When we leave our homes at night, we turn off our lights inside because electricity is not free. Similar to electricity, heat is also not free.

During the cold winter months, some homeowners decide to shut off their heat to save some money while they are out of town. However, saving a few bucks on heat could end up costing you thousands in property damage. Failing to maintain heat can cause pipes to freeze and subsequently burst from the frigid temperature. A frozen pipe can cause significant damage to both your home and your personal belongings. To make matters worse, your insurance company may deny your insurance claim making you responsible for repairing all of the damage out of pocket.

Under a typical homeowner’s insurance policy (HO-3), the insurance policyholder is required to use reasonable care to maintain heat in the home to prevent frozen pipes from bursting. If the policyholder fails to use reasonable care to maintain heat, then the insurance company may deny the insurance claim, which could cost the policyholder tens of thousands of dollars.

What does it mean to use “reasonable care” to maintain heat? There is no written requirement in your homeowner’s insurance policy that specifically states what degree of heat is acceptable to meet this requirement. However, The Institute of Business and Home Safety suggests that homeowners keep their heat at or above 55 degrees Fahrenheit in their homes while they are away for an extended period of time.

In addition to maintaining heat at or above 55 degrees Fahrenheit, homeowners should drain their plumbing system and turn off their water at the water meter. Doing so ensures that if a pipe break occurs, there will be no pressure to pump water throughout your home while you are away. Shutting off your water supply is the only foolproof way to prevent extensive damage to your home from a pipe break.

Lastly, a homeowner may want to have a reliable neighbor or trusted friend check their home regularly to ensure that the property is safe.

As long as a homeowner can show their insurance company that they have acted reasonably and attempted to maintain heat while they were away, then the insurance company will most likely pay their insurance claim.

Compounding the problem is the financial aftermath of these storms. When severe wind damage occurs, it opens the door to the ambiguities of insurance coverage during the insurance claims process.

The unfortunate truth is that many home and business owners do not collect all the money they are entitled to because they don’t fully understand the insurance claims process.

For wind damage insurance claims, it can be challenging to determine whether the damage to your property is seemingly small or large. For example, many homeowners aren’t aware of how the language of their insurance policy and the nature of damages can affect how much they can recover.

Here are some important tips to remember:

• Differences between wind and flood coverage can make recovery complex.
• In many coastal states, insurance companies sell homeowners insurance policies with percentage deductibles for storm damage instead of the traditional dollar deductibles commonly used to cover losses from fire damage and theft. According to the Insurance Information Institute, in 18 states, insurance regulators allow home insurance policies to include hurricane deductibles tied to a percentage of a home’s insured value, rather than a flat dollar amount.
• For example, a standard policy with a $500 standard deductible, a policyholder would pay the first $500 of the claim out of pocket. But with a policy with a percentage deductible of 2% percent on a house insured for $100,000, a policyholder would pay the first $2,000 of a claim. Percentage deductibles typically vary from 1% of a home’s insured value to 5% according to the Insurance Information Institute. In some coastal areas with high wind risk, hurricane deductibles may be higher. Some are even mandatory.
• Tree and debris removal is one area that can be confusing to policy owners. In some cases, you could receive compensation for tree removal from the residence premises as well as damage to your home. In others situations, insurance might pay for tree removal from your roof or home, but not from your yard.

Foresight and an experienced public adjuster can pay valuable dividends when dealing with these life-alternating disasters.

Almost every state, including the District of Columbia, has specific licensing requirements and regulations for those seeking to become a public insurance adjuster. Similar to the requirements of a lawyer, a public adjuster licensed in one state only permits a public adjuster to practice in that particular state. However, a public adjuster may simultaneously hold licenses in other states if he or she fulfills the licensing requirements of each state.

It is very common for a public adjuster to be licensed in multiple states, including states within close proximity of their home state. For example, a public adjuster who is licensed in Massachusetts will often times be a licensed public adjuster throughout New England. Moreover, a public adjuster would be wise to be licensed wherever their real estate clients own property. For this reason, public adjusters in Massachusetts whose clients own property in Florida are often also licensed Florida public adjusters.

In Massachusetts, the requirements to become a public adjuster are governed by Massachusetts General Laws Chapter 175, section 172. In this state, an applicant must have two years experience performing services in connection with the adjusting of property losses. Additionally, Massachusetts public adjuster applicants must pass the adjuster licensing exam and be at least twenty one years of age.

However, flood insurance coverage may be added to an insurance policy for an additional premium.

Generally, flood insurance will protect an insurance policy holder against damage to their property that results from the overflow of rivers, streams, lakes, and other bodies of water. If you own property close to one of these bodies of water, it is important to have flood insurance coverage in order to protect your property. After periods of heavy rain, these bodies of water may overflow and could cause serious damage to your property.

Flood insurance policies may cover building property and personal property at the election of the insurance policy holder. Typically, an insurance policy holder will pay a less expensive premium and only have coverage to their building. However, electing to forgo coverage on personal property is a grave mistake that could cost the policy holder tens of thousands of dollars. Often times, floods damage personal property and too often insurance policy holders have unknowingly bought a flood insurance policy that does not have personal property coverage.

If you live near a body of water, it is imperative to not only have a flood insurance policy, but also to have good coverage.

The Federal Emergency Management Agency (FEMA) website is a valuable resource for information on floods.

Additionally, the National Flood Insurance Program gives important facts about flood insurance.

The new law requires:

1) the installation of either an oil safety valve or an oil supply line with a protective sleeve on systems that do not presently have one; and

2) insurance companies that write homeowner insurance policies to offer coverage for leaks from oil heating stystems.

It is important to note that the ordinance only requires insurance companies to offer coverage for leaks. Coverage will only be afforded to insurance policy holders who choose to add this coverage to their homeowners insurance policy.

Additionally, insurance policy holders should know that most homeowners insurance policies do not include coverage for these types of leaks, which leaves many uninsured against such damages.

Homeowners whose homes are heated by oil should not only comply because they are required to by law, but also because these measures can prevent oil leaks and damage to your property at a minimal cost.

Installing an oil safety valve or oil supply line with a sleeve could cost between $150 to $350. Considering the amount of damage that an oil leak could cause, this expense is insignificant.

There is financial assistance available to those households who qualify for the Low Income Home Energy Assistance Program (LIHEAP) .

Multi-family complexes include rental apartments, condominiums, and cooperative apartments. For insurance purposes, they have many common characteristics and some important individual differences.

Rental apartments are multi-resident buildings owned by an individual, partnership, or corporation. Condominiums include unit owners, who hold title to their living space and an association of unit owners that controls the common areas. In a cooperative, commonly known as a “co-op,” the residents hold a life tenancy to their apartments and they own stock in the corporation that owns the building.

In all three formats, insurance should be purchased to properly cover all buildings, equipment, and related business personal property owned by the building owning entity.

The insurance policy should provide coverage for replacement cost, agreed amount clause, flood and earthquake, ordinance or law, code upgrade, loss of rental income, extra expense coverage, and back up of sewers and drains. Additional coverages may include: debris removal, preservation of property, fire department charges, pollution cleanup, newly acquired or constructed property, outdoor equipment, etc.

If multiple buildings are involved, a blanket insurance policy is recommended.

There are three levels of covered causes of loss which may be written: Basic Form, Broad Form, and Special Form.

The Basic Form covers losses caused by:

fire, lightning, wind, hail, explosion, damage by aircraft or vehicles, riot, civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

The Broad Form includes the perils of the Basic Form and also covers losses caused by:

falling objects, weight of snow, ice or sleet, water damage, and glass breakage.

The Special Form includes all risk of direct physical loss not otherwise excluded or limited. This Special Form provides the most comprehensive coverage and is the most desirable.

Since condominiums differ from rental apartments and cooperatives, they have unique insurance problems. A condominium owner will need to know if the condominium association requires “all in” coverage or “bare walls” coverage. The decision will be based on the condominium declarations and bylaws. The condominium declarations will determine who is responsible to insure certain elements of the property.

A most critical and valuable insurance coverage is “ordinance of law” endorsement. State building and zoning ordinances along with federal regulations have increased in recent years. These regulations create a potentially costly exposure apartment complexes, which are insured by Basic Form property insurance. If there have been important changes in building and zoning laws since apartment units have been built, then the cost to upgrade after an insured loss occurs would not normally be covered under most property insurance policies.

Three coverages are available:

1. Contingent Liability for Operation of Building Laws.

2. Demolition Insurance.

3. Increased Cost of Construction Insurance.

Some examples of upgrades may be: alarm systems, sprinkler systems, ADA ramps, railings, certain disabled persons issues, insulation, windows, asbestos removal, elevators, emergency generators, emergency lighting, etc.

Since many existing properties are “grandfathered” when the law changes, property owners need not comply until a new building permit is required for major repairs. This usually happens after a fire or other casualty loss occurs. Other issues to consider may be lease provisions, repair and maintenance provisions, coverage interpretations, crime exposures, and liability exposures.

After a loss, multi-family apartments may encounter some of the following problems: inadequate or non-existent coverage, lack of (or limited) business income, rental loss and extra expense insurance, insufficient limits of property insurance, a schedule of separate amounts per building versus blanket coverage over all buildings and lack of an agreed amount clause to replace the coinsurance clause.

An experienced and competent public adjuster can help you navigate these complex and often times confusing insurance issues.

Property insurance policies invariably exclude property damage due to the enforcement of building codes or ordinances. This gap in insurance coverage can be closed by adding “ordinance or law” coverage. An insured may add ordinance or law coverage to their insurance policy by including two endorsements to their commercial property policy. These endorsements are : 1) Coverage to upgrade the building as required by laws or ordinances and 2) Coverage for the loss of income during the increased time it takes to bring the building into compliance with applicable codes.

For business owners, it is highly recommended for them to add both of these endorsements to their insurance policies. However, it might not be necessary for homeowners to do the same because their insurance policy may already contain such coverage. For example, in Massachusetts, most homeowners insurance policies contain a minimum of 10% of the building coverage as additional ordinance or law insurance. Therefore, Massachusetts homeowners would not need the additional endorsements.

A variety of laws could come into play when a damaged building is repaired or rebuilt, which may include local, state, and federal regulations. Also, there may be restrictions imposed by historical societies on buildings designated as significant and/or historical.

In many jurisdictions, there are requirements that a building with “major damage” must be demolished, even if part of the building may be salvaged. It is important for insurance policyholders to know what code requirements could apply as these may differ according to jurisdiction.

Fortunately, the insurance industry has created insurance policy endorsements that a property owner can purchase. For an additional premium, insurance policyholders may add the endorsements to their insurance policy, which will provide coverage for this exposure.

Most people in the real estate industry are not aware of this State Board. However, the regulations which it proposes and enforces has a direct bearing on all buildings located within the Commonwealth of Massachusetts. The board held its first meeting in January 1946 and as such, Massachusetts was the first state to create a uniform fire code.

In 1994, the Commonwealth of Massachusetts embarked upon a reorganization of the Office of Public Safety. As a result of that action, the Department of Fire Services was created in July 1996. The Fire Services Commission now has the responsibility of selecting a state fire marshal as opposed to the prior system of appointment by the governor. Stephen D. Coan is presently the State Fire Marshal and prior to being appointed to that position, had been the director of the Fire Training Academy, which is a nationally recognized facility located in Stow, Mass.

The Board of Fire Prevention Regulations, pursuant to Massachusetts General Laws Chapter 22D Section 4, is a state regulatory board charged with promulgating the Massachusetts Fire Prevention Regulations, 527 CMR 1-50 (also known as the Massachusetts Comprehensive Fire Safety Code). The purpose of this code is to prescribe the minimum requirements and controls to safeguard life, property and public welfare from the hazards of fire and explosion created by the storage, handling or use of substances, materials or devices or from other conditions hazardous to life, property and the public welfare.

The Board of Fire Prevention Regulations is comprised of 14 members in total with these members being appointed by the governor for a term of six years. The state fire marshal is a member who serves in an ex officio position. Along with the state fire marshal, the board is made up of three fire chiefs (chief of department) which must come from the Fire Chiefs Association of Massachusetts, a member of the Massachusetts Fire Prevention Association, four registered professional engineers, a representative of the public, a graduate chemist, an inspector of wires, a representative of the blasting industry and a licensed electrical contractor.

This board meets the first Thursday of every month in a meeting which is open to the public. The public has an opportunity to address the board to present any comments or proposed amendments to regulations at two statutory public hearings which are held each year. The board also holds public hearings at other times throughout the year, as deemed necessary in order to amend or repeal any regulations.

If you have any questions regarding the board and/or any fire prevention regulations, please contact Maura Ware, legal counsel and executive secretary to the board, Department of Fire Services, P.O. Box 1025, State Rd., Stow, MA 01775. Any persons interested in requesting formal interpretations of the board or to have proposed amendments that they would like the board to consider, should address their concerns in a letter to chairman of the board, V. Carlisle Smith, at the above address.

Ordinance or law coverage is an additional insurance coverage that may be added to an insurance policy for an increased premium. This coverage is essential for business owners and protects them in the event that a fire, flood, or hurricane damages their property and their insurance policy has a gap in coverage.

Certain property insurance policies exclude damage due to the enforcement of building codes or ordinances. This gap in insurance policy coverage may be closed by adding ordinance or law coverage to an insurance policy.

Ordinance or law coverage is trigged when all three of the following elements are present:

a covered peril (fire, water, hurricane)
causes damage to a building
and the damages result in the enforcement of an ordinance or law in force at the time of the loss.
Essentially, ordinance or law coverage will allow an insured to recover for the cost of bringing a building up to code, even though the insured was not required to comply with the particular ordinance or law before the loss occurred. Without ordinance or law coverage, an insured would not be reimbursed by their insurance company for these potentially substantial costs.

There are three distinct coverages and each carries its own premium charge. They are:

A. Loss to undamaged portion of the building

B. Demolition cost

C. Increased cost of construction

Coverage A pays for the value of the loss of the undamaged building when enforcement of the building code requires demolition of the undamaged portion.

Coverage B pays for the cost of demolition.

Coverage C pays any increased costs of construction due to the enforcement of the building codes.

There is also an endorsement which pays for the business income loss during the necessary increased period of suspension of operations due to any additional construction time required to meet building codes.

Property owners need to do some research into local demolition and construction costs. They need to know at what point the authorities would require that undamaged parts of the building be demolished. Also, they need to study the codes to determine which would apply to the subject building. In this case, it would be easier to hire a code compliance consultant and/or licensed insurance adviser and have a survey done of the building.

Since the increased costs necessary to rebuild in compliance with existing codes may be substantial, you are best to be educated. As a real estate professional, you should be prepared for a catastrophe by purchasing adequate ordinance or law coverage to supplement your replacement cost policy.