Did you know that your neighbors may be paying much less in homeowner’s insurance than you yet have similar coverage? The price you pay for your insurance policy can fluctuate by hundreds of dollars, mostly depending on the size of your house and the company you choose to insure your property. It is important that you feel secure in your home coverage, so you will want to search for one of the best homeowner’s insurance companies in your area to guide you in making great decisions. Whether you plan on buying a home and want an estimate, you should make sure to protect your home without overpaying for any services. You may be asking what kind of homeowner’s insurance extra coverage do you need, so here is the definitive guide. Read on for the top 7 ways to save money on homeowner’s insurance.
Avoid These 3 Pitfalls When Making a Homeowner’s Insurance Claim
There are some things that are undoubtedly expensive when it comes to insuring your home. You want to be able to protect against natural disasters like flooding as well as financial problems. These are some things you can look out for and avoid when you are shopping for the perfect homeowner’s insurance policy.
Avoid These 3 Pitfalls When Making a Homeowner’s Insurance Claim
1.Don’t File a Claim for Something that Costs Less than Your Deductible
Insurance claims can adversely affect your rates and cause a significant increase if the damage is reported. You may also have your policy transformed into a non-renewal simply because of the type of accident. Generally, if the accident is your fault and your deductible is higher than the cost to fix the vehicle, you should simply fix the vehicle on your own and avoid reporting it to the insurance company.
2.Don’t File a Claim for Something that is not Covered by Your Insurance Policy
In addition, if you are not sure whether something is covered, you should ask before you file a claim. Again, you can adversely affect your policy and receive a non-renewal for accidents that are too risky as detected by the insurance company’s system.
3.Don’t File for Roof Replacement only Roof Repair
Replacing a roof is always a costly process, but if you have storm damage and leaks, then you will have no other option but to repair or replace the roof. Insurance companies scrutinize claims for roof replacements very closely and expect a lot of documentation, including before and after photographs, as well as other information to justify the claim for processing. Filing for roof repair, however, is a bit easier and faster.
What Kind of Homeowner’s Insurance Extra Coverage Do You Need?
Did you know that the biggest risk in buying homeowners insurance is not buying enough? Every year, people find out that they were not covered for floods and fires, simply because they didn’t add on additional coverage when they should have.
There are a lot of coverage scenarios that you should think about before you start coverage. Here are some of the basic things that homeowners insurance is good for:
- Rebuilding your home
- Replacing your valuable property
- Cover injuries and damages incurred on the property
- Payment for living expenses after losing a home under insurance, including additional living expenses
A few things come to mind from this list. Storm insurance can be extended to cover every possible emergency, but do you need it? We go through all of the extended coverage options that make sense for most homeowners.
Do You Need Flood Insurance?
Every year, homeowners unexpectedly are in need of water damage insurance. It’s not just rain and hurricanes that are issues. There are all sorts of reasons why a house may flood. It could be a natural disaster, or it could just be spring thaws and heavy rain. Fema.gov reported that floods are the number one natural disaster problem in the United States. It only takes a few inches of water to damage your property.
Some notes on flood and water damage insurance:
- Homeowners insurance doesn’t automatically cover flood damage.
- You will have to purchase a separate policy, typically called an NFIP or National Flood Insurance Program policy.
- FEMA manages flood damage policies.
- Sometimes your home is required to have flood insurance when you live in a high risk area. It could be legally mandated for your property.
Costs for flood damage insurance really depend on where you live and what your policy will cover. For example, does it just cover the structure or is it your entire property? Does it cover valuables like antique furniture? There are also flood risk maps provided by NFIP to show where policies must include this coverage.
Windstorm and Hail Insurance
Do you live in an area prone to windstorms and hail damage? This insurance is offered in some states as an option, while you may have to add it if you live in certain parts of the country, such as in certain risk areas of Texas, which has the Texas Windstorm Insurance Association.
Windstorm and hail insurance is typically listed under hurricane insurance. You may see it has a deductible on your policy. There are two kinds of wind damage deductibles:
- Hurricane deductibles, which are used in the case of hurricane windstorm scenarios, or
- Wind and hail deductibles, which work for any type of wind damage.
Some states require this type of insurance depending on where you live. Florida, Alabama, Louisiana, and Texas are gulf coast states, which typically require that homeowners near the gulf have this type of insurance policy.
Floods are probably the number one worry when it comes to coverage. However, isn’t the thought of your house being flooded by sewage enough to make you look at the rider for this extended coverage?
Sewer backups typically cause high amounts of damage, and they are difficult and often expensive to repair. It also creates severe health hazards, and yet they are pretty common in older homes and areas where the city pipelines may have problems with the sanitary sewer main.
However, sewer backups happen for a lot of common reasons in urban and rural areas:
- Tree root blockages typically occur when shrubs and trees make their way into sewer lines, cracking the structures and causing leaks.
- Issues with poorly maintained sanitary main pipelines.
- Water in basement caused from soil settling adjacent to the structure, leading to rainwater that flows towards the building and down the foundation.
- When the ground is saturated from repeatedly heavy storms, and there is no drainage.
- When your insurance doesn’t cover floods, you should still get the sewer backup coverage.
When a sewer backup issue arises, there are a number of steps that you will need to take to cleanup and take charge of the situation. Without proper cleaning and replacement of important fixtures, you are bound to go through the same issue again. This is why a sewage backup policy or rider is important.
Foundation or Slab Damage
When you first look at homeowner’s insurance, you may think about storms and leaks first. However, inside damage problems like foundation or slab damage are just as common, specifically if you have an older home.
- Homeowners insurance doesn’t automatically cover foundation cracks and slab damage.
- Most of the time, large foundation damages may be included, but not small cracks or previous leaks.
- These policies do not include any coverage for foundation damage due to floods, earthquakes, and other disasters.
- Sinkhole and other ground cover collapse issues are also not included in homeowners insurance at first.
It’s important that you talk to your insurance company about what they are covering and whether you are covered in the event of sink holes, broken foundation slabs, large and small cracks, earthquakes, and so forth.
Dwelling Replacement Cost
Since your home is one of the most significant purchases you’ll make, you want to make sure that you get extra protection for your investment. Dwelling replacement cost refers to the market value and replacement cost. While they both matter to determine your home’s value, there are two different processes for determining these values.
- Market value is the current price for which your home can be sold or bought for. You can look at other homes in your neighborhood and see what they have sold for to get an idea. These are close to your home in “market” value.
Replacement cost or “replacement value” is different because it involves completely rebuilding your home from the ground up, making it the same quality with the same materials. As building codes can change and there are escalating costs for home construction, replacement cost can be much higher than market value.
- Replacement cost is the value of your home if you had to rebuild it, including materials, labor, and permit costs, etc.
Homeowners policies can provide coverage for dwelling replacement. This means that you can choose an amount for this coverage, typically located in Coverage A in the first section of your policy. This should show the amount that is your replacement cost. You can increase this value if you want to make sure that you are fully covered.
Mold is a scary thought for any homeowner. In some cases, homeowners insurance will include mold damage, but there are certain contingencies. For instance, it may only be included under “covered peril,” which means that it has to be severe to receive any compensation.
In addition, most policies do not cover mold that came from preventable water damage, such as flooding or high humidity. Insurers actually put it back on the homeowners to take care of mold in these cases.
So what are “covered perils?” Here is a quick list:
- Vandalism or malicious intent
- Vehicle damage
- Falling objects
- Weight of ice, sleet, and snow
- Accidental discharge or overflow of water or steam that comes from heating, air conditioners, sprinklers, plumbing, and other household appliances
- Frozen pipes
However, not all of these scenarios will receive coverage unless you specifically add it to the policy. For example, your house pipes freeze in the basement, and then they burst. You don’t notice it for a week or two, and you spot few inches of water causing mold in the corner. You won’t be able to get coverage for this scenario, because the mold could have been prevented.
This is why talking to your agent about mold remediation is important. You should be able to define every scenario where it should be covered in your policy. You will likely need a separate flood policy to cover water damage and mold remediation together.
Personal Property Replacement Cost Insurance
Your house is where you put your feet up, right? All of the items in your home mean something to you, and losing anything of dear value would be devastating. There are two different coverage options to choose from when you are looking at Personal Property Replacement Cost Insurance:
- Actual cash value coverage: what is the item worth today? This is the cost minus depreciation typically. It isn’t the amount that you actually paid for it.
- Replacement cost on contents: This is the full cost to replace your valuables. This would cover things like furniture, televisions, and other personal property that has been destroyed without depreciation.
While it can cost more upfront to have replacement cost, it’s the additional coverage that is going to be important when you are rebuilding your home. After all, some items are priceless and you may want to add more coverage per item.
Air Conditioning Heating Insurance for HVAC Contractors
HVAC contractors are responsible for setup, repair, and maintenance of your Air Conditioning Heating unit. They also repair ventilation problems. There are a few different types of insurance you may want to consider looking for the next time you hire a contractor. This includes:
- HVAC Contractor General Liability Insurance
- There are a few different risks that these insurance policies cover. These include products liability, completed operations, and premises liability. For example, if a contract completes repairs but you suffer injuries as a result of this work, the contractor and you are covered by the insurance policy.
While you may want to hire a contractor to help with remodelnig or repairs to your home, you should always check out their credentials and verify their insurance before letting them work on your property.
AC, Heating or Plumbing Water Damage Homeowner’s Insurance
It’s important that you keep your home as comfortable as you want and free of humidity problems. There are a few different mechanical pieces to your A/C unit that may break from constant heat, such as the condenser motor, circuit board, and other components. Homeowners are responsible for maintaining their HVAC units, which is why you may want to get an insurance policy that covers repairs and replacements. You also want to make sure what type of policy covers A/C or Plumbing Water Damage homeowner’s insurance.
While some units may be covered under a warranty, it can cost hundreds of dollars to replace an HVAC unit that doesn’t meet warranty requirements or when the warranty has expired. In fact, something like a cooling system failure could be caused by leak or circuit board failure that isn’t covered in your warranty.
In these cases, you want to ask your insurance company about an HVAC repair policy or rider. This can provide the necessary funds to cover your capacitor, circuit board, internal fuses, condensate pumps, motors, fans, contractor switches, fan controls, relays, transformers, valves and so much more.
Personal Homeowner’s Insurance Umbrella Policy
Most people have heard of umbrella insurance, but if you haven’t bought it yet, this type of policy provides extra liability coverage. An umbrella policy can protect you against other claims and lawsuits, making sure that your assets and your future are well taken care of.
Here’s how the Personal homeowner’s insurance umbrella Policy will work:
- Adds more liability coverage above the limits of a homeowners, auto, or boat insurance policy. This protect kicks in when your other liability on other policies has been exhausted.
- Offers coverages for claims that may not be included in other policies, such as false arrest, slander, libel, and other issues, particularly if you plan on renting out your home.
Umbrella policies cover injuries, damages to property, certain types of lawsuits, and a few different personal liability situations. For example:
- Injuries suffered by other parties where a serious accident occurred and you were at fault.
- Injuries suffered as a result from your pet (this typically only covers dog bites for most insurance companies)
- Injuries another party incurred because of a fall on your property
- Injuries that occurred because of a child who fell in your yard
- Damage to vehicles and other property if you are at fault
There are a number of other coverage points included if you are renting a property. Most of the time, you want umbrella coverage if you want to feel completely insured against any happenstance that may befall you on your property.
Top 7 Ways to Save Money on Homeowner’s Insurance
The price you are quoted for homeowners insurance isn’t always the lowest price. Here are our tips on getting the best homeowners insurance policy rates.
1. Shop Around First
The online marketplace for homeowners insurance is open. You should research all kinds of offers, talk to your friends on Facebook, and even check out the National Association of Insurance Commissioners to find the best insurance company and rates available.
2. Raise Your Deductible
This is a simple, quick way to lower your rates per month. However, you’ll have to meet your deductible before insurance will pay on any repairs or replacement assets.
3. Buy Home and Auto Policies from Same Insurance Company
Some insurance companies offer bundle policies that shave off some dollars from your overall rate. If you currently have an insurance company you work with, you should call your agent to discuss options for homeowners insurance and get a quote.
4. Invest in Home Security
Homes with security systems have significantly lower rates.
5. Look Out for Discounts
There are some discounts available that you can ask about when you talk to an agent. For example, retired people often get a discount because they are home more and will spot hazards sooner than others.
6. Review Your Policy at Least Once a Year
You should keep in touch with your insurance agent and always review policies and values of assets to determine if you are paying the right rate.
7. Try Private Insurance if You Have a Government Plan
If you live in a high-risk area and have a government plan, you should follow up with an insurance agent to see how you can lower the cost of your insurance with different additions or changes to your property.
Buying homeowner’s insurance is an important step to securing your future. You can always work with an agent privately to get the best rates, but you should look at your property and determine your valuables before doing so.
If you have questions about your insurance plan, you should ask your agent first and also talk to another agent to compare. In addition, you may want to add more coverage if you work from home and run a business from your home office.
The most quintessential part of the insurance selection process is knowing what you need covered. You can check out high risk flood maps online and look at your house inspection for any problem areas that you want to get coverage for. As always, you should get the amount of coverage and deductible that is going to help you protect your assets for years to come.
If you are looking for Homeowner’s Insurance for Texans, we’ve got you covered!