Trees can be tricky, but for the most part homeowners are responsible for what falls into their own yard. So if a storm causes your neighbor’s tree to fall in your yard, your homeowners insurance could help cover the cost of removing the tree and remedying the damage it caused on your property, after your deductible.

The same is true in reverse: If a tree on your property falls in your neighbor’s yard, your neighbor should contact his or her insurance company to determine what type of coverage is available for damage or cleanup in their yard.

In most cases, neighbors are able to work things out without too much trouble. Depending on the extent of the damage, you may need to file a homeowners insurance claim. Your homeowners insurance may or may not cover the cost of tree cleanup, depending on your policy and the company you work with.

Good news: Homeowners insurance from ERIE typically pays for the cost (subject to sublimits) of removal of fallen trees if it’s due to a covered peril, such as a storm.

If there’s ever an issue between neighbors, you can rely on your claims adjuster to help straighten everything out.

THE CLAIMS PROCESS

If a tree falls on your house, the first thing to do, if it’s safe, is to try to prevent further damage to your home and property. Make sure to take some photos to document what happened. Then call your insurance agent, who can explain your options and help you understand if and how to file a claim. When you file a claim, a claims adjuster will come by to evaluate the damage and explain how your homeowners coverage comes into play. It’s recommended that you call your claims adjuster before you contract to have the tree removed.

Sometimes trees fall on cars. If it’s not safe or possible to remove the tree from the car yourself, you should call a professional to remove it. (Again, talk to your insurance agent and a claims adjuster first and take a few photos of the fallen tree on your car.) Depending on the damage and terms of your insurance coverage, the optional comprehensive coverage you may have under your auto policy could provide coverage for the loss.

PREVENTING TREE DAMAGE

Preventive measures matter when it comes to trees. Start by looking for signs of distress such as dead limbs, cracks in the trunk or major limbs, leaning to one side and branches that are close to a house or power line. Mushroom growth on the roots or bark can also signal trouble.

Homeowners should be concerned about the health of their trees. It’s possible for you to be held responsible for resulting damage to your neighbor’s house or property, if your tree falls due (in whole or part) to your own neglect. One of the best things to do is to regularly have large trees trimmed. (The Tree Care Industry Association lists accredited tree care professionals.)

There are few things in life worse than losing your home to fire or a natural disaster.

Except, that is, discovering in the aftermath that you don’t have enough homeowners insurance coverage to rebuild the house back to the way it was before trouble struck.

If you get guaranteed replacement cost coverage, that is unlikely to happen. Why? Because guaranteed replacement cost will pay for the full cost of rebuilding your house back to its previous size and specifications* – right down to the granite countertops, custom bookshelves, and gleaming hardwood floors that you so love.

“Guaranteed replacement cost gives you peace of mind,” says Bob Buckel, vice president and product manager at Erie Insurance. “The reality is that it’s almost impossible to estimate to the penny what it’s going to cost to rebuild a home. We take that worry away from you.”

In fact, the vast majority of ERIE’s homeowners insurance policyholders opted in to guaranteed replacement cost coverage to protect their most valuable asset – their home.

Keep in mind that guaranteed replacement cost isn’t available in all states. In North Carolina, ask about Enhanced Replacement Cost. For specific questions or a personalized estimate for your home, talk to a local insurance professional like an Erie Insurance agent.

How Much Coverage Should I Have on My House?

When you purchase a home and start thinking about protecting your investment, this is often the first question. The answer is often: More than you just paid for it, Buckel says.

“People naturally gravitate to how much they paid for the house, but we’re not insuring it to buy it from you – we’re insuring it to rebuild it in case something happens,” Buckel says. “The question you need to be asking is, ‘How much would it cost if a builder needs to rebuild it?”

See also: How Much Does Homeowners Insurance Cost?

This is why replacement cost is often more than market value for your home, or even what you might be able to sell it for.

Figuring out rebuilding costs can be elusive, as a range of factor contribute to what that actual cost might be. Guaranteed replacement costs takes the guesswork out, assuring that you’re covered – even if you need to rebuild your entire home*.

As A Homeowner, You Have Choices

Guaranteed replacement cost is one of a range of choices – called “loss settlement options” in the business – which insurance companies offer to homeowners. Common loss settlement options include:

• Replacement cost
• Extended replacement cost
• Actual cash value
• Guaranteed replacement cost

Each one works a little bit differently. Different insurance companies offer different things, too. (For example: ERIE does not offer actual cash value loss settlement for the dwelling on your primary home – it’s only available for secondary homes and contents. You’ll learn more about actual cash value below.)

Here’s a breakdown of some of those key differences:

Replacement Cost vs. Guaranteed Replacement Cost

That one word – guaranteed – makes a big difference if you’re facing a total loss of your home.

When you’re issued a policy with just replacement cost, the insurance company works with you to project how much it would likely cost to fully replace your home. You can see the replacement cost and the specific limit for your policy on your declarations page. Replacement cost is provided up to the limit shown on the declarations page.

The replacement cost amount usually gets increased annually – usually by 2 to 5% based on inflation in your area.

Yet, if your home is destroyed and a builder actually estimates that the cost to rebuild is more than that replacement cost figure… then you, as the homeowner, are responsible to make up the difference. That’s why it’s important as a home owner to make sure you know and are comfortable with how much your home is insured for.

Here’s an example: If your home is insured at a replacement cost of $200,000, and in reality it is going to cost $250,000 to rebuild, then you either need to come up with an additional $50,000 or find ways to reduce costs… which could result in a smaller, less-appointed house than you originally had.

The premium amount you pay for replacement cost compared to guaranteed replacement cost is typically about the same, although some factors unique to your situation may make one or the other more expensive.

Extended Replacement Cost vs. Guaranteed Replacement Cost

With extended replacement cost, your insurance company assures that a financial cushion exists in the event that cost of rebuilding is more than the estimated replacement cost.

Specifically with Erie Insurance, that cushion is 25 percent above the dwelling amount, as shown on your declarations page. So for a home insured at $300,000, extended replacement cost would give you an extra $75,000 to work with. Yet again, if costs go beyond that extra $75,000… you are on the hook to make up the difference, or rebuild a smaller home. While 25 percent may seem like a lot, there are often circumstances that cause costs to soar well beyond that.

“When a hurricane or tornado does a lot of damage in a specific area, the cost to rebuild skyrockets,” Buckel says. “Everyone is trying to rebuild, and the cost of lumber, labor and building supplies all go up. If you don’t have the right coverage, you are not going to have nearly enough to rebuild.”

            Related: How Named Storms Affect Your Insurance Coverage

Premium costs for extended replacement cost are generally comparable to guaranteed replacement cost, although some factors unique to your situation may make one or the other more expensive.

Guaranteed Replacement Cost vs. Actual Cash Value

In simple terms, actual cash value is basic coverage. While there’s no doubt that actual cash value is typically your least expensive option, there is also truth in the old saying, you get what you pay for.

With actual cash value, you get coverage for a pre-determined set amount, and no more. Further, some policies also factor in depreciation of things such as an aging roof – so you may end up with even less than the policy states.

Compared to guaranteed replacement cost, actual cash value often offers the least attractive option as you will likely be required to pay out-of-pocket costs if you aim to restore your home to its previous design and condition.

As we mentioned above: ERIE does not offer actual cash value loss settlement for the dwelling on your primary home – it’s only available for secondary homes and contents.

Better Safe Than Sorry

Of course, the ideal scenario is that you will never need to use guaranteed replacement cost coverage. That’s why it’s so vital to be proactive in protecting your home.

Yet, if you do need it, you can rest assured that guaranteed replacement cost coverage will provide the money necessary to rebuild without requiring you to shell out additional cash.

“If it’s a covered loss and costs run high, we will pay whatever the difference is,” Buckel says. “It’s on us, not you.”