Understanding Home Hazardous Insurance—Are you adequately covered?

 

You already know this but it bears repeating: Your home is one of the largest investments you’ll ever make in your life.  After socking away the money that we’ll need for a down payment and closing costs, we hire a trust-worthy and effective agent that will help guide us through the process of buying a great home.  Together we so carefully search for the home that speaks to our hearts, hold our breath as the offers are negotiated, have the property inspected by a home inspector, contemplate the potential concerns, correct areas that need improvement, sign all of those papers, get our keys, and start making it ours.  The question of who will carry your home hazardous insurance comes up and we make a sometimes, less-informed choice.  It recently started to concern me that my clients might not thoroughly understand their home insurance policy and could be exposing themselves to unnecessary costs by being over or under insured.  I hoped by explaining some of the terms in the policy, that you might examine your own and have your loved ones do the same.  Make sure that you have appropriate coverage with a company that you believe will stand by you when you need them. 

 The truth of the matter is that home insurance is a business that is gambling that you will pay premiums and never actually need to make a claim.  But we still need them in the case of a catastrophic event.  You are required by your lender to carry a policy, but even if you own your home outright, it makes good financial sense to hold a policy in case of a major  loss to the property. Compare rates using higher deductibles. Gone are the days when you should make a claim for a minor repair, so deductibles under $1000 should be reconsidered. 

Where do you start when looking for an agent? Start by asking your friends or neighbors who they have and what their experience has been.  The state insurance department for VA also can help point you to reputable companies in the region:800-552-7945 or email bureauofinsurance@scc.virginia.gov or website: www.scc.virginia.gov. I am happy to recommend insurers in our area as well.  Talk to 2 or 3 companies and ask them to quote you.

Your decision should not be made on price alone—know what to expect in your time of need. .I found through calling a few companies, that some were more willing to provide information and answer questions than others.  If you feel the company representative is unhelpful, unprofessional, or unwilling to work with you now, seek another agent.  Look for a financially stable company and read reviews and complaints online (but also realize that sometimes people post “sour-grapes” when they were at fault for not understanding their policy).  

There are 6 types of coverages, which you can review your declarations page.

1.  Dwelling: This should be enough to cover the replacement of the main structure in the event of wind, hail, or fire damage.  In Hampton Roads, the construction costs generally range from $100-$150 per square foot.  Keep in mind that if there were a major catastrophic event impacting the whole area, labor and supply costs are going to increase. You’ll want the advantage in having more to offer your contractor!

2.  Additional Structures:  includes detached garages, fences, sheds, pools. This is generally a percentage of the dwelling costs.

3.  Personal property:  This is a percentage of the dwelling coverage and includes weather-related perils, theft, and vandalism.

4.  Loss of Use:  This reimburses you for the additional living expenses required while your home is being rebuilt or repaired.

5.  Liability:  If you are found at fault for the injury or damage to another person or property.

6.  Medical payments:  This is your “don’t sue me” money used to offer anyone injured on your property.

You can purchase additional riders for investment properties, jewelry, even ID theft. Ask your agent what is available.

 

Finally, review your policy every 3 years or after any big improvements. Then rest well knowing that you have done all that you can to cover yourself in case of an event.

But, you might like to check out the Hurricane Preparedness page too!