A POLICY OF PROTECTION [Albuquerque Journal, N.M.]

Jan. 20--New Mexicans obviously don't have to fret about having to rebuild their homes or replace their belongings after a hurricane.

But they might use the occasion of the devastating events on the East Coast to review their own homeowner's insurance policies to see if they're really covered for everything they thought. Too often, people find out too late what wasn't protected -- for instance, that a standard policy doesn't cover flooding.

"Superstorm Sandy revealed many of the problems homeowners may encounter when navigating the claims process after a natural disaster," said J. Robert Hunter, director of insurance at the Consumer Federation of America, in a recent article on homeowner's policies. To be sure, New Mexicans are prone to any number of potential calamities, whether they be wildfires, high winds, hail damage, winter storm damage or the felled tree that topples into the neighbor's sunroom.

And to their credit, victims of the Ruidoso fires last summer were generally well prepared, according to New Mexico Insurance Superintendent John Franchini, who heads the Insurance Division of the Public Regulation Commission.

"We had over 500 homes that were burned, and at this moment, we've had two complaints of inadequate coverage," he said. "That doesn't mean they're still not in litigation, but it seems to me the agents and the people in Ruidoso were cognizant of the value of their homes."

Except when lenders require it to obtain financing -- which is almost always the case -- obtaining homeowner's insurance is not mandatory. But, in his mind, it's something no one should be without, Franchini said.

"When you buy a homeowner's policy or a tenant's homeowner's policy, you have protection for your assets -- your home itself and all of its contents. If you have an apartment, you insure all of its contents," he said. "Those are all of your earthly goods -- and for most of us, that's all we have."

A standard homeowner's policy covers three basic things: property damage to your home and detached buildings, whether from fire, hail, wind "or a vehicle running into your property;" reimbursement to live some- where else if your home is damaged and uninhabitable; and personal liability to protect against claims if you are responsible for injuries to others or damage to their property.

People often overlook the importance of personal liability, "whether you own a home or are just renting," Franchini said.

"If someone comes to your residence and you have something that's unsafe, like a step they trip on and get hurt, your personal liability protects you," he said.

There's no general rule about how much property or personal liability coverage a homeowner should have, Franchini said. Both coverages typically start at $100,000 and go up from there, he said.

"That's why a good, professional insurance agent can help someone decide what their needs are and what their exposures are and what they're willing to assume themselves," he said. "Anything above that should be insured."

There are certain "perils" homeowner's policies won't cover, chief among them flooding and earthquakes. Coverage for those would have to be provided in separate policies, said Thom Turbett, CEO and president of the Independent Insurance Agents of New Mexico.

In the case of floods, federally regulated lenders are mandated to require flood insurance on properties located in areas at high risk of flooding. They can also require it even if it isn't federally required.

"People who live here in New Mexico never think we have floods, which is absolutely incorrect," Turbett said. "I've lived here long enough (to know) when you have a good mountain downpour in the summer, those arroyos have overflowed. And we've had a lot of flood claims over the years when that happens ... You'd be surprised, anywhere anybody is close to an arroyo is probably in a flood zone."

It also isn't common knowledge New Mexico is in an earthquake zone, Turbett said. "It's been a long time since we've had anything substantial," he said. "We sit on top of what's called the Rio Grande Rift ... At some point in time, there's a possibility we could have an earthquake and I don't think a lot of people think about that."

People who live in federally designated flood zones can obtain subsidized insurance through the National Flood Insurance Program, Franchini said.

"There are also private carriers that write flood insurance, and write difference-in-condition coverage, which covers you for flood and earthquake, earth movement, things like that that are not covered in your homeowner's policy," he said.

Franchini said it is important for homeowners to annually review their policies, and to update them if necessary.

"Look at an inventory of all your contents. If you have any paintings, if you have any important goods like jewelry or anything like that, you need to know what they are," he said. "You need to take pictures of them and have an inventory of your premises so you can prove what you have."

He said he keeps his inventory list in a safety deposit box at the bank.

Homeowners should also be wary of the impact of the downturn in market values for their homes.

"The cost to buy a house has gone down, but the cost to build a house has not," Franchini said. "What that means is ... if you have a house that was worth $400,000 when you bought it in 2006 and it's market value is only $300,000 today, you should still be insuring it for $400,000."

Turbett said with the rash of disasters the past couple of years, homeowner's claims have skyrocketed -- and it is having an impact on New Mexico consumers.

"What's happening is there are a lot of carriers now requiring an auto policy along with the homeowner's policy if they're going to write it," he said. "They perceive auto as a line of insurance that is more profitable so they're making the agents bundle those policies ...

"It's limiting choice because obviously before you could buy a homeowner's policy stand-alone."

He said consumers should be aware there are options. "If they're having that issue, they should shop around and look at the best price."

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