Split homeowners insurance policies are usually an attempt by a well established insurance company to reduce the wind risk in coastal areas by excluded wind on their policy form.

Not so common in North Louisiana but in coastal high risk areas like South Louisiana, you will see some home insurance customers with a “split homeowners insurance policy”.

What happens is the insurance company will provide you with a homeowners policy but exclude all wind/hail from the policy.

Since you need wind/hail in Louisiana, you would need to purchase a stand alone wind or hail policy from another company.

Sometimes, but not often, this can result in a lower premium, but you are left with two insurance companies insuring your house.

split homeowners insurance policy

 

Do I lose any coverage with a stand alone wind/hail policy?

Most of these policies do not include Loss of Use.

Do I need Loss of Use coverage?

What if a tree falls on your house and your home is rendered “uninhabitable”? (can’t live in the house)

You would have to rent another house or hotel room until the damages are repaired.

Unless you have Loss of Use coverage, the extended stay would be paid out of your pocket.

The amount allowed for your stay will be determined by the estimate.

If they estimate allows for 2 months to repair the damage, you will be allowed 2 months of loss of use payments towards rent or hotel room.

The amount allowable towards a hotel room will be determined by the individual insurance company and the claims adjuster.

Just because you know a guy that was put up in the Ritz Carlton, does not mean you will not be staying at the Best Western.

Unless you have Loss of Use coverage, the extended stay would be paid out of your pocket.

COVERAGE D – LOSS OF USE EXPLAINED

Loss of use coverage kicks in when you have a covered claim and you can no longer occupy the property.

So during the claim process you need to go find a place to live.

Your policy will pay for a hotel stay or if the repairs are going to take an extended amount of time, they should pay for a rental property.

 

Would loss of use or additional living expenses pay for my mortgage?

 

No.

The fundamental principle of insurance is to return you to the same position your were in before a claim. Loss of Use would not pay your mortgage while the house is being repaired. You still own the house and you are still obligated to pay your mortgage.

 

You can not profit from an insurance claim.

So if you were paying your mortgage before you decided to fry some shrimp in the kitchen and burn it down,  

you are still responsible to pay your mortgage.

 

What about food?

If in a hotel room,  the policy should allow for a food allowance.

It all depends on the insurance company and the company claims adjuster.

The food allowance would be limited.

The insurance company does not want to keep you in a hotel room and be on the room service bill so if the repairs are going to take more than a few weeks, more than likely the insurance company will be pushing you towards a rental property.

Once inside the rental house with a kitchen, your food allowance benefit would probably stop.

The thinking here is to maintain your family’s current standard of living.

Nothing more.  Nothing less.

ADDITIONAL LIVING EXPENSE

The policy provides any necessary increase in living expenses to allow the household to maintain “its normal standard of living”.

So if you think the insurance company is going to pay for your surf n turf hotel dinner bill, you may be in for a surprise.

More than likely you will receive a specific amount allowed to spend on your food allowance.

You need to understand the policy will pay for the rental charge to accommodate you and your family into another residence of like kind and quality.

So if you own a 1500 square foot house, the insurance company would pay for another 1500 square foot house not the 4500 square foot house available in a more affluent neighborhood.

 

What if my house floods can I get loss of use if I can’t live in the house?

The homeowners policy and Loss of Use would only apply if the house sustains a covered loss or peril under the policy.

Flood is not covered under a homeowners policy.

 

Future of Wind/Hail Exclusions from Top Home Insurance Companies?

You may find more of the top insurance companies in Louisiana moving towards excluding wind and hail from their home insurance policies.

There has been support in the past to have companies transfer the risk of wind on all homeowners insurance policies in high risk areas to either the government or a state fair plan type policy.

Right now we have more than a few companies wanting to write home insurance policies in South Louisiana.

It may not always be that way in the future if we have another Hurricane Katrina and Hurricane Rita (back to back)

More than likely most companies writing now will either leave the state or become insolvent.

A “split homeowners policy” very well may be the future of home insurance in South Louisiana but for now we do have options.

 

What’s this all about?

If you have a “split homeowners policy” or basically a stand alone wind/hail policy and a homeowners policy that excludes wind/hail, 

you need to determine if your stand alone wind/hail policy has Loss of Use.

If not, the savings you obtained with a “split policy” would be wiped away if you can’t live in your house as a result of a claim.

If you believe you have two insurance policies covering your house or a “split homeowners policy”, 

 

At FM Agency Group we know home insurance.

Give us a call and we can help you find a policy that is right for you.

 

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