Insurance Briefs

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Insurance
Briefs Volume 2 Issue 2

Will Your Insurance Cover the Cost
of Rebuilding Your Home?

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A fter a disaster happens it is too late to determine
if you have enough insurance to cover the cost of
replacing your home and your lost valuables. And as we
and you only purchased enough insurance protection to
satisfy your mortgage lender’s requirements.
When you evaluate your coverage, be sure not to
have seen from recent events, disaster has a way of strik- confuse the real estate value of your home with what it
ing without warning. would cost to rebuild it.� Another point to con-
sider is whether or not your policy covers im-
provements such as a new kitchen or bathroom

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and major purchases, as well as rebuilding costs.
Most basic homeowner’s policies will provide
replacement cost for damage to the physical
structure of your home. Replacement cost covers
the repair or replacement of damaged property
with materials that are similar in kind and qual-
ity to what your home was built with.
For added protection beyond the estimated
cost of rebuilding your home, you need a guar-
anteed or extended cost policy. This type of cov-
erage is especially important if there is a wide-
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spread disaster that raises the cost of building
materials and labor. A guaranteed replacement
cost policy would pay to rebuild your home re-
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gardless of the actual cost. Insurance companies
offer extended replacement cost policies, which
provide an additional 20% or more of coverage
above the limits found in the basic homeowner’s
policy.
Savvy homeowners make it a practice to review their
homeowner’s insurance on an annual basis to see if their You should also consider purchasing additional cov-
policy still provides adequate coverage to rebuild their erage that will increase the protection of the standard
homes at current construction costs. This is especially homeowner’s policy:
important if you have recently paid off your mortgage
continued on page 3
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PLEASE VISIT OUR NEW WEBSITE -
www.MOUNTAINSTATEINSURANCE.COM
We are pleased to announce to you that we now offer our clients the conve-
nience of our website. Please take a minute to visit our website and see how
easy it is to access important information about Mountain State Insurance
Agency, Inc., our staff, and the products that we have to offer you. We ap-
preciate you, our clients , and make every effort to assist you with all of
your insurance needs. It is our pleasure to be of service to you.
Marsha Hornsby/Personal Lines Advisor (304)720-2000 Ext 212

Mountain State Insurance Agency, Inc Phone: (304) 720-2000
1206 Kanawha Blvd. E Fax: (304) 720-2002
Charleston , WV 25301
www.mountainstateinsurance.com
Are You Liable?
Protect Yourself from Home Worker Lawsuits
A s the housekeeper is vacuuming your living room,
she trips over one of your daughter’s toys and seri-
ously injures her back. While your neighbor’s teenage son
or she will be covered under that policy. If the contractor
doesn’t have enough coverage, you may be held finan-
cially liable. However, depending on the circumstances,
is mowing your front lawn, he steps in a large hole and you may be able to file a lawsuit against the contractor
sprains his ankle. Will your homeowner’s insurance cover as they are required by law to have sufficient workers’
you if one of these workers decides to file a lawsuit? compensation coverage.
Many homeowners do not realize that they could be If you are looking to hire a house contractor, it’s impor-
held financially liable if a maid, landscaper, nanny or an- tant to ensure they are covered for worker injuries, prop-
other house worker were to suffer from an injury on their erty damage and uninstalled materials. Don’t just take
property. Here are some things you should keep in mind their word for it. Ask for written proof that they have a

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before you hire a home worker: contractor’s license, workers’ compensation insurance for
Is that worker an employee or a contractor? themselves and any subcontractors and general liability
coverage.
When you hire someone to help out around the house,
you should figure out whether he or she is an employee Know what your homeowner’s insurance covers
or a contractor. This is one of the factors determines
When it comes to coverage for home workers, every
whether or not you are liable for a worker’s injury. So,
homeowner’s insurance policy is different. Depending on
how do you know if the worker is considered your em-
your home state, your policy may include a provision that

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ployee or a contractor? It all comes down to how much
control you have over the worker. provides limited coverage for minor workers performing
lawn mowing or other tasks that require the use of power
Let’s say you hire a nanny named Lisa to take care of tools on your property.
your children and do some light cleaning in your home.
Lisa follows your instructions about how to care of your On the other hand, your policy may specifically exclude
kids and how to complete certain household tasks. You domestic workers such as nannies or maids. Your policy
supply Lisa with the supplies and tools she needs to do may cover the injuries of household employees, but only
her job. Because you have control over how Lisa works, after a lawsuit is filed against you. Because homeowner’s
she is most likely considered your employee. policies vary widely, it’s important to read through your
contract and talk to your insurance agent before you hire
On the other hand, let’s say you hire a professional
a home worker.
landscaper named Bob to fertilize and mow your grass,
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trim the hedges and plant flowers in your yard. Bob uses Consider an umbrella policy
his own lawn mower and yard tools and he does yard
work for other homeowners, as well. Bob also has a team If you discover that your homeowner’s policy offers
of workers who help him with his business, and he pays limited or no liability coverage for workers, you may
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these workers. In this case, Bob would be considered an consider purchasing additional liability insurance. While
independent contractor. you may have some personal liability coverage through
Of course, these are two fairly simple examples. If you your homeowner’s policy, it’s probably not nearly enough
are uncertain about whether a worker in your home is to cover a major lawsuit from a home worker. If someone
considered a contractor or an employee, consult a lawyer were to file a lawsuit against you, you could end up los-
or tax professional. ing hundreds of thousands of dollars or more-even if you
win.
Understanding worker’s comp insurance You can further protect yourself with what’s known as
Some states require that homeowners who have house an umbrella policy. This type of policy offers a higher
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worker “employees” to carry workers’ compensation level of liability coverage and ensures that you and your
insurance coverage for them. However, even if your state family will be protected if someone sues you for dam-
does not require this, you should still consider purchas- ages. Umbrella policies are typically sold in million dollar
ing this insurance for your employees. Why? Because increments, and you can obtain a policy once your home
if one of your employees is injured on your property, and auto insurance policies meet a minimum “attachment
you may have to pay for their medical bills and other point”-typically a liability limit of $250,000 or $500,000.
expenses out of your own pocket. However, with work-
Check with the Better Business Bureau
ers’ compensation coverage, the insurance company will
cover the costs. Before you hire a home worker, you should contact the
Alternatively, if you hire a house contractor, such as a Better Business Bureau for more information. They can
landscaper, carpenter or plumber, they should be covered tell you if any consumers have filed complaints against
by their own workers’ compensation insurance. If a con- the worker. Visit the bureau’s website at www.bbb.org.
tractor is injured while doing work on your property, he

“Information contained in this newsletter about product offerings, services, or benefits is illustrative and general in description, and is not intended to
be relied on as complete information. While every attempt is made to ensure the accuracy of the information provided, we do not warranty the accu-
racy of the information. Therefore, information should be relied upon only when coordinated with professional tax and legal advice. ”
Does Your Auto Insurance Policy
Cover Your GPS?
I f you’ve recently gone somewhere on vacation and
your car did not have a Global Positioning System
(GPS), you probably wish it did. GPS systems have be-
come increasingly popular as their prices have dropped.
Navigationally challenged drivers who used to decipher covers sound reproducing equipment; audio, visual and
hard-to-read maps can now rely on these small devices to data electronic equipment; and tapes, records and disks
help them reach their destinations. However, the popu- while in a vehicle. A GPS device falls within the data elec-
larity of GPS devices makes them particularly attractive tronic equipment category. Coverage applies if the unit is
to thieves. They are also susceptible to damage in car permanently installed in the vehicle or if it is removable
crashes, like any other item in a car. How will an auto from a permanently installed housing unit, designed to

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insurance policy cover a stolen or damaged GPS? be powered solely by the car’s electrical system, and in
Unfortunately, standard policies provide little or no or upon the car at the time of the loss. The form provides
coverage for a GPS. Many older policy editions explic- coverage for devices in cars the policyholder owns and
itly state that they do not cover losses to any electronic those she rents or borrows. As with the other form, she
equipment that receives or transmits data signals. A GPS can buy coverage in amounts up to $5,000.
would seem to fall within that description. More recent The additional premium for this coverage is normally
policy editions do cover electronic equipment, but only if small. A rate of $4 for every $100 of coverage is typical.
it is permanently installed in the vehicle. These policies For example, the cost for $2,500 of coverage might be
provide a small amount of insurance for electronic equip- around $100.

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ment; $1,000 coverage is typical. As car buyers ask carmakers to add more and more
It is possible to buy additional coverage for GPS de- gadgets to cars, insurance coverage for those gadgets will
vices. Any car owner with equipment worth more than continue to evolve. It is unwise to assume that an insur-
$1,000 should speak with her insurance agent about buy- ance policy automatically provides much coverage for
ing a special policy form. It increases the coverage to a these gadgets. All insurance buyers should carefully re-
specific amount shown on the form. Typically, insurance view their policies and ask their agents questions if GPS
companies will not offer more than $5,000 coverage. coverage is a concern. With a GPS and the right insurance
If the policyholder has an older edition of the policy, coverage, a driver can be confident that she’s going in the
she will need a different form to cover a GPS. This form right direction.
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continued from page 1…Will Your Insurance Cover the Cost
of Rebuilding Your Home?
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• Inflation Guard - automatically adjusts the rebuilding The second part of your coverage evaluation should
costs of your home to reflect changes in construction include a determination of whether or not you have
costs because of inflation adequate protection for your possessions. You can do
• Building Code Upgrades - provides ordinance or law this by conducting a home inventory, which itemizes
coverage that pays a specific amount toward in- everything you own and the estimated cost to replace
creased building costs resulting from having to meet these items if they are stolen or destroyed. If you find
new or tougher building codes that your possessions are not sufficiently covered, you
can increase protection in either of two ways:
• Water Back-Up - insures your property for damage
caused by the back up of sewers or drains • Cash Value Policy - pays the cost to replace your
belongings minus depreciation.
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Standard homeowner’s policies do not include cover-
age for earthquakes or flooding, including flooding • Replacement Cost Policy - pays the actual cost of
resulting from a hurricane. Flood insurance is available replacing the item.
through the federal government’s National Flood Insur- If you have a replacement cost policy for the contents
ance Program, www.floodsmart.gov. However, you may of your home, your carrier will pay to replace lost or
be able to purchase the coverage from the same insurer damaged items with new ones that are comparable. If
from whom you purchased your homeowner’s insur- you have a cash value policy, your carrier will pay only
ance. Earthquake insurance is also available through a percentage of the cost of any new items because they
private insurance companies. You should speak to your have been used and have depreciated in value. Gener-
agent about purchasing flood and/or earthquake cover- ally, the price of replacement cost coverage is about
age if you live in a geographic area that can be hard-hit 10% higher than cash value coverage, but the difference
by these types of natural disasters. in cost will more than pay for itself in the event of a
major disaster.
Auto Coverage for Your Teen’s Part-Time Job

I t’s a rite of passage when a teenager gets their first
part-time job. As their parent, you’re happy because
hopefully they’ll learn how to manage money and de-
Many insurance carriers are reluctant to cover your
teen if they use the family car for these typical part-time
jobs because they often carry a great deal of risk. These
velop some measure of responsibility. Unfortunately, a jobs require the car be driven to different locations and
positive experience for your teen could become a nega- at various times of the day and night. Because there are
tive one for you if they use the family car to perform their so many variables, it becomes extremely difficult for the
job. insurer to adequately price the policy to cover the risk
For many teenagers, getting a part-time job means de- they are underwriting.
livering pizzas or newspapers, working as a crew mem- You may find that you have to purchase a commercial
ber for a landscaping company, or auto policy, which could be more

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driving for a van service. One of the expensive than your personal auto-
requirements for employment is that mobile policy. A commercial policy
they have their own means of trans- provides coverage for situations
portation, but what if that transpor- encountered while conducting busi-
tation is your family car? ness that aren’t normally covered
Even though your car is insured under personal auto policies.
under a personal auto insurance Although it may cost more, a
policy, if your child gets into an acci- commercial auto insurance policy
dent at work you could be surprised is worthwhile if your child intends

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with a claim denial. For this reason, to stay at their job for any length of
it’s important that you immediately time. Many students keep the same
notify your carrier when your child part-time job throughout their high
starts driving the family car for work. school and college years because
The insurer will likely charge you an extra premium, but it fits their schedule. If that is the case, be sure that your
it’s a small price to pay should your child get into an ac- teen is covered during the time they are employed.
cident on the job. You should also find out whether there
are any policy exclusions that might be applicable.

Insurance Briefs
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Charleston , WV 25301
1206 Kanawha Blvd. E
Mountain State Insurance Agency, Inc