What is a deductible?

A deductible is a policy provision requiring the insured to pay the first stated dollars when a claim is made. This may also be stated as a percentage.

(ACV) Actual Cash Value
Replacement cost minus depreciation. This is the standard method of determining the amount of loss on most policies.

Replacement Cost
An optional method for settling a property loss. The actual definition varies from company to company and policy to policy. Replacement cost coverage is usually granted for an extra premium charge.

Valued Policy
Sometimes referred to as an “Indemnity Basis Policy”. It is one in which the amount of loss is established in advance for hard to value items such as antiques or valuable jewelry.
*Exclusions*

Order of Civil Authority – This includes losses for reconstruction or demolition. This clause will however allow the replacement of regular glass with “safety glass”.

Earthquake- The exception here is if a fire or explosion occurs as a result of an earthquake. (May be purchased by endorsement.

Water Damage- Excludes flooding and water seepage from the ground, water which backs up through sewers or drains or which overflows from a sump pump.

Power Failure- Excludes failures that occur away from the insured location.

Negligence- not preserving the insured property.

War and Nuclear Hazards- Not insurable because of unpredictability. However, fire that results from a nuclear disaster is covered.

Land- Including the land on which the dwelling is located.

Basic Cause of Loss Form

Wind Storm
Damage to property inside a building from rain or snow etc., will only be covered if wind causes the opening. This coverage is not intended to cover towers, smokestacks or windmills since the policy covers only the dwelling. Awnings of fabric, signs, and lead-in wiring are also not included.

Civil Commotion
Would include looting at the location of the commotion.

Smoke
Only from an unfriendly fire, it must be sudden and accidental and must not come from agricultural smudging or industrial operations.

Hail
Same coverage as windstorm.

Aircraft
Includes falling objects from aircraft. The aircraft or object must actually hit the building and be the direct cause of loss.

Vehicles
Same as aircraft. Also, the damage must be caused by vehicles not owned by the insured or tenants.

Explosion
Only excludes steam boilers and pipes, turbines or engines. These are covered under separate policies.

Riot
Same as Civil Commotion

Common Exclusions and Conditions

(Exclusions)

• Order of civil authority
• War and nuclear hazards
• Water damage (flood)
• Intentional loss
• Damage by animals owned or kept by the insured
• Power failure
• Negligence
• Earthquake
• Rust or corrosion

(Conditions)
Loss Settlement- Losses are paid either on an Actual Cash Value (ACV) or Replacement Cost basis. Under the homeowner’s policy, losses are settled as followed:

Actual Cash Value Basis

• Personal Property
• Outdoor equipment, awnings, carpeting, and appliances.
• Structures not considered buildings.

Replacement Cost- Covers the dwelling and or other structures. Remember, the coinsurance requirement applies to replacement cost. Replacement cost is provided only if the insured carries at least 80% of the dwellings replacement cost value and pays only if the actual repair or replacement is completed.

If there is less then 80% insurance to replacement value, the insurance company pays the greater of:

(a) The actual cash value of that part of the building damaged, or
(b) That portion of the cost to repair or replace the damage (after the deductible and without depreciation) that the amount of insurance on the building bears to 80% of the buildings replacement cost, but never for more than the applicable limit of liability.