Insuring Success

by Patrick Nolan

SBJ Contributing Writer

Insuring your new property seems to be just common sense, but the common knowledge ends there.

John Campbell, an agent for AAA of Missouri, said over-insuring is a common error. You don't need to insure for the purchase price of the property, just the replacement or repair cost of improvements to the property, he said.

"Commercial property insurance coverage is very much the same as residential," said Ron Raynaud, a State Farm insurance agent.

The primary difference is that commercial property insurance doesn't include the contents of the building. Raynaud said a rider has to be purchased to cover the contents. Also, endorsements can be included on commercial policies for almost any possibility, from workers' compensation to employee dishonesty. Residential coverage is a bit more inclusive.

"A good homeowner's policy will include coverage for personal property," Campbell said. This includes the unattached items anything that would fall out of the house if you were to turn it upside down.

Other things a typical homeowners

policy will include are:

?Out building coverage. This is usually included at 10 percent of the policy value, but it can be increased for an additional premium.

?Loss-of-use coverage. A good homeowners policy will not have a limit on this kind of coverage.

This is very important if something should happen to your insured property, Campbell said. "You may have to live in a hotel while your house is being repaired. You may have to eat out every night."

?Personal liability. A standard policy in Missouri is about $100,000, Campbell said. This policy will protect you from liability for accidents on or resulting from your property. What exactly each policy covers, or doesn't cover, should be discussed with your agent, Campbell said.

?Medical payments to others. This provides coverage in the event of injury on your property. If a non-family member or nonresident should get hurt on your property, this coverage will pay medical bills. The minimum coverage is $1,000, Campbell said.

The standard deductible in Missouri is $250 for homeowner's policies, but better insurance rates can be realized with a higher deductible. Campbell said, "I think $500 is a good point for most homeowners."

Another way to protect yourself is to get warranty protection when you purchase the property. David Jacobson, broker/manager for Carol Jones, Realtors, said very few people ask about home warranty protection.

Home warranty protection is a type of insurance coverage that will repair or replace a variety of appliances and fixtures while the home is on the market or for up to a year after purchase. The policies can be purchased through most Realtors and give a sense of security to the new homeowner, Jacobson said.

If the house you are purchasing has a warranty plan in place, you can feel fairly secure that if something needed fixing during the time the house was on the market, it got fixed, Jacobson said.

Also, if the coverage is extended for the first year of ownership by the new owners, they can avert the financial difficulties that could come with fixing the roof or replacing the furnace in the first year.

Jacobson said most people have tied up the bulk of their savings in the down payment and purchase of their home.

Even the agents themselves have insurance when you buy your home. Many real estate agents in Missouri carry errors and omissions insurance. Margo Kohl, with Action School of Real Estate said errors and omissions insurance is "not required, but something that each broker would want to have. Your (errors and omissions policy) will cover an agent in any wrongful act they have been a part of as for the writing of the contract."

Jacobson said agents for larger companies, like Carol Jones, purchase E&O coverage each time they close a contract. While it isn't required by law, it is frequently a company policy.

Carol Jones provides everyone who lists their home with the company with E&O coverage for six months, free of charge.

The bottom line is the same for both commercial and residential insurance. "The biggest thing is that people are protected from loss or liability," Raynaud said.

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