage from a windstorm will not exceed the deductible. These deductibles are negotiable, but will affect your premium. Hurricane Irma, a category 4 hurricane that hit Marco Island in 2017, caused limited damage to new construction, the primary items damaged were landscaping, roofing, screen enclosures and some broken windows. Unless a full reroof is needed, damage to these items is not likely to exceed a 3% deductible.
The other component of home insurance is flood insurance. Most policies issued contain a maximum amount of insurance which is $250,000. If our area ever faces a storm with a significant surge, each home in our price category will face large damages which are uninsured. It is important to understand the limits of the flood insurance policy you have. Private flood insurance is available with larger limits, but at a significantly larger premium. FEMA helps control the costs for the limited policy.
While we are discussing insurance, there are policies your contractor should have in place to protect you while your home is being built and afterwards as well. Most all contractors have a general liability policy of some sort, many with a maximum payout of $1,000,000. Small contractors often do not have Workman’s Comp insurance. It is this insurance that protects the home owner from liability in the event a worker is injured while building the home. If a general contractor doesn’t have Workman’s Comp insurance, he is not required to ensure that his sub-contractors have the insurance or have current exemptions in place. Lack of this insurance can leave a homeowner with liabilities he never expected to have. Another often overlooked policy is completed operations. This is a policy that protects the contractor and therefore the home owner from costs related to repairs after the home is occupied. Many contractors are unable to pay the costs associated with major repairs from warranty issue leaving the home owner with the repair bills. Completed operations insurance protects both parties from damages for these repairs. While all of these risks are some what small, they exist none the less. It is important for you to understand them and what your contractor is doing to protect you.