Beware Of These Homeowners Insurance "Gotchas"

Lisa Walker • Oct 21, 2015

If you’re a current property owner or want to buy one of our new San Joaquin Valley homes, you most likely know of the need for homeowners insurance. The coverage protects your investment. Besides, no lender will issue a mortgage unless you have an adequate policy. But you may assume certain things about insurance based on your research that are incorrect. Watch out for the following common “gotchas” when shopping for a policy.


Destroyed items will be completely replaced.


You might think that if an item you own is totally destroyed, your insurance will pay you to replace it. Isn’t that the entire point of coverage? Unfortunately, most standard policies only pay for the value of the item at the time of the loss. For example, if your four-year-old lawnmower is destroyed by a fire, you will get the value of the used lawnmower, which will most likely not be enough to buy a newer version of the same model.


If you want to be able to replace an older item with its latest model, be sure that your policy includes a “replacement cost clause.” This generally adds a small amount to the total premium but can be valuable in restoring your home after a major disaster.


Insurance will pay the cost of rebuilding a home that has been totally destroyed.


Guaranteed replacement cost coverage used to be part of homeowners policies up until the last decade of the 20th century. After the devastating losses produced by Hurricane Andrew in 1992, however, this coverage was dropped. Instead, many insurance companies only pay for the home value listed in the policy when it was issued. Even if you allow for inflation when determining a value, the amount may not cover the “demand surge.” This is the spiking of building materials that occurs when a natural disaster, such as a hurricane or flood, damages most of the homes in an area.


Another potential increase in cost can come from current building codes. If the house is destroyed by more than 50 percent, it must be rebuilt according to current codes. This generally costs more than rebuilding a property to the codes that existed when your home was originally built.


Talk with your agent and ask about a demand surge rider and building code coverage. Having these two clauses in your policy can take care of bringing your structure back completely.


The water damage clause covers flood damage.


Your policy generally covers the damage caused by water if the source is internal, such as if a feed to your washing machine bursts. However, if the source of the excess water is external, such as from the predicted El Niño storms coming this fall and winter, the policy will not cover any losses. You’ll need to get flood coverage, which is generally a separate policy that you include in your standard homeowners insurance.


My liability coverage takes care of anyone injured on my property.


Liability insurance is supposed to take care of any financial responsibility resulting from lawsuits or injuries related to your property. However, they typically include limitations such as not covering injuries to anyone in your household. In addition, any lawsuits brought about when you run a small business out of your home are not covered, such as if a visiting client falls or a delivery person stumbles down your stairs.


To cover any injuries to people in your household, make sure that everyone has sufficient health insurance. As for your home business, you can get a home business rider added to your homeowners policy but this may suffer from some limits as well. It’s better to get a separate commercial liability policy just to cover your home enterprise.


If you want to know more about what’s involved in insuring or buying a home, or want to take a tour of some of our developments, please contact us.


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(Left to right) Jim Robinson, Randy Merrill, and Joe Leal accepted the Builder of Choice Award from Builder Partnerships in March 2022. Win is a result of High Scoring from the Builder's Trade Partners and Suppliers VISALIA, Calif. - March 23, 2022 - Central Valley homebuilder San Joaquin Valley Homes (SJV Homes) has been recognized with the coveted "Builder of Choice Award." The national award was earned through the supportive votes from its partnering subcontractors. The annual award by Builder Partnerships was created to recognize home building companies that have developed strong, lasting relationships with suppliers and trade contractors in their markets. In a survey created specifically for the award and responded to by trade professionals from across the country, SJV Homes received an overall score of 93% with its highest mark going to the category, "Willingness to Listen." 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Stable partnerships have helped these businesses plan in advance, invest in their team and create new jobs in the Valley. Urner's is a family-owned supplier based in Bakersfield, Calif., that has been in business since 1919. While partnering with SJV Homes for the past three years, the company has hired eight new employees, purchased three new delivery trucks and brought on six outside crews to deliver and install its cabinets and appliances to the builder's new homes. "We'll continue to grow with SJV Homes as long as they will have us," said Urner's contract sales manager, Jack Howard, who appreciates SJV Homes for its meticulous standards and confident approach to homebuilding. "We really appreciate the fact that in uncertain times, they are still looking at growing, not downsizing in any way. They share their business plan at the beginning of each year, which helps us forecast." Bryan Davis, president of M&B Carpentry and Manufacturing, has worked with SJV Homes since it was launched in 2013. In fact, the company is working on 60% of the builder's new homes and has expanded to three crews to handle it. "SJV Homes is a very loyal company to work with. Partnering with them has a hometown feel, not like it is with corporate national builder," said Davis, who has known the owners of SJV Homes for more than 25 years. "I know that I can go into the owner's offices at any time to sit down and talk." The business of building new homes also has a significant impact on the cities where new communities are constructed, from Visalia to Hanford to Tulare and several nearby towns. Since the founding of SJV Homes in 2013, 24 new neighborhoods have been completed and sold or closed out by the builder and its financial partner Presidio Residential Capital. The economic impact of that homebuilding activity in the past five years is as follows: Nearly $500 million paid out to local subcontractors $50+ million infused into city and school funds through permits and fees $100,000+ donated to local schools and charities SJV Homes plans to open at least five new home communities in addition to the 12 currently for sale. The local builder expects to close its 3,000th home in May, all within an approximate 40-mile radius of its home base in Visalia, Calif. About San Joaquin Valley Homes San Joaquin Valley Homes (SJV Homes) is a local homebuilder with deep roots in and a strong commitment to the Central Valley. Founders Joe Leal, Jim Robinson and Randy Merrill share a vision to build quality new homes in carefully planned neighborhoods for people who love the Valley and want lasting value. In 2013, SJV Homes combined forces with Presidio Residential Capital, a real estate development management firm in San Diego. It has since closed more than 2,500 homes and is now one of the busiest homebuilders in the San Joaquin Valley. For more information, please visit www.sjvhomes.com. About Builder Partnerships Builder Partnerships is a unique member organization providing training and support to help members improve their performance and profit. Currently, we represent more than 1,600 builders in the United States and Canada who forecast building more than 185,000 homes collectively this year. With more than 75 manufacturer members and service providers, Builder Partnerships also manages highly competitive rebate and incentive programs. We help strengthen relationships between builders, manufacturers, and other service providers in the home building industry. For more information, visit www.BuilderPartnerships.com or call (303) 972-7666
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