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You’d think that property insurance would be simple and straightforward—and you’d be wrong. Shifting property valuations, changing standards, and other factors can riddle your policy with exceptions, but they can also open up opportunities for savings. Here are five potential situations that you should make sure are covered by your current or new policy.
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Your house has burned down, but the land is still there. Will your coverage pay for rebuilding? Chris Hackett, a property insurance expert with the Property Casualty Insurers Association of America, recommends getting separate valuations for the actual house and the underlying property. That way, you can be sure to have enough coverage to fully replace the house itself, regardless of the value of the land.
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Now the land isn’t there anymore, either. Sinkholes and landslides pretty much wipe out everything. Especially if you live in shaky-land territory—for example, Florida (sinkholes) or the West Coast and anywhere in the midwest along the New Madrid Fault (earthquakes)—be sure that you have riders for land collapse.
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You’ve just sold mineral rights to the land beneath your house. Gold mine! Before they start drilling, however, Hackett advises that you pull your agent into the loop to be sure that you know who is responsible for paying for damage to your house from vibrations, land collapse, pollution, and heavy equipment traffic.
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Old houses usually have a patchwork of electrical, plumbing, and HVAC systems. If part of the house becomes damaged, it will have to be rebuilt according to current building codes and standards; you can't just replace the old stuff with more of the same. That’s why your policy should have an “Ordinance and Law” section that covers the extra expense of ensuring that repairs comply with current codes.
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Home security systems can earn you as much as a 20 percent discount on property insurance, Hackett says, because damage is usually minimized if police and fire crews are alerted early. Sprinkler systems can also earn you a steep discount, but only if you install the system in the whole house, not just in an addition.
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