Homeowners insurance is important and necessary!! Seriously, I know it may be boring, but learning this WILL save you money.
In this blog, we will help you research the best insurance for YOU. Why overpay for insurance you don’t need? And why buy insurance only to find you’re not covered for the things you DO need? If you already own a home or are considering buying one, you absolutely need homeowner’s insurance. Below are six items to consider, all of which should help you save a lot of money in the long run.
Six Things to Check Right NOW
1. DON’T Overpay for Insurance
Shop around for homeowners insurance by using an insurance broker and asking a friend or two for their insurance agent. And, just because your friend may have “great insurance” don’t expect that they actually did their homework and shopped around. Nor do they have the exact same needs you have. Insurance brokers may represent 30 or more companies and may do the shopping for you. These brokers should know which companies provide the best customer service on claims and also have lower costs. Plus, if you have multiple types of insurance for cars, boats, and possibly an umbrella policy, then bundling with one insurance carrier may save you the most money over what could possibly be the 30 years you have the mortgage.
2. DON’T Be Underinsured
CoreLogic, an Irvine-based company provides data to most major home insurers. They say 60 percent of all U.S. homes are underinsured by an average of 20 percent. Reasons why underinsuring happens: rising labor and construction costs, remodeling or additions, and possible errors in the property’s description. Don’t assume flood or earthquake coverage is included in your homeowner’s policy. It usually is a separate policy. In addition, if you have expensive items like furs, jewelry, computers, fine art, or high-end sports equipment, you may need extra coverage called a “floater.” It’s a separate policy with no deductible to cover an accidental loss. The solution is to document in detail your belongings (sometimes through independent certified appraisals for artwork and jewelry, etc.) and determine the replacement costs. (Note: Be sure you are insured for replacement costs as your items will often escalate in value over the years due to inflation and/or supply and demand.)
3. DO Be Aware of and Dodge Premium Hikes
Before you make a claim, consider the cost of the claim amount and ask the insurance company to provide how much and for how long the premium might increase after a claim. Compare against the number of months you’ll be paying a higher premium. If you find the total of higher premiums ends up costing you more in the long run, it’s probably a safer path to just pay for the damage without filing a claim. With claims of under $5,000, insurers typically found no significant premium increases. I’ve never seen a premium reduced after an increase; so knowing the higher premium cost forever into the future is important.
4. DO Expect the Worst: Earthquakes, Flooding, etc. WILL HAPPEN
Many people never read their insurance policies and expect that they’re covered. Earthquakes are not covered unless you pay for a separate policy. Neither are most types of floods. Is your home located near or on an earthquake fault line? If so, consider getting an extra earthquake policy to make sure you’re covered.
The U.S. Geological Survey identified 42 states with a reasonable chance of experiencing damage from earthquakes. They said 16 states, California included, have a relatively high likelihood and previous history of earthquakes of magnitude 6 or greater. A great solution is to talk to your agent about supplemental earthquake and flood policies.
Figure 1-SCEC Community Fault Model
5. DO Take LOTS OF PICTURES of Your Expensive Belongings!
Do you have expensive paintings, jewelry, pricey electronic equipment, cameras, bicycles or priceless family heirlooms that may exceed the standard policy limits? Then, list the items and discuss additional coverage with your insurance agent. Larger claims will require further documentation to ensure the process goes smoothly. But even that isn’t a guarantee of automatic payment. Document your claim with photos and written estimates of the replacement costs. Get details from contractors and ask them to itemize their bill to clearly show all the costs line by line. This will provide the details the insurance adjustor needs to calculate the true cost to repair or replace.
Very important: If an adjustor’s interpretation of the policy says something is not covered, ask them to show you the contract language.
6. DO Assess Possible Injury Caused by Your Pets or Animals!
Do you have a small rodent problem? Small pests or vermin are usually not covered by policies. Your own pets are usually not covered, such as chewing dogs. But if your pet bites someone, that usually is covered under personal liability. The best solution is to talk to your insurance broker about your specific coverage.
If you would like to know more about insuring, buying, selling, or financing/refinancing in an increasingly complex process, please email me here, or call me at 949-484-6322.
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