Insurance World

A typical homeowners insurance policy has four key ingredients. They are:

1. Homeowner insurance coverage for your home itself
2. Homeowner insurance coverage for your family’s personal items
3. Homeowner liability coverage
4. Coverage for the expenses of temporary living should you have to vacate your home because of fire, flood or other disaster covered by your homeowner policy.

The portion of the homeowner coverage for your home itself provides funds for the repair or reconstruction of your home if it has been damaged or destroyed by disaster such as hurricane, hail, lightning, fire or any other covered event. What is not covered with a standard homeowner policy is normal wear and tear on your home or damage caused by an earthquake or flood. (There are homeowner policies that cover these, but they are more costly and in some regions, such as flood prone areas they are not available at all.)

When you take our your homeowner policy you’ll want to be sure and buy enough coverage for total reconstruction of your home

Most standard homeowner policies also protect structures on your property although detached from your home, such as in-law quarters, garage or gazebo. It’s common practice to cover these unattached structures for ten percent of the covered value of your house.

Should any of your clothing, electronic equipment, furnishings, or other personal belongings be destroyed by insured disaster, or stolen, they are covered by your homeowner policy. Most carriers cover them at the rate of 50-70 percent of the total dollar figure of your home structure’s coverage.

There is also a clause in your homeowner policy for coverage of off-premises items. Which means that if you take your personal belongings elsewhere and they become lost or damaged your homeowner policy will generally reimburse you at least ten percent of the amount of coverage that you have on them when they are on your home premises. Homeowner policies also provide up to $500 of protection against unauthorized credit card use as well.

For high priced items like jewelry and fur a standard homeowner policy will usually limit your coverage to $100-$2000. You can purchase coverage up to appraised value for an additional charge. In either case there is no deductible and coverage includes your accidental loss of the items.

Foliage around your home such as trees and shrubs also come under the protection of your homeowner policy. Usually the money figure is five percent of the home’s insured value, but up to $500 for each bloom. They are protected against even riots, vandalism, explosion and airplane crashes. They are not insured against wind or disease damage.

Liability coverage protects you against litigation should anyone or anything become injured on your premises. You are also covered for damage done by your children or pets to the property of others as well. This coverage is in force even if you are not in your own home or on your own property. It covers any court defense as well as any court appointed financial award against you. The coverage limit is generally more than $100,000, although a $300,000 minimum is a standard recommendation.

Your homeowner policy also takes care of living expenses if you temporarily have to vacate your home because of damage and during repair and reconstruction of your home. Coverage includes hotel costs, meals in restaurants and other common expenses. Coverage limit of 20 percent of your home’s insured value is common for this. If part of your home served as rental property your homeowner policy will also reimburse you the amount of the rent that you are losing because of the disaster.

Insurance companies are not in the business of taking on risks without first obtaining as much background knowledge as possible. This applies whether they are insuring your house, your car, your possessions or your life. There is however a difference in the operation of such policies. Whilst there is nothing surprising in those seeking competitive prices being prepared to change insurers as necessary for cover for the material items in their lives, a change of insurer for life cover is much less likely.

This factor makes it more important for insurance companies to obtain the most accurate information available relating to the medical history of the prospective customer. Information available however makes it clear that the specific information needed is not always what has been provided.

What insurance companies need (and in fact what they pay for) is specific information relating to their potential customer’s past illness which will have, or is likely to have a bearing on their life expectancy. This is after all what life insurance is all about.

What has been supplied by GPs has not always met this core requirement, and in some cases the insurance company has simply been supplied with a copy of the patient’s records. To a GP these records should read like an open book; their training enables them to take a broad view and provide the most accurate summary available relating to the length of life which the patient should be able to expect.

Whilst insurers may have experience of life insurance cases, they are not trained to be able to assess the effects of an illness on an individual, which is why they pay doctors to provide such information. It must be remembered that the future of their company depends very much on them getting reliable facts, which can be used to assess the risks and enable them to do their calculations correctly.

An additional factor is that, in supplying patient’s notes to insurers, GPs are going against the rules on patient confidentiality. They are permitted to respond to insurers requests for information as this will be done with the full knowledge of the patient. The patient will not however expect the insurer to be supplied with extraneous information which has no bearing on the life insurance question.

Now the good news is that the BMA (British Medical Association) and the ABI (Association of British Insurers) have concluded discussions which have resulted in agreement being reached on a way forward which should be satisfactory for all concerned.

On behalf of GPs, the BMA have agreed that reports to insurance companies which are prepared for life insurance applications shall be of the high quality patient specific type required. In return the ABI have agreed that the charges for these reports shall increase by 6% per annum over the first five years of the agreement.

Compounded, this means that in five years the amount per report which is paid by the insurance company will rise by around 34%. This will give hard pressed GPs the incentive necessary to make time for the preparation of accurate medical reports. This point has been made by the BMA in advice to GPs regarding the new agreement. They have pointed out that improvement in the accuracy of life insurance information on which quotations are based is an important consideration, impinging as it does on the quality of life for those patients.

It is good to see an apparently satisfactory outcome to a problem which has been a thorn in the flesh for both the BMA and the ABI for some time.