Choosing a homeowners insurance policy is an inherent part of the home buying process. Clients and friends seem to have so many questions about what they should look out for. I have listened to my audience and since you asked, I want to deliver!
In speaking to my trusted insurance adviser, BethAnn Alitt with Alitt Insurance Agency whom I have known for many years, she gave me a great list of “Do’s and Don’ts” when it comes to choosing an insurance company and policy. According to BethAnn, here are important things to look out for…
A big do is: DO understand your coverage!
A big don’t is DON’T be under-insured.
DO’s :
DO get the proper coverage for your home. Older homes need specialized coverage (such as increased building codes and coverage tailored to replace vintage home characteristics such as coved ceilings, lathe and plaster walls, built in cabinetry, custom milled wood working…which is often found in our particular area).
DO let your insurance agent know when you are starting a renovation, remodel or add something such as AC or solar panels. These may need to be added and coverage adjusted to provide adequate coverage.
DO pick an insurance agent that can shop different carriers for your insurance. There are many carriers and some specialize in niche markets and can offer coverage tailored for such things as an older home, a home with a brush or wildfire exposure, a home with restrictive dog breeds, condos, etc. No carrier does every policy the same and some are better than others for what you may need.
DO know the difference between what is considered a FLOOD and what is not. The FLOOD definition for insurance is HUGELY different than the regular definition. EX: your water heater breaks and your home is ‘flooded’ with water. This is NOT considered a FLOOD for insurance purposes. This is a non – weather water loss, and would be normally covered under a regular home policy. EX 2: there is a huge downpour and water is streaming down your street. It comes onto your property and into your home, ‘flooding’ the home. This IS a flood under the insurance definition. However, for this to be a covered loss, you need to have 1) FLOOD insurance and 2) the water needs to damage 5 acres or more. If only your home is damaged, there would be no coverage…even with FLOOD insurance.
DO know the difference between earth movement and an earthquake? Earth-movement is not a covered loss under any regular or EQ policy. Earthquake is covered under an EQ policy. An earthquake policy will also have a separate deductible and different coverage amounts than your regular home policy.
Dont’s:
Don’t skimp on your home coverage. Homes are usually the biggest investment a person or family makes. Get the best coverage you can and perhaps get a higher deductible to offset the premium. The higher the deductible the lower the overall cost. It is better to pay a $5000 deductible and have included the correct amount of let’s say building codes coverage, than to pay a $1,000 deductible and have to pay $20000 or more out of pocket for the extra coverage you didn’t carry as you felt it was too much money. A deductible is a set amount ($1k, $1500, $2500, etc) but the cost to repair a home that does not have the proper coverage can be in the hundreds of thousands of dollars.
Don’t skimp on liability. Protect your assets. The cost difference between $100,000 and $300,000 is about $45 annually. If you have a liability claim, and are under-insured, the other party can sue you, garnish your wages, attach a lien on your home and make the rest of your life miserable. Get good coverage.
Don’t assume something is covered. Ask if you are unsure. Earthquake, flood and mortgage insurance are NOT included in a standard home insurance policy. These are extra!
Always be sure to choose an agent that will fully explain your coverage. Insurance is difficult to understand and in my personal experience Beth Ann has always done a great job in explaining my coverage. If you have questions or would like more information give me a call! I would love to put you in touch with Alitt Insurance Agency, Inc.