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Frequently asked questions...

Why should I use an independent agency to purchase insurance?

Who decides how much my property is worth?

What about floods, earthquakes and other catastrophes? Are they covered by my homeowners insurance?

Are there any exclusions I should know about?

Does My Homeowners Policy Cover My In–Home Business?

I'll soon be renting my own apartment. Is there insurance for that?

What about our vacation home in the next state? Or our seasonal camp in the same state?

What if I am sued or found liable for injury to another person?

Will my homeowners policy cover me for losses that occur outside of my home?

 

Why should I use an independent agency to purchase insurance?
The independent agency can provide the policyholder with more personal service when compared to a direct writer. An independent agency, such as Denis, Ricker & Brown, works with several insurance companies to provide quality insurance with competitive pricing and local service. Direct contact and a local person can be vital when purchasing an insurance product and especially when filing a claim. Without an agent you are on your own to absorb the frustration and expense of resolving your problems.

Who decides how much my property is worth?
The common methods of valuing property at the time of a loss are:

  1. Actual Cash Value—The replacement cost of the item minus depreciation. For example, a new television set may cost $500. If your 4–year–old TV set gets damaged in a fire, it might have depreciated 50 percent. Therefore, you would be paid $250 for that set.
  2. Replacement Coverage—The cost of replacing an item without deducting for depreciation. So today's cost for a TV set with features similar to the 4–year–old one damaged by fire would determine the amount of compensation. If it still costs $500 today, that would be the replacement coverage.

Replacement value should not be confused with market value. The market value is what your house, for example, would actually sell for and is generally more than the replacement cost. This is because replacement value does not include the land, and does not reflect the value of the location.

Check your policy. If you prefer replacement coverage and do not already have it, this coverage can be added to your policy. Typically, the difference in premiums is 10 to 15 percent to upgrade from actual cash value coverage to replacement coverage. However, it is well worth it to protect your investment in your possessions. Your Denis, Ricker & Brown agent can advise you of the costs involved.

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What about floods, earthquakes and other catastrophes? Are they covered by my homeowners insurance?
Most catastrophes are covered; for example, wind damage from hurricanes and tornadoes come under the windstorm peril listed in the previous question and so are included. Flood and earthquake damage, however, are not covered by a standard policy.

Be careful not to be lulled into a false sense of geographic security. Flood and earthquake activity is more widespread than many people realize. For example, almost 90 percent of the U.S. population lives in seismically active areas. Since 1900, earthquakes have caused damage in all 50 states. And if your home is located in a flood–prone area, you are 26 times more likely to suffer a flood loss than a loss from fire.

You may want to check with your Hickok & Boardman agent about special catastrophic policies for normally excluded conditions like floods and earthquakes. Of course, the cost of such extra coverage may reflect the high risk involved. If you live along a shoreline, for example, expect to pay a higher premium for flood coverage than someone living on a mountaintop would pay.

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Are there any exclusions I should know about?
The exclusions are specifically listed in the policy. They are, but not limited to, intentional loss, neglect, general power failure, flooding, earthquake, and damage done by war. If you neglect to take care of your roof properly (e.g. a leaky roof), you may not be covered. Obviously, if you intend to lose an object or damage your own property, there is no coverage.

One other exclusion that can be costly is the Ordinance or Law exclusion. Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs may not be covered by your insurance policy. Thus, if you discover when replacing damaged property that current law demands higher grade or more expensive materials than the original ones being replaced, the new materials may not be covered for the full price.

For example, if the current building code in your area requires a higher grade of electrical wiring and after a fire you are replacing all the wiring in your home, your policy may cover only the cost of replacing the older wiring. The difference in cost between the old wiring and the new wiring required by ordinance or law is your responsibility.

Coverage to included Ordinace or Law requirements can possibly be added to your homeowner's policy with an endorsement—an addition that could save you money in the long run.

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Does My Homeowners Policy Cover My In-Home Business?
Homeowners policies were never intended to cover business exposures. Consequently, coverage for the items you use in your business such as computers, fax machines, filing cabinets, tools and inventory are usually limited to $2,500 in your home and $250 away from home under most policies. And your homeowners coverage provides no liability insurance for your home–based business

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I'll soon be renting my own apartment. Is there insurance for that?
Yes. Renters insurance is a property/casualty policy to protect your property and to protect you against liability. For example, if someone slips and falls in your apartment, you may be held liable for the injury. Renters insurance would cover that accident. All your possessions up to the monetary limits listed in your policy also would be covered for specified damages (both at home and when you travel).

If somebody sues for damages caused by you or your possessions (other than a vehicle covered by your auto insurance policy), your renters insurance policy would cover the cost of the lawsuit—both defending it and settling it if necessary—up to the limit of coverage chosen.

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What about our vacation home in the next state? Or our seasonal camp in the same state?
Insurance companies typically operate in more than one state so that a company that carries your primary residence may be able to issue a policy for your vacation home. Personal liability is covered in the first homeowner's policy so the second policy need cover only property. This type of policy is called a "dwelling fire" policy. This type of policy is commonly used to cover a seasonal residence or "camp".

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What if I am sued or found liable for injury to another person?
Liability covers bodily injury and property damage to others due to your negligence. The coverage applies to non–auto accidents that occur either at your residence or off the premises. Medical expense payments such as first aid can also be due to the injured party. If there is any incident with the possibility of suit, it is advisable to contact your agent immediately and inform them of the situation.

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Will my homeowners policy cover me for losses that occur outside of my home?
There is only one way to find out the answer to this question, and that is to check your policy. Homeowners policies regularly provide protection for off–premise destruction or theft, which covers your possessions while they are outside your home. For example, if your luggage were stolen while you're on vacation, a homeowner's policy containing off–premise protection would cover the loss. This type of protection can also protect your kids' stereo equipment and other possessions when they go off to college—if they live in a dormitory. Once a child moves to an off–campus apartment, he or she will typically need to purchase a separate renters insurance policy to cover their personal property.

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Denis, Ricker & Brown
A Member of the Hickok & Boardman Insurance Group
PO Box 565 Montpelier, VT 05602 | 802.229.0563 | fax:802.229.9327
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