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What's Really Covered by Your Home Insurance: An Interview with Jeffrey C. Demo of JC Demo Insurance Group. Inc.

By Jeffrey C. Demo

Tell us a little bit about your company and the services you offer.

We have been in business 16 years. We are a full service brokerage offering everything from homeowners insurance to auto, business, life and health. Discounts for having your home and auto with the same company are significant. We worked for the insurance companies as underwriters before we came to represent them as agents years later, making us rather unique in the industry.

Can you briefly describe what an example of bare minimum home insurance coverage would be like?

Home Owners Insurance is based on the cost to rebuild your home at today's cost in the event of a loss. The standard HO3 policy includes replacement cost for your home and other structures on the property. It would also include some coverage for liability exposures and medical payments in case someone is hurt on your property.

What are some important things that would not be covered in that example?

On the standard HO3 form, your personal property would only be covered for "actual cash value," which is replacement cost less depreciation. It's important that coverage for replacement cost for your personal property be added so that you would be insured for the full value of your property. Also, coverage for water and sewer back up is not included in this policy but can be added by endorsement.

What is replacement cost coverage and how does it potentially help homeowners?

Replacement cost coverage provides the amount necessary to repair or replace your property to the condition it was in prior to a loss. This coverage is very beneficial to the homeowner because it protects them from having to absorb the additional cost needed to replace their property.

Can you talk about any other replacement cost specifics?

Personal property is replaced at fair market value ( in other words if you had a 50" television and it was stolen then you would receive a brand new 50" television of "like kind and quality" minus your deductible.

You can also purchase additional replacement cost coverage for your home to protect you when the coverage limit provided by your policy is not enough at the time of loss. This would be important in the event of a natural disaster where the cost of building materials spikes causing the cost to replace your home to be higher than originally calculated.

How is the deductible typically calculated with replacement cost? What about in the case of a flood, using flood insurance?

The deductible on your insurance policy does not have a correlation with replacement cost. You choose your deductible when the policy is set up. It is the amount of the loss that you would be responsible for paying at the time of a loss.

Flood is not covered by your home owners insurance policy. Flood is an additional policy purchased through the National Flood Insurance Program via your insurance agent.

Do you have any tips for homeowners who may have a limited budget for homeowners insurance?

Independent agents like us are able to quote your coverage with multiple insurance companies to find the policy that provides the best value at a cost you can live with. We can also provide you with options like an increased deductible to help offset the cost while making sure that you are properly protected.

What's the best way for people to contact you and your company?

Email or phone works great.

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