Q: I loved your article about health care insurance claims, but my insurance matter is different. I'm debating among three homeowner policies for my soon-to-be purchased home and can't decide which is best. Two main concerns are pine trees in a side neighbor's yard that don't look too steady and replacement costs if something terrible happens to my property. Please clarify each issue for me so I can make an educated decision between the companies. - Velma Vacillate
A: Dear Velma: With an overabundance of available policies, you're smart to check potentially troublesome issues now rather than later when it may be too late. Let's take each of your questions in turn, beginning with the unsteady trees.
According to the Insurance Information Institute, the responsibility of a fallen tree from someone else's yard onto your property generally lies with whoever's property is damaged (yours) and, hence, your own insurance company takes care of the problem. (Personally, I think this is grossly unfair.)
However, most insurance policies contain a "hazards" clause; in a case like this, did the tree owner know the tree was a potential hazard? Had you tried to discuss the matter with "Ned Neighbor" and perhaps even offered to split the cost of cutting the tree down before a good, stiff wind blows it down - right on top of your garage or swimming pool?
Unless you can show that Ned was negligent in not dealing with his tree, you either must file a claim, courting the possibility of a rate increase or, worse, policy cancellation or dig deep and pay out of pocket for the damages. My suggestion is first to talk with ole' Ned followed by subsequent calls and documentation of every single occasion those pine trees sway more menacingly toward your territory.
With respect to replacement costs versus the actual cash value, or ACV, of your home if some catastrophe strikes, always opt for insurance that guarantees some sort of replacement coverage.
Sure, it may cost more in premiums, but in the grand scheme of things you'll be much better off if a tragedy occurs.
Let's assume your homeowner's policy covers only the ACV. Great Aunt Mattielou (who still insists upon smoking in your house) sinks down on your sofa, lights up, nods off and whoosh! burns the couch to a cinder. While Mattielou is thankfully OK, your sofa isn't. You paid $549.99 on sale a couple of years ago - you'll never buy this cheaply again - so with an ACV policy, you're out the real cost of another sofa in today's marketplace.
Still, furniture can be replaced fairly easily, but what if you need to restore your entire house and its furnishings, a situation people face every day?
Unfortunately, because of so many fires, hurricanes, and the like, more and more insurance companies are limiting or even discontinuing purely replacement clauses. After all, with a replacement cost policy and your $200,000 home burns down, the insurance company's on the hook to replace it in its entirety, even if this costs a couple of hundred thousand dollars more.
To obtain as much compensation as possible in a calamity, be certain when sifting through possible plans to check for replacement cost contents insurance and replacement cost dwelling inclusions. The contents portion should replace damaged personal property with items of like kind and quality without deducting for depreciation.
The dwelling aspect states the company will pay you the cost of replacing the damaged property without deduction for depreciation but limited by the maximum dollar amount indicated on the declarations page of your policy.
Good luck with your decision and also with any Great Aunt Mattielous who are lurking around your home, cigarette in hand.
Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears on Saturdays in the Business section of the paper. An expanded version is at www.timesfreepress.com under Local Business. E-mail her at consumerwatch@timesfreepress.com.