Insurance coverage can be confusing, and it gets worse when something bad happens. So I asked our new sponsor Scot Hastie of Pardee's Agency (A World Company) in Kingston for some help decoding and demystifying some of the thorniest questions listeners and I have had for homeowners, auto and commercial.
PROPERTY
Q: A tree falls on my property from the neighbors. Whose problem is it? Does insurance cover it?
A: Scot says he has been asked this question a gazillion times over the years.
“The answer to this question is that the neighbor’s policy will not pay and you will be reliant on your own policy to respond UNLESS your neighbor directly caused the tree to fall. If it comes down to a weather event or tree rot it is all but certain that the neighbor won’t be considered responsible or negligent and their policy will not pay.
More good news (sarcasm): your policy will not pay either unless the tree hits something that is structural and you will incur your policy deductible before your polity will pay.
I have never has seen a claim paid under these circumstances, but I have had it suggested to me a number of times. If you have a neighbor’s tree that is clearly threatening your property and is clearly in bad shape and at risk of the trunk or limbs falling, if you were to notify the neighbor in writing (certified letter) it may bolster your ability to demonstrate that it was a known hazard that you made them aware of and they failed to act.
Ideally, you have a civil and friendly relationship with your neighbors, and you can come to friendly mutual agreements with issues of this nature. Tree clean-up and tree removal can be extremely expensive which contributes to the angst surrounding this topic.
Another variation of this question that I have received a number of times is: ‘I have a tree that is threatening my house, will my Homeowners Insurance policy pay for me to have it taken down?’ the answer to that question is NO. A Homeowners policy is not a maintenance contract; it is not going to pay to do things to maintain your property.
When telling people this as tactfully as I can, I have had some people say ‘Okay, I will let it hit my house and then they will pay for the removal of it and the repair to my home.’ I don't suggest that as a strategy!
Q: During a storm, one of my trees falls on my neighbor's property, damaging the fence and landing in his yard. Whose problem is it? Does insurance cover it?
A: Scot answered this with the previous response, and adds:
“Unless you were cutting the tree down and caused it to fall, this becomes your neighbor’s issue. The only source of coverage would be the neighbor’s Homeowners policy and the loss would be subject to their policy deductible. Most deductibles these days are at a minimum of $500 and are quite often higher. Perhaps being at $1000 or $2500.”
Q: What’s my coverage if my septic system backed up wreaking havoc and disgust? Long-time listeners know this happened to me back in Episode 6. City dwellers used to sewer systems are in for a rude awakening in this experience. It’s a mess. What does insurance cover and not cover?
A: From Scot: “Most claim scenarios have multiple potential layers to them. What you may have experienced personally is that the septic tank itself was not covered because the damage to that and related components was due to wear and tear which is not something that: an insurance policy would respond to. The wearing out of something is hardly ever something that there’d be coverage for. One of the first things a claims representative will look to determine was the cause of the claim due to something that was ‘sudden and accidental.’ Effectively, an event that took place and the damage that occurred was immediate. If that wasn't the case and the damage was due to something that was occurring over an extended period of time, this makes it far more likely that a claim will be denied because what occurred is likely to be considered a lack of upkeep or maintenance.
What happened in your case was the resulting damage due to the failure of some portion of your system was covered. The clean-up and damage done due to the back-up was covered, and likely covered, at what is called a sub limit of coverage. With Sewer and Water Back up coverage, it is typically provided on a Homeowners policy at some incremental amount and most often can be increased if you wish it to be.
There are so many potential coverage concerns that ideally you either have a sense of what areas you wish to make sure you are covered for or, more importantly, you have an insurance person who spends sufficient time with you to provide a thorough explanation of what you are covered for and what you are not covered for and addresses all the questions you have.”
Q: What's an umbrella policy and do I need it beyond homeowner's I already have?
A: From Scot: “I am a HUGE advocate/proponent of Umbrella Liability policies. They are potentially so important and are most often what I would call inexpensive peace of mind. Visually, when you think of an umbrella, you think in terms of it covering over you and that is what an Umbrella Liability policy does. It covers over and above the amount of liability coverage you have on your home and the liability coverage you have on your vehicles.
The more you have to lose, either now or in the future, would dictate how large an Umbrella Liability policy you would consider having.
I have seen some internet-based financial advisers advising against Umbrella policies or suggesting that the Umbrella Liability limit does not need to be that high because the statistical likelihood of you being the one who has the misfortune of the huge settlement occurring against you is so low. Sorry, I don't think anyone should put what they have worked for their entire lives at risk over saving a couple or a few hundred dollars.
I frequently use one example when I explain the importance of having an Umbrella policy. Many years ago, I had a customer who was being sued due to their involvement in an auto accident. The amount of liability coverage they had was $300,000 and they were being sued for $1,000,000. What do we know about our court system? We know it can take forever to have something conclude or come to trial. What do we also know about insurance companies? We know that they are only going to do what they are contractually obligated to do. In this example, my customer was notified by their insurance company that the amount they are being sued for exceeded the amount of coverage that they were carrying and that if the award from the lawsuit exceeded the amount of coverage they have, they would be personally responsible for the difference between the coverage they have and the amount of the award.
I don't think any of us would want to wait years with that uncertainty as we waited for the wheels of justice to conclude what they are doing. Umbrella policies are an important part of most everyone's personal risk management plan.”
ANIMALS
Q: Driving at night on a curvy mountain road in Saugerties, I hit a deer. Luckily, I'm okay but my car is massively banged up and the deer, so sorry, is gone. What does insurance cover? Would it matter if it had been a bear? A coyote? They're scary and terrible, so maybe?
A: Scot’s answer: “The damage to your car resulting from striking an animal would be covered by your Comprehensive coverage if you have that coverage on your policy. The claim would be subject to the deductible you have for that coverage. The type of animal would not matter.
Obviously, none of us wants to hit and harm an animal. From your insurance company’s perspective, hitting an animal is viewed much less severely than hitting a stationary object or another vehicle. A claim of this nature is viewed as something that was pretty much outside of your control.”
Q: A goat from the farm next door jumps the broken fence he never fixed, comes over to our yard, eats all our flowers and we're stuck with a huge gardening bill to repair. Does my—or the farmer's insurance—cover any of it? Is there goat insurance?
A: Scott’s answer: “This strikes me as funny while of course if anyone's landscaping or flowers and plants are destroyed, that is not funny in any way.
This scenario is dependent upon the nature of the coverage that the farm owners have. Do they have liability coverage that extends to their animals causing damage to someone's physical property or causing injury to an individual or another animal? If they do, there will be coverage; if they don't, there won’t be coverage.
This is a good time to mention the coverage that most Homeowners policies provide should our domestic animals cause damage to someone's property or cause injury to a person. The most common occurrence related to this topic is dog bite claims. Claims of this nature are one of the most frequent liability claims that insurance companies are processing. Being a responsible pet owner is a critical piece of everyone's personal risk management practices
If you have the misfortune of having your dog bite someone, it can jeopardize your ability to secure Homeowners coverage under favorable conditions going forward and they also could require that the animal that bit someone is no longer in your household. It is potentially a terrible set of circumstances and an area that everyone really needs to be attentive to.”
COMMERCIAL
Q: We rent out our house using one of those rental services and a guest breaks a bunch of stuff and hurts himself?
A: Scot’s answer: “The key here is that you have the proper coverage. There are Homeowners Insurance companies that are accepting of a certain amount of rental occupancy of someone's home. They need to be made aware of what your intentions are related to the rental of your home. Typically, this comes down to how many days or weeks a year does someone anticipate renting out their home.
The Homeowners Insurance companies that provide coverage for homes that are being rented will have thresholds. If it is anticipated that the number of days your home is rented will exceed their threshold, then it will be necessary to utilize a different type of policy that permits a greater frequency of your home being rented. Have the discussion with your Agent or Insurance company and to make sure the policy you have will respond to the manner in which you intend to use your home. We provide coverage for many people who rent out their homes on a part -time basis. We also provide coverage for many properties that are full-time short-term rentals.”
Q: I'm starting a business out of my home office. Do I need insurance beyond my homeowners?
A: Scot’s answer: “The answer to this is almost always yes, but it really depends upon the nature of your business. If it is all virtual and you do not have customers or patients coming to your home, your Homeowners Insurance company may have an endorsement that can be added to your policy that may provide you with the property and liability coverage that you need. If the nature of the business is more significant, you will likely need to have a separate policy to address the property that your business owns as well as the liability exposure that your business has.
The evolution of business being conducted from people’s homes has been significant. As always, this is an area to be discussing with your Agent or insurance company to make sure you have the appropriate coverages.
There is a world of difference between having a business that is just you and a telephone and a laptop where there is no customer, client, or patient thoroughfare versus a business where there are a lot of people coming and going from your home.
This is a consideration of nature of a business and size and circumstances of a business. If you have employees at your home, if the nature of the business is considered hazardous or beyond the comfort level of your Homeowners insurer, it could be a situation where what is being done is unacceptable to your insurance company and could either cause your policy to be cancelled or for exclusions that exist in your policy to be triggered if there is a loss and the nature of the loss had arisen from your business.
An important coverage consideration that most people are unaware of is that if you have a detached structure on your property (think garage, cottage, studio, etc.) and it is used in "whole or in part" in a business manner, your unendorsed Homeowners policy can exclude all coverages on that building if something happens to it.
Something innocent such as a tradesperson storing materials or their tools in a garage or shed could trigger a denial of a claim. I have seen it happen and, of course, it is awful. If you have any detached buildings on your property that are being utilized in any way that is related to or associated with something that is business-related, make sure they you have this conversation with your Agent or Insurance company so you know definitively whether you have coverage or not and whether your policy can be endorsed so you have coverage for the use of the building or it is determined that a separate' policy needs to be written to provide the proper coverage.”
Thank you Scot Hastie of Pardee's Agency in Kingston for the candid answers about insurance!
For folks interested in talking to Scot about homeowners, auto, umbrella or commercial coverage, here’s how to contact him. Tell ‘em Cidiot sent ya:
email: shastie@pardeesinsurance.net
phone: 845-331-0025 x1940
web: Pardee's Agency (A World Company)
