Your Homeowners Insurance can insure your possessions in two ways.  Either for Replacements Cost Coverage or Actual Cash Value Coverage.

An Actual Cash Value policy will pay the cost of replacing your items, in the event of a loss, minus a deduction for depreciation. A Replacement Cost policy will pay you what it takes to replace your items new today, with no deduction for depreciation. This can be a big difference in coverage.

Suppose, for example, that  you have a fire in your home and it destroys a 10 year old television set. If you have Replacement Cost coverage on your Homeowners Insurance policy, the insurance company will pay you what it takes to replace the TV with a new one. If you have Actual Cash Value coverage, the policy will only pay part of the cost to replace it because you have used it for the last 10 years and a used television is worth a lot less than its original cost. Imagine applying this to a major loss. Everything from clothing to dishes to furniture.

This can be a major difference in coverage and it normally does not cost very much to add replacement cost coverage to your policy. As a result, we highly recommend purchasing replacement cost coverage on your homeowners or renters insurance policy.

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Most Texas Homeowners Insurance Policies automatically provide coverage for your personal items inside the home for approximately 50% to 75% of the amount of coverage you carry on your dwelling or structure. The exact amount of your coverage will appear on the Declaration Page of your Texas Homeowners Insurance Policy and will be title “Personal Property.”

To determine if this is adequate coverage, you need to conduct a home inventory. This is a list of everything you own and what it would cost to replace those items in the event of a major loss, such as a theft of fire. For additional information on how to conduct a home inventory please see our previous blog posting titled “Texas Homeowners Insurance Inventory Tool,” dated 4/15/2010.

If you believe you have a need for additional coverage, contact your agent and request a higher coverage limit for your personal possessions.

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After a major disaster, such as a hurricane or tornado, building materials and construction workers are often in great demand. This temporary increase in demand can push up the cost of both materials and labor and in turn increase the cost of rebuilding you home.  As a result, this could cause the cost of rebuilding you home to exceed the policy limits of your Texas Homeowners Insurance Policy. To protect against this, many companies now offer a policy that will pay more than the policy limits.

The Extended Replacement Cost Coverage or Guaranteed Replacement Coverage on a Texas Homeowners Insurance Policy will allow a policy to pay up to 25% above the homeowners insurance policy limits, if needed, in the event of a total loss. Some companies offer Extended Replacement Cost Coverage of 25%, 50%, 100% or even unlimited coverage, depending on the insurance company.

This is a very valuable coverage and I would highly recommend obtaining whenever possible. Not all companies in Texas offer it, but if available it is a great homeowners insurance coverage to have.

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The dwelling coverage on your Texas Homeowners Insurance policy covers the structure itself. You will need enough coverage to rebuild your home at current construction costs at the time of a loss. The cost of rebuilding could be more or less than what you paid for your home or what you could sell it for today. This amount can also vary depending on cost and availability of materials. After a major catastrophe, such as a hurricane, often material and/or labor costs increase drastically because of demand and lack of availability.

You want to be certain you have enough coverage on your homeowners insurance to rebuild your home in the event of a total loss. Some of the factors that will contribute to the cost of rebuilding your home are:

• Local construction costs
• The square footage of the home
• Type of exterior walls of the home (brick, stucco, etc)
• The style of the home (ranch, contemporary, etc)
• The number of bathrooms and other rooms in the home
• Fireplaces, exterior trim and special features of the home
• Whether parts of or all of the home was custom built
• Improvements to the home

Most homeowners insurance policies in Texas offer replacement cost coverage for the dwelling and will pay to replace/rebuild  the home in the event of of a loss with no deduction for depreciation. However, it is important to be certain that a replacement cost estimator has been done to determine the amount of coverage you need to carry on your home.

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This subject comes up a lot. The Texas Homeowners Insurance Policy is designed to rebuild your home new in the event of a total loss. Therefore, the amount you need to cover you home for is what it would cost to rebuild the home brand new today, if something was to happen to it. This is called the replacement cost of the home.

Many different factors are used to determine this amount. Things such as the year of construction, square footage of the home, location, quality of construction and type of interior finish out of the home, just to name a few. It is a complex formula that takes many different factors into account.

I often have people contact our office and say that they believe their home is over insured because the homeowners insurance coverage amount is above what they could sell their home for or above what the tax valuation is on the property. That is a very different number and would be considered the market value of the home instead of the replacement value of the home. Again, the market value is what you could sell the home for and the replacement value is what it would cost to rebuild the home brand new today. These are often very different numbers.

The replacement value will take into account things like debris removal, site preparation and the increase cost of reconstruction in the event of a major loss, such as a fire. Only specialty contractors will do this tyope of work. In many cases, they will have to demolish what is left of the home, remove all trash and debris and prepare the site for reconstruction. This alone is very expensive and must be taken into account when determining the replacement value of your home for homeowners insurance valuation purposes.

Contact your insurance professional (VGW Insurance) to discuss this in more detail and request that an updated replacement cost coverage evaluation be done on your home. You do not want to find out that you are underinsured when you need it the most, at the time of a claim.

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As we now are beginning to see warm weather in Texas, many of us will begin using and enjoying our swimming pools again. It’s a great time of the year for kids and adults alike.

That being said, it is also important to keep in mind that each year approximately 43,000 people are injured in and around swimming pools and more than 600 people drown in home or public swimming pools. Half of these fatalities happen in the back yards of single family homes and many are preventable.

Here are a few safety tips for each homeowner to follow to insure that your home swimming pool is as safe as possible:

1. Never leave small children unsupervised-even just for a minute.
2. Put fencing around the pool area to keep people from using the pool without your knowledge.
3. Install a fence that separates the home from the pool, so that small children cannot wander out of the house and into the pool.
4. Be sure all pool users know how to swim. Even infants can now be introduced to swimming with professional instructors.
5. Dont swim alone or allow others to swim alone.
6. Stay out of the pool during rain or lightning storms.
7. Keep all electrical devices away from pools or wet surfaces.
8. Consider going without or removing the diving board.
9. Keep children away from pool drains. The suction force may injure them or prevent them from surfacing.
10. Never dive into a shallow or above ground pool. Check the water depth before diving in.

These are just a few safety tips to keep in mind so that all of us can have an enjoyable summer and avoid some of the unnecessary risks associated with swimming pools.

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Most Texas Auto Insurance Companies will not allow you to add a vehicle to your policy that is not registered in your name.

In addition, most Auto Insurance companies in Texas will not allow the registered owner to list you as a driver on their policy unless you live in their household.

As a result, for years, this has been a very difficult situation to insure. Many Texas Auto Insurance companies will not insure this situation at all.

Fortunately, we now represent a couple of different insurance companies that will offer coverage in this situation. They will write the policy in your name, add the vehicle to your policy and list the registered owner of the vehicle as an additional insured. This will provide coverage for you, the vehicle and the vehicle owner. It should also be acceptable to the lienholder. Please contact our office for additional information.

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I have been asked this question many times and the answer is definitely, yes. When you move out of your home, it no longer is considered your primary dwelling and the occupancy type changes from primary to either secondary, tenant occupied or vacant (depending on your circumstances). Each of these occupancy types are different and require either an endorsement to your existing policy or a new policy all together, in order to ensure that the proper coverage remains in effect.

If you are renting the home out, you will likely need what is often called a Landlord Policy. This will provide coverage for the dwelling and any other structures, but not the contents. If the new renter needs coverage for their contents, they will need to purchase a Renters Insurance Policy.

Most Landlord policies will also provide some type of Loss of Rental Income coverage, so if something happens to the home and the tenants have to move out while the home is being repaired you will be reimbursed for lost rental income.

You also need to be certain that you will have liability coverage on the rental property.

One additional thing to consider is adding Personal Injury Coverage to the policy. This will provide coverage in the event a tenant attempts to sue you for wrongful eviction. It is a very inexpensive endorsement and could provide valuable coverage if ever needed.

If you have a change of occupancy for your home, you need to contact your agent to discuss the change and be certain that you have the proper coverage in effect.

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To assist you in completing an inventory of your personal belongings for you Texas Homeowners Insurance, we are providing the following link to the Insurance Information Institute’s, Know Your Stuff – Home Inventory Tool. Just click the following link and begin the process: http://www.knowyourstuff.org/

You will be able to enter your items by room and upload photos and scanned receipts. After the information is entered into the system, items can be sorted by price, date of purchase or item type. Your inventory can be saved, printed, emailed or burned to a CD.

This should prove to be a valuable tool to assist you in the important task of completing your home inventory for your Texas Homeowners Insurance Policy.

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How could anyone possibly remember all of the items they have acquired over time,  in the event they had to put a list together of those items? Well, that is exactly what you will have to do in the event of a major Homeowners Insurance Claim, such as a fire.

You have coverage on a Texas Homeowners Insurance Policy for your contents. It is based on a percentage of what the home is insured for. Normally between 60% to 75% of what the Dwelling/Structure is insured for. However, in the event of a major loss, the homeowners insurance company does not just write a check for that amount. They will ask for a list of all the items that you own, that were lost in the fire. They will also ask for proof of purchase for any recent major purchases you have made.

Putting this type of information together after the items have been destroyed is a daunting task.

The best thing you could possibly do is to take an inventory of the items located in your home and keep that inventory in a place other than your home. Possibly in a safe depost box, at your place of work or maybe at a relatives home.

Start by making a list of your possessions one room at a time. Describe each item, note when and where you bought it, list the make and model and value. Also, attach any sales receipts that you may have. This is especially important for more valuable items.

Consider taking a video of your home and all of the items within it or possibly take photos of each room. Although, this will not constitute proof of ownership it will help you to remember what you have in the event you need to list your items.

Your Texas Homeowners Insurance Policy provides excellent coverage. However, in the event of a major claim you need to be prepared so the process will go as smoothly as possible. Doing an inventory and keeping it off premises will be very helpful, in the event you need it.

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