Insurance: Protection equals peace of mind

Sunday, September 26, 2010

Q. How do we properly insure contents?

A. Something that is often missed on HME policies and other contracts is contents coverage that includes "All Risk" coverage. There are two forms of coverage that are universally used in the industry: One is called "Basic" or "Named Peril" and the other is "Special Form" or "All Risk."

"Basic" is very limited. It includes "Actual Cash Value" limitations, which means a claim is settled on the value of your furniture, fixtures, equipment and stock based on "used" valuation, including depreciation at the time of loss. It usually includes a low co-insurance percentage of 80%. "Basic" insures only what is listed on the policy, such as fire, vandalism, malicious mischief and wind, just to name a few. If it is not listed, you have no coverage.

The coverage you really want is "Special Form." This coverage insures all perils except what is excluded. It is very broad and the cost to upgrade is minimal.

Some "Special Form" exclusions you must be aware of are earthquake, flood, war and nuclear reaction. You can always purchase earthquake in certain geographical areas for a separate and distinct policy premium. Flood is defined as surface water that comes in from the outside and is available on a separate policy. If you're in a flood area, coverage is underwritten by the National Flood Association and may be available through your agency.

Keep these things in mind as you review your coverage with your insurance professional. Make sure you have "Special Form" on your contents, either eliminating co-insurance all together or having it at 100% so you're adequately protected should an insured loss occur. If you do have a flood or an earthquake exposure make sure that you purchase it for your peace of mind.

Weston Millward is the CEO of The Millward Agency. Reach him at 801-571-1100 or