Explanation of Coverage
Homeowners Policy
The homeowners policy is designed for primary and secondary residents and rentals limited to 25 weeks per year. The policy is considered an “all risk” policy that would cover any sudden and accidental damage including the perils shown below. This policy covers the dwelling and contents for replacement cost up to the policy limit. If this is your primary home you can buy an additional 25% replacement cost coverage for the dwelling. On the coast the perils of wind and hail are excluded from the policy and have to be purchased through a seprate policy listed below. Liability and theft insurance are automatically included under this type of policy, as are other structures coverage and additional living expenses.
Wind & Hail Policy
The wind and hail policy coverage those two perils only. The policy is written to accompany the homeowners policy. It also covers for replacement cost on the dwelling and contents up to the policy limits. This policy is written through North Carolina Insurance Underwriting Association, affectionately called the Beach Plan.
Dwelling Fire
For properties that are not eligible for a homeowner policy we also have a hazard policy (often referred to as the “Beach Plan”) that protects against the perils shown below. This policy is written through North Carolina Insurance Underwriting Association which is a state run insurance servicing company. This policy protects your dwelling for replacement cost, up to the policy limit but covers the contents on actual cash value (a depreciated value). This type of policy is a DP-2 policy. There is also a DP-1 policy that would cover both the house and contents on an actual cash value basis. Either of these policies insure you for rental reimbursement if the house is damaged by a covered peril and deemed unable to rent. You will be required to furnish proof of booked rentals. One peril that occurs in our area is wind driven rain. This is when rain, wind, snow, etc. is forced in around closed windows, doors, attic vents, etc., and causes damage to the interior.
This is not a covered peril. Unless there is exterior damage, interior rainwater damage is not covered.
Flood Insurance
Flood insurance covers against rising surface water, tidal waves and ocean or sound flooding. The coverage is through the federal program. This policy covers on an actual cash value basis, not replacement cost, for the dwelling and the contents up to the policy limits. Replacement cost is not available unless this is your primary residence. There is no rental reimbursement under this policy. Flood insurance only applies to the dwelling and the contents – bulkheads, pools, fencing, hot tubs, ramps to the ocean, septic tanks, driveways, etc. are not covered.
Excess Flood
The federal flood program will only insure dwellings up to $250,000 and contents to $100,000. If your house is a higher value, additional coverage must be placed with an excess carrier. This policy provides identical protection to the federal program. The only deductible under this program is the $250,000/$100,000 limit on your federal policy.
Theft Insurance
Theft insurance covers for contents stolen from inside your dwelling, if the dwelling is broken into, not for tenant theft or mysterious disappearence. The maximum coverage available is $10,000 and the contents are insured for actual cash value. This coverage is also written through NCIUA. They do require that all exterior doors, excluding sliding glass doors, have dead bolt locks.
Liability Insurance
Liability protection is a must. This will protect you if someone is injured on your property. The least expensive way to obtain liability coverage is to contact your primary homeowner agent and have them add this property to your policy as a second home rented to others. If they are unable to do this for you we have a few different options ranging from $100,000 to $2,000,000 in coverage.
Condo Policy
The condo policy is designed to protect the contents belonging to the unit owner. In most cases additions and alterations coverage is also included in these policies. This includes those items attached to or part of the condo for which the owner is responsible (i.e. carpet, wallpaper, fixtures, cabinets, etc.). It is best to check with your condo association to find out exactly what you are responsible for insuring inside the unit. This policy covers the ordinary contents for full replacement cost. The perils insured against are: fire, lightning, smoke, water damage from plubing (other than sewer back-up), wind, wind-driven rain, theft, freezing, in some cases flood, earthquake, liability, loss of use, and loss assessment coverage.
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