Many prudent, forward-thinking individuals and families assume they have adequately provided for their financial security by purchasing homeowner's insurance and life insurance.  Unfortunately, many policyholders eventually discover coverage gaps that render their plan for financial security in the wake of an unanticipated emergency no more reliable than an inflatable life raft slowly leaking air.  Many claims disputes begin with misunderstandings regarding the exclusions, coverage limits, and conditions that policyholders do not realize exist until disaster strikes.  Some common holes in insurance life rafts that often go unnoticed until it is too late are highlighted below.

Homeowner Insurance Coverage Gaps

Homeowner’s insurance policies are long, complex documents full of nuanced terminology that can be confusing and difficult to understand.  Although it is vitally important that homeowners know what their policy covers, few people understand the many exceptions and limits on their protection.  Policyholders often assume their homeowner policy offers protection in the form of the full amount required to replace their home.  However, many policies place caps on the replacement cost of a residence, which are based on the face amount stated on the policy.  Policyholders should periodically consult with a contractor regarding the current replacement value of their home to ensure that they have sufficient coverage.

Many insureds also misunderstand the nature of their policy because the policy is referred to as "all risks” coverage.  The best way to understand this type of homeowner policy is that the policy covers “all risks EXCEPT” the laundry list of excluded perils and forms of loss that are itemized in the policy.  For example, the policy will not cover flood damage.  To have flood coverage you will likely need to purchase flood insurance that is made available by FEMA under the National Flood Insurance Program.  Depending on your state and insurance policy, coverage for earthquakes, hurricanes, sinkholes, and other losses might only be covered by a special addendum.  Frequently, the additional expense to comply with building codes and governmental regulations when rebuilding or repairing your home after a disaster also will not be covered unless supplemental coverage is purchased.  If you are displaced from your home during the repair process, the policy might also limit the duration or amount of coverage for the expenses associated with this period of relocation.

Homeowners should review their policy with their agent or broker periodically to ensure that the coverage is adequate given potential changes in an insured’s situation.  Notices received from an insurer also should be carefully scrutinized.  Although such correspondence might look like standard boilerplate, the notice might provide important information about changes to a policyholder’s coverage.

Life Insurance Coverage

The basic goal of life insurance is to ensure that you have sufficient coverage to facilitate your family maintaining its standard of living if you pass away.  However, changing circumstances can create significant coverage gaps.  If an insured’s life insurance coverage was provided by his or her employer, for example, a job change could impact the coverage.  The provisions or amount of coverage might morph based on a new employment situation.  The prior employer might have provided permanent life insurance while the policyholder might have only term coverage after the job change.  Term insurance expires after a pre-determined date.  Further, changes to income, savings, and expenses might merit updating your life insurance coverage.  Life insurance coverage should be periodically reviewed to ensure that you have the best protection to satisfy your unique concerns and financial objectives.

While these strategies will not prevent all claims disputes, many potential problems can be avoided by understanding the limitations, conditions, and exclusions in your policies and anticipating potential problems. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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