After a disaster damages your home or business, the contents of your building will need to be cleaned and restored. “Contents” includes furniture, art, office supplies, personal belongings, most appliances, commercial items, documents and more. Anything not structurally connected by utilities like water or gas is considered content. Whether you need important paper documents and machinery for your business salvaged, or furniture cleaned and restored, there are several restoration options. This newsletter will focus on these services and discuss how to set up and utilize your insurance policy to ensure coverage.
Cleaning and Restoration Services
For business and residential needs, various cleaning and restoration services are available.
Create an inventory of contents and belongings. Insurance Information Institute (Triple-I) suggests photographing every item to be covered and making a list with serial numbers on electronics, makes and models, and year of purchase. It may benefit you to also attach official documentation, like receipts and appraisals, to the inventory list. Proper inventory assessments can also help with accounting accuracy and tax liability.
The relationship between contractor and customer in content restoration is referred to as bailment. Bailment occurs when one party (the Bailee) takes the property of another (the Bailor) into their possession. When a contractor has someone’s property in bailment, they become liable for any damages. Content restoration operations are often not fully covered by standard liability insurance policies. Review your insurance program with a qualified restoration insurance professional.
Business & Commercial
Business (or “commercial”) contents insurance commonly covers damages or losses caused by fires, flooding/storms, and theft for:
Business contents insurance may also cover stock and cash within the premises.
Homeowners’ contents insurance (or “personal property insurance”) helps cover most valued items damaged or lost in a fire, flood/storm, and theft. The common categories of personal property include furniture, clothing, TVs and other electronics, jewelry, and recreational equipment.
Some categories of personal property have a maximum dollar limit that your insurance company will pay in the event of a loss. In those instances, it is recommended you cover expensive contents on their own policy (i.e., artwork, jewelry, etc.).
The 80% Rule
One of the most common coinsurance breakdowns is the 80/20 split. Under these terms, the insured is responsible for 20% of the costs to restore and the insurer pays the remaining 80%. The 80% rule in home insurance only concerns property coverage, not the liability coverage that also comes with a basic policy.
All types of insurance policies will have a coverage limit and a deductible. Standard contents insurance policies will limit coverage for certain types of valuable items, like antiques, memorabilia or jewelry. While your contents insurance coverage may be higher than the value of these pieces, the policy may only provide limited coverage.
Optional coverage can be purchased to provide additional protection, often referred to as a rider, floater, endorsement, or scheduled personal property coverage. According to Triple-I, an item should be professionally appraised before being scheduled.
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