1.19Jan

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Why Do I Have Insurance
if Nothing is Covered?
By: Jim Valkenburg / Insurance Insight
Most of you have seen the awful commercial
referring to a water heater not covered in
a home policy. But that same policy would cover
earthquakes and zombie apocalypse.
The water heater is NOT covered if it breaks down because that is
normal wear and tear (the same as a broken dishwasher, refrigerator,
etc.) yet any resulting water damage done to your home IS covered
(they don’t say that)!
Earthquakes, on the other hand, is NOT covered unless you have
added it specifically to your policy and the zombie attack IS NOT
covered because it would be an act of war which is specifically excluded.
Every year, agents get calls from clients (usually in July or August)
wanting to know if their air conditioner is covered. Again this is “wear
& tear” and if you own a home it will eventually happen to you. These
wear and tear breakdowns are the items a warranty covers.
The purpose of a warranty is to pay to repair or replace those item
that eventually wear out, but they DO NOT pay for any of the resulting
damage - such as carpet/tile loss due to water damage. In cases such as
this, you would need a warranty claim to pay for the broken item and a
homeowner’s claim to pay for damage done by the broken item.
All home policies exclude the same things – there is no fine print to
exclusions. Some of these are war, nuclear attack, flood (but you can
purchase a separate policy), earthquakes (can be added), damage done
by insects, etc.
For auto insurance, you would not be covered for damages to your
own vehicle if you bought only liability insurance and were at-fault
in an accident. Your insurance company likewise would not pay for
a rental car when your vehicle is stolen unless your purchase rental
reimbursement.
If you install $6,000 worth of upgraded stereo equipment in your
new car and that equipment is stolen, it would NOT be covered unless
you had your agent put “add-on” equipment coverage on your auto
policy.
In short, insurance does cover those things it was designed for, and
does not cover the wear and tear and eventual breakdown of appliances
and such.
Jim Valkenburg is a retired military officer and insurance executive.
He and his wife owned and operated their own insurance agency for
over 16 years. His primary purpose is to give out real information
that can be used to make intelligent insurance decisions.
28 January 2019
28