What May Be Covered by Your Homeowners Insurance Policy

Additional Living Expenses
If your property is not safe for occupancy, keep receipts for all expenses associated with your relocation, such as emergency shelter, clothing, and food. These extra costs may be covered under the “loss-of-use” portion of your policy. You will be required to account for any covered expenses, so be sure to keep all of your bills and receipts. Any advance payments received will be counted toward your final claim settlement. Additional living expenses include items such as food and housing costs, and telephone or utility installation costs in a temporary residence. Also, extra transportation costs to and from work or school, relocation and storage expenses, and furniture rental for temporary residence are eligible under additional living expense coverage. Your insurance company usually advances you money for these extra costs.

Personal Property
Making lists of all damaged items is a good place to start documenting your personal property loss. Include the brand names and model numbers of appliances and electronic equipment. If possible, take photographs of the damage. Don’t forget to list items such as clothing, sports equipment, tools, china, linens, outside furniture, holiday decorations, and hobby materials. Put together a set of records – old receipts, bills, and photographs – to help establish the price and age of everything that was damaged. If your property was destroyed or you no longer have any records, you will have to work from memory. Try to picture the contents of every room and then write a description of what was there. Try also to remember where and when you bought each piece and about how much you paid. Do not throw out any damaged items until you have been told to do so by the adjuster. May I suggest using DocuHome to perform a home inventory .

Building Code Upgrades
Building codes periodically change to conform to ever-rising safety and environmental standards. The codes have probably changed in your community to some extent since your home was built. Unless there is language in your policy covering additional costs associated with those changes, you may incur non-reimbursable expenses to rebuild in compliance with present codes. Such coverage appears as an “endorsement” – that is, as an option for “ordinance or law” coverage – for a small additional premium.

IMPORTANT: If your home has non-permitted square footage, do your due diligence to understand how this impacts your building permits.

Replacement Cost Versus Actual Cash Value
Replacement cost is the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation – the decrease in value due to age, wear and tear, and other factors. An actual cash value policy pays the amount needed to replace the item at the current market value. For example, a tree falls through the roof onto your eight-year old washing machine. If you have a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you have an actual cash value policy, the company would likely pay only a percentage of the cost of a new washing machine because a machine that has been in use for eight years would almost certainly be worth less than its original cost according to the current market value.

If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and release the funds to the policyholder as the work is completed. You should show the mortgage lender your contractor’s bid and let them know how much the contractor wants up-front to begin the job. Your mortgage company may want to inspect the finished job before releasing the funds for final payment.

Personal Belongings
If you have a replacement cost policy for your possessions, you normally need to replace the damaged items before your insurance company will pay you the replacement cost. If you decide not to replace some items, you will be paid their actual cash value. You don’t have to decide what to do immediately. Your insurance company will generally allow you several months from the date of the cash value payment to replace the item. Find out how many months you are allowed. Some insurance companies supply lists of vendors that can help replace your property.

About Mark
Mark is an attorney with a background in insurance and real estate law. He has served as corporate counsel for State Farm Insurance Company and has represented numerous insurance carriers and their clients over the past 15 years. Mark is also a realtor specializing in the sale of high end luxury properties in the Malibu Real Estate area and the Westside of Los Angeles. His credentials include a wealth of insurance, business and real estate related knowledge and expertise.

When looking to buy, sell or lease Malibu real estate, there is no one more qualified to guide you than Mark S. Gruskin. Visit his personal website at or call him at (310) 317-8202

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