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Colorado Insurance Blog

How Often Should You Replace Your Roof and Why is it Important?

Don’t overlook your roof! This important structure affects more than curb appeal. It’s responsible for protecting many structures and systems.

View of home from the street

The parts of a home that get the most attention tend to be visual, and more or less at eye level: paint color, landscaping, porches, and decks. The roof is the one part of the home that doesn’t tend to get a lot of notice unless the gutters overflow or an enthusiastically tossed toy goes a little too high.

This important structure affects a lot more than your house’s curb appeal – it’s responsible for protecting interior structures from water, ensuring your HVAC system operates efficiently, safeguarding your loved ones in dangerous weather, and, in some cases, making your attic safe storage space.

Roof Age and Replacement Tips

How long does a roof last? Sales pitches for roofing companies can come fast and furious, inviting doubt to creep in over the integrity of the shingles overhead.

Here’s a short intro guide on the various types of roof materials, and when you may want to consider repair, replacement, or maintenance:

Asphalt Shingles

Typically black with a gravel-like surface texture, asphalt shingles are the most common type of domestic home roof material in America. With proper care and upkeep, this type of roof will offer between 15 to 30 years of viable service before you’ll need to replace them entirely. Because of the nature of its overlapping construction, it’s also relatively easy to swap out or replace broken or damaged shingles.

Composition Shingles

Made from a wider variety of materials in a multilayer design that can include fiberglass, composition shingles have a slightly shorter lifespan, between 12 and 20 years before replacement is necessary. Like asphalt shingles, they may become damaged or lost periodically due to weather and exposure but can be replaced as needed.

Wooden Shingles

This type of roofing – as the name suggests – is made out of wood, often cedar for passive pest control, but also woods like cypress, pine, or redwood. This natural material is hardy and offers between 20 and 25 years of use before you will need to replace your wooden roof. While rot and pest-resistant woods and coatings are used, this type of roof material can be vulnerable to problems like moisture, mosses, mildew, and insects.

Metal Roofs

Metal roofs are durable and industrial, offering between 50 and 75 years of dedicated protection, on average. Because of their overlapping design and potential corrosion, these types of roof coverings are susceptible to leaks, so care must be taken to maintain and assess them regularly, usually bi-annually unless specific issues crop up. If they become dented or warped (think storm-fallen limbs), they can be expensive to repair or replace.

Rubber Roofs

A rarity in domestic neighborhoods and typically the domain of industrial buildings, rubber roofs last between 30 and 50 years before a full replacement is called for. Over time, particularly in hot, sunny, or damp climates, this roofing material may shrink and pull back at its seams, causing issues with peeling and leaks from moisture buildup and pooling.

Do I Need to Replace My Roof?

If you know when your roof was installed and the material falls within the normal lifespan, likely not unless you’re experiencing specific issues. That being said, if you are nearing the end of that lifespan or an in-place warranty is due to expire, it’s a smart move to schedule a full roof assessment.

In addition to regular visual inspections as you walk around your house or in your attic, it’s best to have a roofing company inspect, repair, and maintain your roof at least every other year. If your home is in an area with extreme weather or a great deal of direct sunlight and high temperatures, an annual checkup is an even better idea.

Blog content courtesy of Safeco Insurance

Do You Need to Insure an E-bike?

What is an E-bike?

According to Colorado Parks & Wildlife, an E-bike has 2 or 3 wheels, fully operable pedals, and an electric motor that doesn’t exceed 750 watts of power.

There are 3 classes of E-bikes:

Important Colorado E-bike laws:

  • Electronic bicycles are not required to be registered
  • There are no license requirements for E-bikes
  • Generally speaking, Class 1 and 2 E-bikes are allowed to operate on the same paths as conventional bikes, thought local jurisdictions can prohibit operation on specific paths
  • Class 3 E-bikes are only allowed on streets and bike lanes, unless specifically permitted by local jurisdictions
  • There are different rules pertaining to State Park or Wildlife Areas
  • E-bikes must ride in the right-hand lane when traveling a less than the normal speed of traffic on a roadway
  • Riders must signal intent to turn or stop and yield the right of way to pedestrians
  • One hand must be kept on the handlebars at all times
  • Class 3 E-bikes have the following age and helmet restrictions:
    • Operators must be 16 or older (passengers can be under 16)
    • Operators and passengers under 18 must wear a helmet

Does an E-bike have to be insured?

The short answer is no. There aren’t any legal requirements to insure an E-bike. That being said, if you have a loan on an E-bike, your lender will likely require you to carry insurance on it.

Even though you’re not required to have insurance on an E-bike, it’s important to at least have liability coverage. You can go faster on an E-bike than you might otherwise travel on a conventional bike, which makes the risk of crashing a little higher. If you hit a person, fence, house, mailbox, or something else, you could be responsible for the damages. Liability insurance will help you pay for those damages if a situation like that arises.

If you’ve paid a pretty penny for your E-bike, it probably makes sense to get adequate insurance for it. That way if it gets stolen, damaged in a fire, you’re in an accident, or something else happens, you’re not left empty handed.

How to insure an E-bike:

Many homeowners policies will afford some amount of coverage for an E-bike. Some policies may only extend liability, whereas others have a special limit of physical damage coverage included and some may not extend any coverage at all. Each insurance carrier has their own guidelines, so be sure to check what coverage you have on your policy.

Keep in mind that most home policies have a deductible of $1,000 or higher, so if you’re counting on your home policy to cover any damages to your bike you’ll need to cover your deductible before your policy pays out. Depending on the value of your E-bike and your home insurance deductible, it might not make sense to insure it on your home policy.

Many E-bikes cost several thousand dollars, so a total loss might exceed your deductible. But if a $1,200 E-bike was stolen, that’s not a claim I’d recommend filing on a home policy. You’d only get $200 from that claim example, which isn’t worth having a claim against your home insurance since it would likely cause your premium to increase for up to 5 years.

If you don’t have a home policy or if your policy doesn’t provide the coverage you’re looking for, you can generally insure and E-bike on a motorcycle policy. One benefit of that is that you can choose a lower deductible, like $500 or even lower.

Another plus is that you can file a claim without it impacting your home insurance. A claim for a stolen E-bike wouldn’t cause your motorcycle premium to increase like it would if you filed a claim on your home policy.

Insuring an E-bike on a motorcycle policy would also give you the option of Medical Payments and Uninsured Motorist coverage, both of which can be extremely valuable. Medical Payments coverage can help pay for your injuries, regardless of whether you’re at fault for a loss. The limit is usually $5,000 per person, but limits can vary.

Uninsured Motorist coverage will help cover your costs if you’re not at-fault for in an accident and the other person doesn’t have enough coverage. You can get Uninsured Motorist coverage up to the bodily injury liability limits on your motorcycle policy.

Read more about Uninsured Motorist coverage: What is Uninsured Motorist Coverage?

Sources:

Colorado Parks & Wildlife. Colorado Parks and Wildlife. (n.d.). Retrieved June 27, 2022, from https://cpw.state.co.us/thingstodo/Pages/E-Bike-Rules.aspx


Electric Bicycles. Electric Bicycles | Colorado General Assembly. (n.d.). Retrieved June 27, 2022, from https://leg.colorado.gov/content/electric-bicycles

Insurance Claim Terms Broken Down

The claims process can be difficult to navigate, especially when the insurance company is throwing around terms you’ve never heard.

Here’s a breakdown of some of the common terms relating to insurance claims:

Adjuster

An adjuster is the trained claim representative assigned to help you if you file a claim. They’ll examine the damage to your covered property and review your policy to determine what coverage you have. The adjuster is also responsible for issuing payment for your claim.

Actual Cash Value (ACV)

Actual Cash Value (ACV) coverage takes depreciation into account at the time of the loss. If you have ACV coverage, your policy won’t pay to replace what is damaged. Instead they will pay the depreciated value, which subtracts for age and condition. ACV is calculated by subtracting depreciation from the replacement cost.

Depreciation

Many items lose value over time due to age, wear and tear and the manufacturing of newer and better products. That reduction in value is known as the depreciation. Cars are notorious for depreciating as soon as they are driven off the lot, but many household items also depreciate.

Replacement Cost

The cost to actually replace a lost or damaged item, regardless of age and condition at the time of loss. For example, if you bought a TV 10 years ago for $300 but it costs $700 to buy a comparable TV today, Replacement Cost coverage would pay the full $700 to replace the TV if you had a covered loss.

Deductible

Your deductible is the amount you have to pay before your insurance company will payout for a claim.  The insurance company will generally subtract the deductible from the total payout.

If you have a $1,000 deductible and had a claim for $4,000, the insurance company would issue payment for $3,000 and you’d be responsible for the other $1,000.

Policy Limits

The dollar limits for each coverage on your specific policy. The policy limits are the maximum amount your policy will pay out under each coverage for a loss. Many policies also have “sublimits” for certain classes of property, like jewelry, coins, or other valuables.

Subrogation

If someone else is responsible for causing damage to your property, your policy may pay for the damage and then seek reimbursement from the responsible party. If the insurance company has received reimbursement, you may get some or all of your deductible back.

How to Avoid Contractor Fraud

When there’s a catastrophe, like a fire or hail storm, the likelihood of contractor fraud increases immensely. Here are some tips for picking a reputable contractor and avoiding fraud.

1. Only work with contractors that are licensed

Colorado doesn’t require contractors to be licensed on the state level, so don’t assume that every contractor you encounter has a license. Many counties and cities have specific requirements, but not all local governments require contractors to be licensed.

Licensed contractors are required to have a certain amount of experience and pass an exam. That helps ensure they are qualified in their field.

You can verify the license of a professional you’re considering here: Verify a Colorado Professional or Business License

2. Find a contractor that is insured

If your contractor isn’t insured, you could be responsible for any injuries that occur while they’re working on your property. Request a Certificate of Insurance from any contractors you’re considering to verify their coverage.

3. Work with local contractors when you can

Local contractors have a better idea of the rules and regulations in your area. Not only does that help ensure work is done to code, but it also speeds up the process. If you hire a contractor from another state, there’s a chance you could be waiting longer for them to get permits pulled and inspections done.

A contractor that is local is also less likely to take payment and leave town without completing the work. If you have any issues with the work done, you can often get a local contractor to come back and fix it whereas someone from out of town might leave you high and dry.

4. Check references and reviews

If multiple people have complaints about their experience with a specific contractor, there’s a good chance you’ll also have issues with them. But if you find glowing reviews online and get good references for them, you’ll likely have a better experience.

5. Don’t get pressured into making a hasty decision

You don’t have to sign a contract immediately. Take your time, gets bids from multiple contractors, and make sure you understand the contract before you sign it. If you’re being pressured to sign something on the spot, that might not be a contractor you want to work with.

6. Get everything in writing

According to Travelers, the contract should include:

  • A detailed description of the work to be completed and the price of each item.
  • A payment schedule – for example: one-half down and one-third when work is partially completed, and the balance due upon completion of repairs.
  • The estimated start date and completion date on larger projects.
  • Any applicable guarantees, which should be written into the contract and clearly state what is guaranteed, who is responsible for the guarantee, and how long the guarantee is valid.
  • Signatures from both parties. You should never sign a contract containing blank sections.

7. Don’t pay in full for incomplete work up-front

Paying up-front increases the risk of a fraudulent contractor taking your money without completing the work. It also opens the door to poor workmanship and cutting corners because they don’t have to meet certain expectations in order to get paid.

When paying a contractor, pay by check rather than cash. Make the check out to the company rather than an individual.

8. Keep all records together in a safe place

Any paperwork you receive regarding the job should be kept together. Then if you need to reference anything you can find it. It also helps your case if there are any disputes.

This can include anything from the contract, any changes to the contract, estimates, invoices, certificates of insurance, correspondence, etc.

9. If you’re filing a home claim, file it and talk to your adjuster before starting on any work

If you’re repairing your home because of a loss that might be covered by insurance, make sure you file a claim before starting any work.

The insurance company needs to verify coverage before they can approve a claim. If you begin the repairs before an adjuster reviews the damage, your claim could be declined.

10. Report any suspected fraud

You can call local law enforcement, the National Insurance Crime Bureau 1-800-TEL-NICB, or FEMA disaster fraud hotline 1-866-720-5721 to report any suspected fraud.

Sources:

Hiring a contractor checklist and tips. Travelers Insurance. (n.d.). Retrieved April 28, 2022, from https://www.travelers.com/resources/home/renovation/checklist-for-hiring-the-right-contractor

Colorado general contractor license and Insurance Requirements. Next Insurance. (2021, December 15). Retrieved April 28, 2022, from https://www.nextinsurance.com/blog/colorado-general-contractor-license-and-insurance-requirements/

Top 4 Reasons Insurance Rates in Colorado are Increasing

1. Volatile Catastrophe Trends

In the insurance industry, a “catastrophe” is a disaster that is unusually severe and meets or exceeds a loss threshold. As of December, 2021, the current dollar threshold to declare an event a catastrophe is $25 Million, according to Insurance Information Institute. Some examples of catastrophic events include tornadoes, hailstorms, high wind, flooding, hurricanes and wildfires.

Colorado does see some flooding and tornadoes, but the largest losses come from wildfires and hailstorms. Colorado has the 3rd highest wildfire risk in the US and had the 2nd most hail claims filed between 2018-2020.

Wildfire

Insurance Information Institute reported that as of October, 2021, Colorado has 373,900 properties with “high to extreme wildfire risk.” That makes up 17% of the properties in the state. With so many properties at risk of being damaged or destroyed by wildfire, insurance companies have to plan accordingly.

Colorado’s highest catastrophic payouts since 2017:

May 8, 2017 Denver Metro Hailstorm: $2.3 Billion

2018 Front Range & CO Springs Top 3 Hailstorms:  $276.4 Million, $169 Million, $172.8 Million

2020 East Troublesome Fire: $543 Million

2021 Marshall Fire: Over 1000 structures destroyed and estimated $1 Billion in damages

Catastrophe Facts and Statistics- RMIIA

The high wildfire risk in Colorado means higher rates across the state. But insurance companies charge more for insurance on homes that have the highest risk. They do this by assigning each property a Protection Class (PC) or Brushfire Score, which determines the risk of fire and the responding fire department’s ease of access and resources. The higher the PC or Brushfire Score, the higher the premium charged to insure that property.

Read more: What You Should Know About Wildfires and Insurance

Colorado has the 3rd highest wildfire risk in the US and had the 2nd most hail claims filed between 2018-2020.

Hail

Hail has been a problem in Colorado for as long as I can remember, but the number and severity of claims have increased significantly over the past decade. Part of that is due to the increasing population in the state. The more homes that are built on the Front Range, the more targets there are for hail to hit.

Between January 1, 2017 and December 31, 2019, Denver and Colorado Springs were in the top 5 cities for hail losses, with Denver at #2 and Colorado Springs at #3, according to an Insurance Journal article. Insurance companies in Colorado pay out hundreds of millions, if not over a billion dollars for hail damage every single year. Most companies have higher deductibles for wind and hail losses to help mitigate the risk. They also have to charge an adequate amount for both auto and home insurance.

2. Traffic Accidents

There are three major factors causing the number and severity of traffic accidents to rise in Colorado: Booming Population, Impaired Driving, and Distracted Driving.

Population Growth

It’s no secret that the population in Colorado is increasing at a rapid rate. According to U.S. News, the 2020 Census showed that Colorado was 6th fastest-growing state from 2010-2020, with a 14.8% growth. Unfortunately, traffic infrastructure has not kept pace with the population growth, leaving many roads on the front range gridlocked more frequently than not. More cars on the road directly correlates with accident frequency.

Distracted Driving

In addition to the heavier traffic, dangerous driving activities are becoming more common. Nearly everyone has a smart phone, and most people don’t put their phone on “Do Not Disturb” when they get behind the wheel. Distracted driving can include anything that takes focus away from the road, including texting, talking on the phone, eating, reading, and more.

According to CDOT’s 2021 annual survey:

91% of participants reported driving distracted in the past seven days.
54% admitted to reading a message on their phones.
Nearly 50% talked on a cell phone while driving.
41% sent a message while driving.

CDOT also reported that in 2020, 10,166 crashes in Colorado involved distracted drivers. Those accidents caused 1,476 injuries and 68 deaths.

Impaired Driving

Impaired driving is also contributing to more severe and frequent accidents. The total number of fatal crashes has increased by 37% from 2011 to 2021. Fatalities involving drivers that tested positive for drugs increased by 39.3% from 2015 to 2019. Drivers with a BAC over the legal limit were involved in 8.6% more fatal accidents during that same time.

From 2020 to 2021, the number of DUIs involving marijuana went up by 48%. While not all DUI incidents end in an accident, the increase in risky driving behavior certainly impacts the frequency of crashes.

With impaired and distracted driving causing more crashes, injuries and fatalities, insurance companies are paying out more for auto claims in Colorado. Higher medical costs are also impacting the higher payouts for auto accidents. Berkley Accident and Health reported that treatment costs increased by 6% in 2020 and another 7% in 2021.

Unfortunately when accident frequency and severity increases, we all pay the price. The more insurance companies pay out in claims, the more rate increases they are forced to take in order to remain solvent in the state.

3. Supply Shortages

There have been worldwide supply shortages since the pandemic started in 2020, which have led to inflated prices across most industries. Since the materials for home construction and auto parts are more expensive, insurance payouts are also inflated.

Auto Part Shortages

According to the Consumer Price Index, the cost of auto parts have increased by 14.2% from March 2021-March 2022. Insurance companies generally consider a vehicle a total loss if it will cost more than 70% of the vehicles value to repair the damage. That means more cars are being totaled because of the inflated repair costs.

Both new and used cars are also much more expensive than they were a few years ago. Supply chain disruptions have made it harder for manufacturers to produce enough new vehicles. There were 7.7 Million fewer vehicles produced in 2021, largely due to the microchip shortages. The shortfall of new vehicles directly impacts the price of used vehicles.

Price increases from March 2021 – March 2022:

New Vehicles: 12.5%

Used Vehicles: 35.3%

Motor Vehicle parts and equipment: 14.2%

*According to the U.S. Bureau of Labor Statistics Consumer Price Index

As the values of used vehicles increase, the payouts for total losses get higher. With insurance companies paying out more, the cost of insurance also goes up.

Building Material Shortages

On top of the rising costs impacting auto insurance, the costs of building materials have also soared because of supply chain shortages. Lumber prices jumped 42% in the first year of the pandemic, and steel mill products rose 81% in the first three quarters of 2021. Throughout 2021, the price of materials for new construction increased by over 18%.

The inflated cost of materials alone has led to much higher prices for rebuilding homes that have been damaged. Just like with auto insurance, higher home claim payouts leads to home premium increases.

On home policies, insurance companies are increasing rates to keep up with the amount they are paying out for claims but premiums are also rising due to higher coverage amounts. Since it costs more to rebuild a home, the amount of coverage you have on your home policy is likely also increasing.

There’s a good chance that if your policy was written more than a year ago, you don’t have enough coverage to rebuild your whole home.

You may have been able to rebuild your home for $150/square foot 4 or 5 years ago, but now it might cost closer to $275/square foot. As a result, your dwelling coverage (Coverage A) needs to increase to ensure your home is properly insured.

Many homeowners found out they were underinsured after the Marshall Fire, which is largely due to the rapid inflation seen in the past several years. If you haven’t review your home coverage with a licensed agent recently, I highly recommend you do. There’s a good chance that if your policy was written more than a year ago, you don’t have enough coverage to rebuild your whole home.

Read more: If Your Home Burned Down, Would You Have Enough Coverage?

4. Labor Shortages

You can walk into almost any business and see a “Help Wanted” sign on the door. It’s no secret that there are labor shortages across most industries. The shortage of workers has directly impacted the supply shortages, but even when the supplies are available many industries don’t have enough people to actually do the work.

Auto Technician Shortages

There’s currently a deficit of trained auto technicians to work on repairing damaged vehicles. To keep up with demand, there needs to be 3 times as many qualified technicians. The shortfall of auto technicians is causing higher auto repair costs and longer repair times.

When it takes longer to repair a vehicle, the insurance companies end up paying for a rental car for longer which also increases the claim payout amount.

Skilled Construction Labor Shortages

When it comes to home construction, there’s a shortfall of at least 200,000 skilled trade workers. That has led to more expensive bids for both home repairs and new construction. Not only are skilled workers charging more for their labor, but the amount insurance companies are paying for Additional Living Expenses is much higher.

Most home policies come with coverage for Additional Living Expenses, so if you can’t live in your home due to a covered loss they will pay for the additional expenses you incur as a result. That includes a hotel or long-term rental, restaurant expenses if you don’t have a kitchen to cook in, dry cleaning bills if you don’t have access to a washer and dryer, and more. If takes 6 months longer to rebuilt your home after a loss, the insurance company is paying those expenses for longer.

At the end of the day, the amount insurance companies pay out for claims directly impacts the amount they charge for insurance. All of the reasons listed above are causing insurance companies to pay out more than they have in the past. As a result, the cost of auto and home insurance are increasing accordingly.

Sources:

Boyd, S. (2021, January 29). Marijuana Dui Arrests Up 48% In Last Year Across Colorado. CBS Denver. Retrieved April 13, 2022, from https://denver.cbslocal.com/2021/01/29/marijuana-dui-colorado-arrests-alcohol/

Catastrophe Facts & Statistics. RMIIA. (n.d.). Retrieved April 13, 2022, from http://www.rmiia.org/catastrophes_and_statistics/catastrophes.asp#:~:text=The%20most%20destructive%20wildfire%20in,and%20auto%20insurance%20claims%20filed

Davis Jr., E. (2021, April 28). 2020 census shows America’s fastest-growing states | best … U.S. News & World Report. Retrieved April 13, 2022, from https://www.usnews.com/news/best-states/slideshows/these-are-the-10-fastest-growing-states-in-america

Distracted driving. Colorado Department of Transportation. (2022, April 4). Retrieved April 13, 2022, from https://www.codot.gov/safety/distracteddriving

Facts + Statistics: Wildfires. Insurance Information Institute. (n.d.). Retrieved April 13, 2022, from https://www.iii.org/fact-statistic/facts-statistics-wildfires

Spotlight on: Catastrophes – Insurance Issues. Insurance Information Institute. (2021, December 13). Retrieved April 13, 2022, from https://www.iii.org/article/spotlight-on-catastrophes-insurance-issues

Top states, cities for insurance claims for hail damage. Insurance Journal. (2020, April 28). Retrieved April 13, 2022, from https://www.insurancejournal.com/news/national/2020/04/28/566579.htm

U.S. Bureau of Labor Statistics. (2022, April 12). Table 7. consumer price index for all urban consumers (CPI-U): U.S. city average, by expenditure category, 12-month analysis table – 2022 M03 results. U.S. Bureau of Labor Statistics. Retrieved April 13, 2022, from https://www.bls.gov/news.release/cpi.t07.htm

Unni, C. (2021, November 29). The Pandemic’s Lasting Effects: Medical Costs Projected to Rise 6.5% in 2022. Berkley Accident and Health. Retrieved April 13, 2022, from https://www.berkleyah.com/the-pandemics-lasting-effects-medical-costs-projected-to-rise-6-5-in-2022/

If Your Home Burned Down, Would You Have Enough Coverage?

After the Marshall Fire tore through entire neighborhoods in Superior and Louisville, many people are worried about their home insurance. There have been countless reports of families whose home insurance was too low to rebuild their home. Not only did they lose their home, their belongings, and their sense of normalcy, now they are frantically trying to figure out how they will afford to rebuild.

That raises the question, how do you know if you have enough coverage? After all, you pay for insurance so you can be made whole again if disaster strikes. And what good is a policy that leaves you with only half a home after a fire?

How much home insurance is enough?

Many homeowners are concerned when the dwelling limit is lower than the amount they could sell their home for. Remember, an insurance company is never going to sell your home, just rebuild it. You should insure your home for the amount it would cost to rebuild your home. Not what the real estate market estimates it is worth.

How do you know if you have enough home insurance?

Insurance companies use a Replacement Cost Estimator (RCE) to determine the estimated cost to rebuild a home in the event of a total loss. When filling out the RCE, we can get very specific with the details in the home.

The RCE will factor in things like square footage, the foundation (basement, slab, etc.), the number of bathrooms, and the finishes in the home, like flooring, counters and cabinets. For homes with higher end finishes, we can go even more in-depth. We can input the light fixtures, crown or base molding, and special features like theatre rooms, built-in speakers, wet bars, and wine cellars.

That being said, the RCE is only an estimate and the costs of labor and materials are constantly changing. The actual cost to rebuild your home may even change over an annual policy term. For example, when COVID-19 hit, the cost of lumber skyrocketed. So it now costs more to rebuild a home than it did before the pandemic.

To account for inflation and increasing construction costs, we recommend Extended Dwelling Coverage. Extended Dwelling Coverage provides an additional percentage of your dwelling limit. It’s usually either an extra 25% or 50% (some carriers even offer 100%), which can extend if there is a loss.

Example: Your dwelling limit is $300,000 and you have 50% of Extended Dwelling Coverage. If there was a significant loss to your home you’d have up to an extra $150,000 to cover any costs that exceed your $300,000 dwelling limit.

Your home has to be correctly insured for the Extended Dwelling Coverage to extend. You can’t underinsure your home and then count on the additional percentage of coverage to fill that gap. That’s why it’s important to notify your agent if you make any significant changes to the home. If you finish the basement or upgrade your kitchen or bathroom, you need to update the RCE.

Debris removal is a cost that people often overlook.

Most policies include coverage to remove the debris after a loss. The cost of debris removal can be significant.

Many counties have an ordinance that requires demolition when a certain percentage of the home is damaged, usually 60% or more. So even if there are parts that are salvageable, the whole thing might need to be rebuilt. In cases like this, your dwelling value isn’t only covering the rebuilding of your home. It’s also covering the demolition of the undamaged portion of your home and the cost of hauling away that debris.

Are your belongings covered?

Most homeowners policies also include coverage for your personal property. So if your house were to burn down, or be impacted by another covered loss, you won’t be on your own to replace your belongings.

The majority of policies default to Actual Cash Value settlement for personal property. That means if your belongings were damaged or destroyed in a loss, your claim payout would be the original value minus depreciation for age and wear & tear. That’s not going to go very far when it comes to replacing your things.

I highly recommend purchasing Replacement Cost coverage for your personal property, if available. With Replacement Cost, you’ll be given the full cost to actually replace an item rather than the depreciated value.

If you have any high value items or collections, it may be beneficial to schedule those on your policy to ensure you receive the full value if there is a loss.

Create a home inventory to keep track of your belongings

One way to account for the personal property you have in your home is to fill out a Home Inventory Checklist. If you’re prepared with a home inventory, it can help make things go more smoothly if disaster strikes and you have to replace everything.

Read more about How to Create a Home Inventory.

What happens if you can’t stay in your home after a loss?

If your home becomes uninhabitable due to a covered loss, your homeowners policy will pay for the additional living expenses you incur. You would continue paying your normal expenses, like your mortgage and property taxes, and your policy would pay for the extra costs that arise as a result of your claim. That can include paying for a hotel or long-term rental, restaurant bills if you’re unable to cook in the hotel, laundromat costs, etc.

This coverage is typically called Loss of Use or Additional Living Expenses. The limit of coverage could either be a set dollar amount (like 20% of the dwelling limit) or an amount of time (12 or 24 months). It’s important to have an adequate limit because if your home is a total loss it can take a significant amount of time to rebuild.

Some policies offer “walkaway” coverage

If you lost your home to a fire that burned your entire neighborhood, you might wish you didn’t have to rebuild in that area. That’s especially true if you chose your location based on the surroundings and the scenery. After a fire, there’s probably not much natural beauty to look at.

Most home policies will only pay replacement cost once your home has been rebuilt. There are a few select insurance carriers that offer replacement cost coverage up front if the home is deemed a total loss. That equates to “walkaway” coverage because you can take the payment and go build or buy elsewhere.

Keep in mind the policy isn’t going to pay what your home would have sold for prior to the loss, it will only pay what it would cost to rebuild your home.

Do you feel confident your policy has coverage you need if your home burned down? If not, give us a call today. Our agents are committed to providing specialized coverage for each individual or family’s needs.

Larger Rate Increases Expected in 2022: Here’s Why

Across the insurance industry, rates are expected to increase even more this year than they have in recent years. While annual increases are becoming the norm, the jump may be more drastic in 2022.

There are many factors that are driving insurance costs up. Claim payouts are higher than ever, and natural disasters and car accidents are becoming more frequent. Combine that with supply chain issues and labor shortages, and you have the unprecedented market we’re currently in.

Homeowners

Building material costs are at an all-time high

With global supply chain issues and labor shortages, prices for many products have soared over the past few years. Building materials are no exception.

During the first year of the pandemic, the cost of lumber jumped up by 42%. The prices have fluctuated since, but aren’t back to the pre-pandemic prices. In the first three quarters of 2021, steel mill products rose in cost by 81%.

There’s also currently a shortage of at least 200,000 skilled trade workers. 60% of surveyed builders are reporting labor shortages and the vast majority of them don’t expect that problem to go away in the next 6 months.

Price increases from December 2020 – December 2021:

Floor Coverings 3.9%
Window Coverings 8%
Major Appliances 6%
Overall Construction Supplies 18.4%

All of these factors have led to more expensive construction projects for both home repairs and new construction.

Home claims are rising in both severity and frequency

Catastrophic home claims are no longer few and far between, they seem to be happening every other week somewhere in the country.

In 2021, there were 20 natural disasters with losses exceeding $1Billion in the US alone. From 1980-2021 the annual average is 7.4 events, but the annual average in the past 5 years is 17.2 events.

Many scientists and experts attribute the increased frequency of disastrous events to climate change. As our weather and climate changes, severe weather events are becoming more common and severe.

Between the increased frequency and severity of home claims and the higher cost of building materials, home insurance prices will continue to increase. The chances that you’ll need to file a claim on your home are higher, and it will cost even more to repair or rebuild your home than it has previously.

Auto

Supply chain disruptions are causing costly shortages

Supply chain issues are impacting many different industries, including auto production. 7.7 Million fewer vehicles were produced in 2021 due to supply chain complications.

One of the most impactful shortages has been microchips that are used in vehicles. With most vehicles containing higher levels of technology than ever before, it’s been difficult for manufacturers to keep up with demand.

Because of the microchip shortage, there’s a shortfall of new vehicles on the market, which has driven up the cost of used vehicles.

Price increases from December 2020 – December 2021:

New Vehicles 11.8%
Used Vehicles 37.3%

Many rental car companies sold a large portion of their vehicles in order to survive during the pandemic. Once travel increased again over the summer of 2021, they had to restock their fleet of vehicles. With fewer new vehicles on the market due, they turned to used vehicles.

Around the same time, consumers who had extra money from stimulus checks also began shopping for new and used cars. The combination of that and the rental car companies drove the prices of used vehicles up significantly in June. Those prices remained inflated through the end of 2021 and aren’t expected to drop anytime soon.

The cost to repair vehicles keeps rising

In addition to the microchips, there are also supply chain issues impacting wiring harnesses, plastics, and glass used by auto manufacturers. As a result, the cost to repair vehicles is up around 20% and the cost of auto parts is up 6%.

Similar to the skilled labor shortage seen in the construction industry, there’s also a need for 3 times as many trained auto technicians. The delays in obtaining auto parts and the lack of skilled technicians to complete the repairs have made auto repairs take significantly longer.

With cars being stuck in the shop for longer than usual, that takes up even more of the rental car market. People are needing rental cars for longer, and they are harder to find. That drives the cost of rental cars up and exhausts the car insurance coverage limits faster.

Driving has returned to pre-pandemic levels

At the beginning of the pandemic there were fewer drivers on the roads and there were fewer accidents as a result. During that time, many insurance companies decreased premiums and offered credits or refunds.

In 2021, however, we saw a return to pre-pandemic driving levels and a rise in the number and severity of accidents. Insurance companies found themselves with underpriced policies, which is causing them to now increase rates to keep up with the high claim payouts.

If you’d like to discuss your insurance options or get a proposal, give us a call today. We’re here to help!

Sources:

Semiconductor shortages to cost the auto industry billions. AlixPartners. (2021, September 23). Retrieved January 27, 2022, from https://www.alixpartners.com/media-center/press-releases/press-release-shortages-related-to-semiconductors-to-cost-the-auto-industry-210-billion-in-revenues-this-year-says-new-alixpartners-forecast/

Smith, A. B. (2022, January 24). 2021 U.S. billion-dollar weather and climate disasters in historical context. 2021 U.S. billion-dollar weather and climate disasters in historical context | NOAA Climate.gov. Retrieved January 27, 2022, from https://www.climate.gov/news-features/blogs/beyond-data/2021-us-billion-dollar-weather-and-climate-disasters-historical

U.S. Bureau of Labor Statistics. (2022, January 12). Table 2. consumer price index for all urban consumers (CPI-U): U. S. city average, by detailed expenditure Category – 2021 M12 results. U.S. Bureau of Labor Statistics. Retrieved January 27, 2022, from https://www.bls.gov/news.release/cpi.t02.htm

NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2022). https://www.ncdc.noaa.gov/billions/, DOI: 10.25921/stkw-7w73

How Home Insurance Impacts Remote Businesses

Integrity First Insurance was built on providing reliable service to Colorado residents. We treat our clients like family. Developing these close bonds enables us to offer policies that directly align with the needs of our clients.  We have versatile policies that change over time as our clients continue on their life’s journey. We look forward to assisting you.

How Home Insurance Impacts Remote Businesses

Home insurance helps you maximize your investment. You’ve likely made a lot of sacrifices in order to acquire your Colorado residence. Home insurance covers you if your property suffers interior or exterior damage. All of your personal items inside the home are also covered if you are a victim of theft. Taking inventory of your personal items is recommended, as that will help the process run smoothly if your items are damaged. Liability coverage protects you if a guest is injured on your property or if you accidentally cause damage to your neighbors’ property.

If you are a local business owner, you’re probably aware of the emerging trend regarding remote businesses. If you plan to start operating your business from home in the future, you have to consider a few possibilities. Do you plan to invite customers to your home? If so, consider increasing your liability limits. You’ll also need to amend your policy in order to cover any work-related equipment if it is damaged or potentially stolen. If you’re operating a remote business, then technology is a major asset. You need somewhere to safely store files and data. Cyber liability coverage is a worthwhile investment. This type of coverage protects your business if your network suffers a data breach. Errors & Omissions coverage is another option to consider.

Integrity First Insurance Will Help You Protect Your Investment

Visit our website to learn more information about home insurance.

How to Create a Home Inventory

We all hope we’ll never have to file an insurance claim on our home, but the recent fire in Superior and Louisville was a reminder that bad things can happen in an instant. If you’re prepared with a home inventory, it can help make things go more smoothly if disaster strikes and you have to replace everything.

One simple way to create an inventory of your belongings is to do a video walk through of your home. Press record on your cell phone or camera and walk from room to room panning over your belongings. You can narrate what you’re looking at and open any cupboards or drawers where valuables might be kept. Once you have a video of your possessions, be sure to upload it to cloud storage or email it to yourself or someone you trust to ensure you can still access it if something happens to your phone or camera.

Another option is to fill out a Home Inventory Checklist. If you want a more itemized list that you can easily add and remove items from, you can download an app to help you create an inventory. Some options include Home Contents or Everspruce. Both apps have a free version, or you can elect to pay a fee to unlock additional features.

Here are some tips from the Insurance Information Institute for creating a list of your belongings:

  • Pick an easy spot to start – A contained area—like your small kitchen appliance cabinet, your sporting equipment closet or your handbag shelf—is a great place to get started.
  • List recent purchases – Another way to start is with recent purchases—get into the inventory habit and then go back tackle your older possessions.
  • Include the basic information – In general, describe each item you record, and note where you bought it, the make and model, what you paid and any other detail that might help in the event you need to make a claim.
  • Count clothing by general category – For example, “5 pairs of jeans, 3 pairs of sneakers…” Make note of any items that are especially valuable.
  • Record serial numbers – Usually found on the back or bottom of major appliances and electronic equipment, serial numbers are a useful reference.
  • Check coverage on big ticket items – Jewelry, art and collectibles may have increased in value and may need special coverage separate from your standard homeowners insurance policy. While you’re making your home inventory list, check with your agent to make sure you have adequate insurance for these items before there is a loss.
  • Don’t forget off-site items – Your belongings kept in a self-storage facility are covered by your homeowners insurance, too. Make sure you include them in your inventory.
  • Keep proof of value – Store sales receipts, purchase contracts, and appraisals with your list.
  • Add significant new purchases to your list – Make it a habit to add the item information and receipts to your inventory while the details are fresh in your mind.
  • Store a copy of your paper inventory outside the home – Keep it—along with applicable receipts and appraisals—in a safe deposit box or at a friend’s or relative’s home. Make at least one backup copy of your inventory document and store it separately. An easy way to make digital backup copies of your paper list is to take pictures of it on your smartphone.

Sources:

How to create a home inventory. (n.d.). Retrieved April 19, 2021, from https://www.iii.org/article/how-create-home-inventory

Home Insurance: What It Does and Doesn’t Cover

When you are on the search for your first home in Colorado, you also need to take into consideration the protection for that home. Homeowners insurance is imperative to protect your family, personal belongings, and the home itself. However, you need to ensure you choose the right policy, and this will depend greatly on what is and is not covered. Therefore, before you commit to a particular policy, make sure to speak to us at Integrity First Insurance.

What Is Typically Covered by Home Insurance?

The great thing about home insurance is that it offers you peace of mind, but it does so much more than that. Homeowner’s insurance typically provides protection for the structure from vehicular accidents, fires, and weather-related damage. In addition, it offers protection for the home against theft or vandalism, as well as personal liability protection from potential lawsuits in the event someone suffers an injury while at your home.

What Is Usually Not Covered by Homeowners Insurance?

There are some things that home insurance simply will not cover. For instance, if a natural disaster like a hurricane, tornado, earthquake, or landslide causes power failure or damage to your home, your standard policy won’t provide coverage. Neglect, pet damage, and the like also won’t be covered.

If you are concerned about sewage backup, leaks, flooding, or other water-related damage, you will want to consider a separate flood insurance policy.

While homeowners insurance is not typically required by the state, it is often required by a lender if you are financing your home. Further, it is a wise investment to protect the roof over your head. If you need help securing homeowners insurance for your Colorado home, reach out to the team at Integrity First Insurance to explore the options available to you.

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