WHAT TO KNOW WHEN INSURING YOUR HOME
by: Remie Longbrake | published: August 16, 2021
It’s important to protect your home, and insurance is a great way to protect your assets when a disaster occurs. The significance of insurance is to get you back to where you were financially before the claim. It’s not designed to improve your circumstances, however, depending on what happens, you can’t necessarily get back everything you lost. Therefore, it is important to understand what may be covered in a loss and what you might not expect.
1. It’s a good idea to start with a local agent.
Buying off Amazon or online is convenient, but buying insurance is a bit more complicated. A local independent insurance agent will help navigate your options. Sort of like a real estate agent, they typically know the community and the local pricing that is customary when calculating replacement costs, which is cost to rebuild. There is a lot of detail that go into a policy, way more then theft or liability. Ages of homes, basements, the construction of the home, square footage, the neighborhood, all are considered. Plus agents are eyes and ears to helping you get an affordable rate, plus assist the home office to take photos, talk with policy owners and match a risk to the best option that the home owner can afford with the right features they need.
2. Understand which peril coverage your have.
It’s important to know what you are covered for and what may not be covered. When it comes to getting your home insured, you should understand what you are buying. Your policy should tell you what you are insured for and excluded against, however it’s not always so clear. The common three peril classes are Basic form, Broad form, and Special form. The first two are named perils, meaning the policy explicitly covers those named perils provided it’s an insurable event. Special form is a bit different, these policies are usually worded to say what it doesn’t cover and is the most expensive in most cases. When you’re not sure you should always ask your agent or insurance company what type of perils coverage you have or are in process of getting.
3. Your homeowners insurance policy may not cover water damage.
Water can be devastating! Most polices only cover certain types of water damage, which is water damage that originates from inside the house or from a storm that created an opening the roof for instance. However, what is often excluded is floodwater, broken water mains and fixtures, wear and tear causes, and other water-related damages. It’s important to know what’s covered and if you should consider purchasing separate flood insurance if available.
4. Policies have exclusions and limits you need to know.
Every insurance policy has exclusions, like floods, earthquakes, but sometimes wind and hail damage, fences, and outbuildings. So not all policies are alike. Your policy may also include special limits on items such as jewelry, trailers and watercraft on your property, and property of others that may be stored there. Exclusions are listed throughout your policy and it’s important to read and understand. Your agent can help break down the policy for you to make sure you avoid potential gaps in your coverage.
5. Tell your agent about updates and changes to your property.
You buy your house, you buy insurance, you get a packet, and then you might not think about it again. But now let’s say you’ve lived in your home for a while. If you’ve done any update, perhaps a remodel, redone your roof, added a porch, or a garage, then it’s very important to tell your agent and your company so they are aware of the changes.
Maybe you renovated your kitchen, or put on a new roof. Or, maybe you added an alarm system. Updates like this can change the value and rebuilding cost of your home. If you don’t update your policy and tell your agent, you may be underinsured, leaving yourself at risk, and could be missing out on a possible discounts.
6. Roofs are really important.
Roofs are usually the most impacted area of the home. Given it’s openness to the sky and whatever falls out of it, the roof is in constant risk. That’s why it’s important to replace your roof when needed and do any repairs by doing a visual inspection. This is especially true for those with chimneys and roofs with a lot of angles and exposure.
7. Maintaining a home inventory will likely help a claim.
The last thing you want to think about after your home has a loss is, what did I have in there? An easy way is make the claims process perhaps easier is to create and maintain a personal home inventory. This should include taking periodic photos of each roof each year. This may help jog your memory about what was inside your house in the event of a loss. It is important however, if there are valuables, like jewelry, safes, firearms, furs, that you should talk with your agent to see if they should be scheduled, meaning listed on your policy individually. Typically, your policy will include an amount to cover personal contents, however if you have something of value, without scheduling it, you may not the value of that item replaced.
8. Your insured amount is likely different than market price.
There is a big misconception that your homeowners insurance coverage amount is the same as what you paid for your house. That is highly incorrect! If your house needs to be rebuilt you may need coverage for debris removal, materials, and labor. Which, in some cases, exceeds the amount you paid for your house or the market value. It’s also important to note that both the market value of your home and the cost to rebuild will vary greatly and should not be confused. Your agent can help you decipher the differences and what you should have coverage wise, regardless of what you paid or still may owe.
9. Be aware of discounts.
We all like savings! One of the best ways to save is to properly secure your home. A home security system is a great investment, one that the insurance company will appreciate and should pass down some savings. One misconception is the popular Ring type systems, which many companies won’t consider these a true security system because it’s not monitored 24/7. Other savings would be claims-free discounts, having your home and auto with same company, and buying a policy in advance to give companies time to review your property and asset it appropriately.
10. Cheapest is not always the best route.
Comparison shopping is worth your effort. And, if you’re a self-proclaimed frugal shopper you’ve likely found that sometimes, you get what you pay for. Similarly, when comparing insurance quotes the cost may not be the best indicator of the best fit for you. However, you should also consider what the cheapest price includes or what it doesn’t. On home insurance policies that is not always clear. That’s why it’s best to not base everything on price and ask questions to understand what you are buying.
Claims service is certainly important as is making sure the company has seen your home and done their report. If you work with a local agent they should be proactive and hand-on so your not doing this yourself and trying to read policy language that might not be 100% relatable if not already in the insurance field. And if your not getting the service and price you need that it’s always good to check around and consider your options.
In closing
We hope this list proves valuable to you when considering home insurance. There are a lot of details that go into a home insurance policy and working with a local agent can help you navigate your options most effectively.