Q. I saw a story on the news recently about a homeowner who signed up with a company called Airbnb to rent out a room in her home for extra income. It sounded like people could use a website to find a place to stay instead of using a hotel or bed and breakfast. How does this work with home insurance? What if a guest damages the house or is injured on the premises? Would the homeowner policy cover those situations?
A. Probably not. We recommend checking with your agent or
insurance company if you're considering making all or part of your home available
for rental on a regular basis. Some companies may provide coverage if you occasionally
rent out a room, but we believe making all or part of your home available for
regular rental would be considered business use. Homeowner policies generally
do not provide coverage for business use.
Your agent or customer service representative can explain how your current
policy does or does not apply and any options available to you. You may be able
to add to your coverage, or you may have to buy a policy specifically designed
for a landlord.
If you have general questions about homeowner insurance, or you experience
difficulties with an insurance company or agent, our advocacy team is available
to assist at 1-888-877-4894.
I've been watching the news about the terrible fires in California. Are fires from a natural gas explosion covered? How do insurance companies figure out how much to pay when everything is destroyed?A.
Your first question is easy. All homeowner's policies we're aware of cover fire losses. In fact, property insurance in the United States started out as fire insurance as far back as Benjamin Franklin, so there is a long history of consumers being paid for losses caused by fire. Explosion has been a covered peril for quite some time as well.
Your second question is somewhat more difficult. Homeowner's insurance is typically sold based on the cost to rebuild the home, and there is usually an inflation protection feature so the limits keep up over time. Coverage limits for other structures, personal property and additional living expense are percentages of the building limit. Let's take a look at each of these parts of the coverage.
For the dwelling coverage, there are usually records available, including public records, blueprints, surveys, and appraisals that describe the home. Using these records and any information available from the homeowner, a replacement cost can be determined. It becomes more complicated if there have been modifications to the home.
Sometimes there are other structures, like a detached garage, fence or gazebo. They may be described in the records mentioned above. If not, the homeowner will hopefully have information that can be used to determine how much it will cost to rebuild them.
Personal property losses may be a real challenge for most homeowners, especially if the home is burnt to the ground. The starting point of a personal property claim is usually asking the homeowner to list all of their property. If you take a minute to think about all of the property you own, every appliance, every piece of furniture, every article of clothing, every towel and linen, everything hanging on your walls, and in your closets and storage areas, most people are going to have a tough time coming up with a complete list. Most people also keep all of their records at home, and so there are likely no receipts or other documents like warranties or other literature to help create a list. Some sources of information include banks, credit unions and credit card companies that may have records of purchases. With big ticket items, there may be store records or warranty registrations available from the retailer. Sometimes friends or relatives may have photos of a holiday or birthday party at the home with personal property visible in the background. They may also be able to provide a statement to the insurance company regarding your belongings.
Homeowner's policies also cover additional living expenses when you can't live in your home due to covered loss. This can include food, lodging, and other expenses over and above what you normally would spend if you had not suffered a loss.
Fortunately, total fire losses like this terrible tragedy in California are pretty unusual. We do recommend consumers keep an inventory of their personal property so they're prepared in the event of a loss or theft. Photographs or video tape of each room in your house or apartment can be helpful as well. The inventory and other proofs should be kept somewhere away from the premises and updated regularly.
We also have a form
on our website that may help you create an inventory.
Q. Last night on the news we saw some homeowners with trees down from stormy weather. There are some very tall evergreen trees in our neighborhood. What happens if a tree falls on our house or car? Will the damage be covered by insurance?
A. Let's start with the tree falling on your car. If you have comprehensive coverage on your car, your car insurance will pay for damage caused by falling or flying objects. In a windstorm, this could include a tree falling on your car or branches or other debris hitting your car. You would be responsible for your deductible. To find out if you have this coverage, check your bill or the declarations page of your policy. Each coverage you selected will show a premium next to it. If you're not sure, check with your agent or company.
Homeowners policies also cover damage caused by a windstorm. If a tree falls on your roof, for example, your homeowners policy will pay to remove the tree from the roof, repair the structure, and pay for property that is damaged by the tree falling or by wind or rain that comes in through the opening created by the tree. Your policy also covers reasonable additional living expenses if the damage is so extensive you can't live there while repairs are done.
Sometimes the tree that falls on your house or car belongs to a neighbor so we receive calls asking whether the neighbor is responsible for the damage to your property. There really isn't an easy answer to this question. Your homeowners policy or the comprehensive coverage on your car will cover the damage whether it's your tree or your neighbor's. Your insurance company will then investigate to determine whether there is any responsibility on the part of your neighbor. If you use your own car insurance or homeowners insurance, the insurance companies can work it out between them.
Q. I saw a story on the news about home insurance claims involving
a contractor that was being accused of charging for work that was not done,
and for not completing work, leaving the homeowner with their house torn up
and big bills to pay. The reporter said the contractor is being investigated
by the Construction Contractors Board, but the contractor told the reporter
the real problem is with the insurance companies. I hope I never have a claim,
but if I do, how can I be sure the insurance company will pay my claim?
A. If you do experience a loss, there are certain common requirements
in insurance policies that must be met. You need to notify your company as soon
as possible about the loss, protect your property from further damage, and make
the property available for inspection. Having a contractor come in and start
tearing out property before the insurance company has an opportunity to inspect
the loss could jeopardize your claim.
The first step in working with your insurance company is to determine whether
the loss is covered by the policy. We recently published our top 10 homeowner
myths listing some of the more common issues that come up. If your insurance
company determines the loss is not covered, it must provide an explanation that
includes the policy language that applies. If you have questions about the position
your company is taking, you can contact a consumer advocate here at the Oregon
Insurance Division for assistance. Your advocate can review the policy language
and the Insurance Code to be sure the company is in compliance with the terms
of the contract and the law.
When it comes to selecting a contractor, we suggest using the same approach
you would use to select a product or service if you were paying for the repair
yourself. Check with family, friends and business professionals you know and
trust for recommendations. Check with the Construction Contractors Board, the
Department of Justice, and the Better Business Bureau for complaint information.
Once you've narrowed down your choices, get itemized estimates that clearly
identify the work that needs to be done. Sometimes the insurance company claim
representative will write an estimate. We suggest sharing that with your contractor.
Be sure you, the insurance company, and your contractor are in agreement before
signing a contract or authorizing any work. Also, be sure you understand your
obligation. For example, you will generally have a deductible to pay, and there
may be limitations that lead to additional cost sharing.
Sometimes additional damage is found once the work is underway. If that happens,
we suggest contacting the insurance company immediately. Depending on the extent
of the additional damage, the insurance company may need to make another inspection.
Your contractor can provide information but it's your house and we recommend
that you stay in contact with the insurance company and the contractor to be
sure there is agreement about additional repairs before continuing the work.
If you have questions about your home coverage, or you experience difficulties
with your claim, the Insurance Division Consumer Advocacy Team is available
at 1-888-877-4894. Information is also available on our website, www.insurance.oregon.gov.
Q. I’ve been watching the storm coverage and it looks like a lot of people may have frozen pipes. If a pipe breaks and there is water damage to someone’s home, is it covered by insurance?
A. Water from a leaking pipe can cause a lot of damage to a home and personal
property. If a pipe under the kitchen sink burst for example, there could be
damage to walls, cabinets, floor coverings, and personal property stored in
the cabinets. The good news is homeowner policies generally cover the accidental
discharge of water from a plumbing or heating system caused by freezing. The
repair of the pipe is usually the responsibility of the homeowner but the insurance
company would take care of any resulting damage. This would include repair or
replacement of damaged property and the added cost to live somewhere else if
the damage is so extensive that the homeowner cannot live in the home.
Once the water is turned off, it’s important to promptly start the process
of getting the water cleaned up to keep the damage to a minimum. There are contractors
that specialize in water extraction and the drying process. Most insurance companies
can recommend services if the homeowner needs assistance.
If you have questions or experience difficulties with your insurance company
or agent, give us a call at 1-888-877-4894.