At Skyline Insurance, we provide home insurance quotes to new home buyers, but we also switch people over from their current policy with other insurance companies. Many times it's due to better pricing, but very often, it's because they were upset when they had to actually use their insurance and they had no idea what to expect. Here are some very basic things we at Skyline Insurance Agency think you should know when purchasing or renewing a home insurance policy.
#1 - Know Your Deductible
Many policyholders do not how much they are responsible for paying out of pocket when they have an insurance claim until they actually have to use the insurance. Your deductible is a dollar amount and is your portion of damages to pay BEFORE the insurance starts paying out for damages. Many agents don't ask the policyholder what deductible is feasible for them to pay if they had a loss and will quote you with a standard 1% deductible.....that is 1% of the total amount the structure is covered for toward damage. That means if your home is covered for $180,000, you will have to absorb $1,800 out of pocket toward damages.....This makes your insurance useless if you wanted to file a small theft claim or minor wind damage to your roof shingles.
#2 - The Value of Your Home is NOT How Much to Insure it For
When asking for home insurance quotes, people have the mindset to get a quote on the home based on its market value or re-sell value. Although many companies will sell you a policy based on this amount, called Actual Cash Value (ACV), you're best protected by a policy when insuring your home for what it would cost to rebuild, Replacement Cost. On a newly built home, actual cash value and replacement value are usually close to the same amount, but on older homes, and even homes that are just a few years old, replacement cost value can be significantly higher than the market value of the home. This is because the house you own that was built in 1982 has to be rebuilt considering today's labor and material costs, much more than 30 years ago. Not only will a replacement cost policy pay to rebuild your home from the ground up, it will also provide for full value repairs on partial losses. If your home is under-insured or insured as ACV, the insurance company can depreciate your loss and not pay out a sufficient amount to make full repairs on your loss. Instead of getting $18,000 to fix the damage in your kitchen from a fire, you might only get $11,000 after your loss has been depreciated and your deductible has been applied.
#3 - Water Damage Not Included
Some policies you can buy include coverage for all major types of losses, but many insurance companies offer policies that cover a few major risks, but make it optional to include additional types of damage, such as water damage from busted pipes, mold damage, or damage from falling trees and other objects. Although leaving this optional coverage off of the policy can save you hundreds a year, water damage is one of the most common types of home insurance losses that occur. If you do have this coverage on your policy, remember, the insurance company will only pay for the damage caused by the water, but will not pay to fix the plumbing, itself.
#4 - Saving a Buck Can Void Your Insurance Coverage
When doing home upgrades, renovations, or repairs, it is common for homeowners to shop around and get the work done as cheaply as possible. Although comparison shopping and getting good "bang for your buck" is important in our economy, make sure you hire a professional. If you use a company or contractor to renovate your bathroom, enclose your patio, or redo your roof, any loss you have, resulting from improperly installed wiring, incorrect plumbing or insufficient roof repair will not be covered by the insurance company. There are no insurance companies that will cover construction defects, so make sure whoever you hire has a general liability policy and always keep your construction and repair records in case damage occurs months or even years down the line.
#5 - Maintenance Is Important.....and Required
Just like insurance companies won't pay for construction defects or faulty repairs, they also can deny a claim if it's determined that damage was avoidable if proper maintenance had been completed. Roofs, siding, window seals, plumbing and fixtures all wear down over time and require homeowners to maintain or replace as need. Roofs can develop cracks, holes, or become improperly sealed over time, and can allow rain to leak in more easily to cause interior damage. Do a visual inspection of your home's exterior and note any type of stains, cracking, or warping of your ceiling and walls. It is also a very good idea to have a professional roof inspect the roof once a year so you can catch signs of wear before they become a bigger problem.
#6 - The Longer You've Had Your Policy, The More Coverage You Need
"I've been with this insurance forever", "I don't know, it gets paid with my mortgage payment, so I don't even look at it", or "I've been with them so long, it's easier just to stay". These are the most common things I hear before I review a policy and realize they insufficiently insured are missing important coverage that they are not aware of, or just paying way to much for the coverage that they do have. Best thing to do is get familiar with your policy at least once per year, ideally right before renewal time. It can be overwhelming, confusing or sometimes, just plain boring to look at your policy and try to make sense of it all. Call your insurance agent and have him or her give you an overview of your coverage, ask any questions you may have and very importantly, ask him if he would suggest any changes to the policy. A professional and knowledgeable insurance agent can glance over you policy coverage and immediately know if you are missing import coverage, have a too high deductible (or too low), or if everything looks good, can give you that affirmation.
#7 - Go with the Best
All in all, you want a knowledgeable, experienced, courteous and professional insurance expert working for you and providing you peace of mind for your insurance needs. Skyline Insurance has over a decade of insurance knowledge, is centrally located and offers free insurance consulting, regardless of who you have your insurance policy with. Contact us today for a free review of your current policy and to answer any questions you may have about insurance in general.