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Your Common Homeowners Insurance Questions Answered

Thursday, January 28th, 2010

Homeowners insurance is more than just a requirement for a home loan; it is a must for all homeowners who want to protect themselves, their families, their home and their assets.

Don’t take your homeowners insurance policy for granted, as it may one day protect all that you have worked so hard for. With that said, there are a number of common questions homeowners have when it comes to homeowners insurance:

Q:  Does my homeowners insurance cover natural disasters?

A: Perhaps. Certain natural disasters, such as wind or hail damage, are typically covered by most homeowner’s insurance policies. However, natural disasters such as earthquakes and floods are not. The only way to find out what disasters are covered by your homeowners insurance policy is to read the policy. Both flood and earthquake insurance policies can be purchased through the federal government.

Q: Does my homeowners insurance protect my most prized possessions?

A: This is a gray area. Your homeowners insurance should be adequate enough to cover the assets within your home; however, if you have many possessions that are of significant value, such as jewelry and antiques, it is best to take out additional insurance to cover their value.

Q: Will my homeowners insurance provide me with enough money to rebuild in case I lose my home to a fire?

A:  Again, perhaps. There are two different types of policies you can take out: the replacement value or the current value. In other words, if you take out only enough insurance to cover the cost of your home, this may not be enough to build anew home; in which case you would fall short of rebuilding your home. Make sure your policy is written as such as provide you with enough money to rebuild your home and replace its contents.

Q: Where can I shop for homeowners insurance?

A:  Homeowners insurance can be purchased through your local insurance company or it can be purchased online. There are many websites that allow you to get online homeowners insurance quotes and also compare costs between insurers. Many times, purchasing homeowners insurance through the same company who carries your auto insurance policy can save you money, as many insurance companies offer multi-policy discounts.

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What to do when your Homeowners Insurance Carrier Drops you

Monday, January 25th, 2010

Unfortunately, your homeowner’s insurance company can choose to drop you at any given time, without even an explanation. For many homeowners who have religiously paid their premiums, this can come as quite a bit of a shock.

Your Insurer Drops you - now what?

Many insurance carriers choose to drop a section of homeowners for various reasons, none of which usually has to do with you. For example, your homeowner’s insurance carrier may choose to cut ties with certain areas of the country because of a great deal of natural disasters. Some carriers, on the other hand, may choose to drop you after you have filed a large claim. In both cases, they are within their legal rights to drop you.

This, however, leaves you in a precarious situation of finding a new homeowner’s insurance carrier before the contractual period on your policy has ended. Many individuals across the country - particularly those affected by Hurricanes Katrina and Ike - have discovered that their homeowner’s insurance carrier has decided not to renew their policy.

Insurance companies must give you at predetermined period of time - such as 45 to 60 days - to find a new insurer, although the time period varies from state to state.

When to Find a New Insurer

Although the likelihood of convincing your current insurer to keep you on as a policy holder is small, you can find a new company. A good first step when choosing a new homeowner’s insurance carrier is to either contact your state department of insurance or contact an independent broker who works with multiple insurance companies.

Where to Look for a New Policy

Although your homeowner’s insurance carrier may have dropped you, it doesn’t mean that you can’t find a good rate on homeowners insurance with another company, so be a savvy shopper and check for rates with several different insurance companies.

You may have more leverage with an insurance company if you have a good credit score and if you agree to carry multiple policies through them, such as homeowners and auto insurance.

If you find that homeowner’s insurance rates are too pricey for your budget, consider raising your deductible. Many times, raising your homeowner’s insurance deductible by just $500 to $1,000 can save you quite a bit every month on your homeowner’s insurance premiums.

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How to Eliminate Homeowners Insurance Claims during the Winter Months

Friday, January 22nd, 2010

We all want to keep our homeowners insurance premiums to a minimum to save money each month, yet each time we file a claim we run the risk of having our premiums raised. It is therefore a must to do what we can to eliminate filing an insurance claim.

The winter months, in particular, are a time when homeowner’s insurance claims go through the roof across the country. This is due, in part, to the ice and snow that accompanies many winters throughout the country. From ice and water damage to frozen pipes and slip-and-fall accidents, there are many instances in which a winter storm can bring upon an influx of homeowners insurance claims.

There are, however, steps you can take to prevent needless homeowner’s insurance claims during the winter months:

  • Keep your tree limbs cut back; particularly those that hang over your home. Winter storms can bring them down on your house, either because of wind or ice, thereby damaging your home in the process.

  • Keep the interior of your home heated to at least 65 degrees to prevent pipes from freezing. Wrap any exposed pipes with pipe insulation to further protect them from freezing.

  • If you lose power during a winter storm and lose your home’s heat, open all faucets and let the water drip slowly. This will prevent the pipes from freezing.
  • Always make sure your fireplace or wood stove is properly vented and has been serviced by a professional fireplace technician.

  • Never, ever leave space heaters unattended, and always position them far away from any flammable material, such as curtains, rugs or bed linens.

  • Always keep your sidewalk, walkways and driveway free of snow and ice. Check with your city or borough about laws regarding the removal of snow and ice from your property.

  • Make sure your gutters have been thoroughly cleaned before the winter weather begins as to clear them of any leaves and debris that can cause ice dams in the winter.
  • Disconnect the water from all outside spigots before freezing weather begins.

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Valuable Homeowners Insurance Add-ons to Consider

Friday, January 15th, 2010

Having comprehensive homeowners insurance provides homeowners with a sense of safety and security; that is, until you find yourself in a situation where your home has been damaged but your homeowner’s insurance provider is refusing to pay out on the claim.

When was the last time you checked your homeowner’s insurance policy? Do you understand what is covered and what is not? Have you ever bothered to read your homeowners insurance policy?

If not, you are like most homeowners. They take out the policy and then just assume that their policy will adequately protect them, their family, their homes and their belongings.

But the reality is that there are a number of major disasters that simply aren’t covered under a standard’s homeowner’s insurance policy:

  • Flood - Your home is simply not covered under a standard homeowner’s insurance policy in the event of a flood. Many people choose not to take out flood insurance because they don’t live in a flood plain, only to have thousands of dollars worth of damage when a flood occurs. Flood damage can extend far beyond water damage; it can create mold problems that can risk your family’s health. In other words, floods can create problems that cost thousands of dollars and require extensive home repair.

  • Earthquake - A home that is damaged in an earthquake is not covered by a standard homeowner’s insurance policy, which is why most individuals who live in earthquake-prone areas carry additional earthquake insurance. Most earthquake insurance policies are taken out through your state’s insurance department.

  • Expensive jewelry and antiques - If you have expensive jewelry or antiques you will want to take out a floater to your policy that covers these things.  Most homeowner’s insurance policies only cover your home’s assets up to a certain dollar amount, and expensive jewelry or furniture could significantly raise the value of your assets, some of which may not be covered. It is also important to take pictures and have the items appraised so that the process of making a claim can go easier.

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How to Make a Home Inventory

Wednesday, January 13th, 2010

One of the best things you can do to protect your home’s assets and make sure that your homeowners insurance covers their replacement in case of a total loss, is to make a home inventory.

A home inventory is essentially a documented list of all of your home’s belongings; in particular, your furniture, electronics, appliances and home accessories. Without a home inventory, the process of making a homeowner’s insurance claim may be quite a bit more difficult and time consuming. If you have a comprehensive home inventory list, however, you can rest assured knowing that your home’s belongings are properly insured.

The easiest way to make a home inventory is to assemble a list of all of your home’s contents, from room to room. Keep receipts, assess their value and record the date of sale. It may also help to record the make and model numbers of your electronics and appliances.

It is also extremely helpful to make a recording or take pictures of all of your home’s assets. Then, keep your inventory and video recording or pictures in a safe place, such as in a safe or outside of your home, such as in a safe deposit box. Simply walking from room to room, recording each room’s contents, is usually the best way to make proper home inventory.

What to Include in your Home Inventory:

  • Televisions/VCRs/DVD players/Blue Ray players/stereos/Video cameras/Cameras
  • Washer/Dryer/Air Conditioner/Furnace/Heat Pump
  • Carpets/Area Rugs/Window Treatments
  • Lamps/Light Fixtures/Chandeliers/Clocks/Mirrors/Pictures/Art Work
  • Sofas/Chairs/Dining Room Furniture/Bedroom Furniture/Tables/China Cabinets/Entertainment Centers
  • Pianos and other Musical Equipment
  • Silverware/Crystal/China
  • Apparel/Shoes/Coats/Furs/Suits/Dresses
  • Jewelry (you may need a separate policy if your jewelry exceeds a certain amount)
  • Refrigerator/Stove/Freezer/Microwave/Dishwasher/Small Appliances
  • Office Equipment - File Cabinets/Computers/Printers/Scanners/Fax Machines/Business Supplies
  • Sporting Equipment - Bicycles/Golf Clubs
  • Outdoor Equipment - Toys/Luggage/Small Boats/Trailers/Lawn Mower/Snow Blower/gardening Tools
  • Tools - Power Equipment/Hand Tools
  • Antiques - In the case of antiques, it is often best to have them appraised for value and then to take out a separate homeowners insurance policy to ensure that their value is protected.

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Mold and your Homeowners Insurance: What you need to Know

Thursday, January 7th, 2010

Mold - in particular, the highly unhealthy black mold variety - can be more than a nuisance in your home.  An infestation of black mold in your home can cause serious health issues and even death; which is why you need to: (a) have your home checked for mold; and (b) make sure your homeowner’s insurance policy covers the cost of mold removal.

The Birth of Mold in a Home

Some insurance companies have excluded mold damage from their policies, particularly in areas known for high mold counts.  Although the deadly black mold has been found in all 50 states, there are some states and areas of the country that have been affected more; likely because of the climates and rainfall amounts. However, there are other things that can cause mold infestation in your home, including leaking or burst pipes and leaking roofs. Unfortunately, many people have growing mold in attics, basements or behind walls that they are unaware of until they start becoming ill.

It is important to understand, however, that mold just doesn’t pose health problems; it can also cause severe structural damage to a home.

Ironically, it is the new construction that often breeds mold, as newer homes employ energy-efficient construction practices, including tight seals and thick insulation, which trap moisture that leads to mold.

Does your Policy include Mold Infestation?

Most homeowner’s insurance policies do not cover mold infestation, unless it is a result of a covered peril, such as a burst pipe. However, non-covered perils, such as a slowly leaking pipe, are considered to be home maintenance issues, and are therefore often excluded in most homeowner’s insurance policies.

Some insurance companies limit the amount of a mold claim, while other homeowner’s insurance companies have completely excluded mold claims, regardless of whether they result from a covered or non-covered peril.

Many insurance companies have begun raising premiums as a result of an influx of mold claims, while others have simply begun limiting the claims. Because of these factors, it is extremely important to understand your homeowner’s insurance policy so that you can be better prepared to deal with a mold-related claim if it arises.

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Factors that may Determine your Homeowners Insurance Rates

Wednesday, January 6th, 2010

Homeowners insurance rates are affected by multiple factors, many of which we may not be aware of. It isn’t uncommon, for example, to have very different homeowner’s insurance costs for two very similar homes.

The following factors that may influence the rates of your homeowner’s insurance policy:

  • Age of the home - Older homes typically have higher homeowners insurance rates than newer homes, mainly due to the age of the home’s structure and its features, such as the plumbing, the electrical and the roof, for example. An insurer will usually raise the rates for an older home because it is simply assumed that more problems exist with an older home.

  • Location of the home - Your home’s address will likely affect your homeowner’s insurance rates. From crime to location near public facilities and fire stations, the equation for determining the cost of your zip code varies greatly from one insurance company to the next.

  • Building materials - The materials used to construct your home may change your homeowner’s insurance rates. For example, wood shingles may be more costly to insure than vinyl siding because they catch fire more easily. When constructing or remodeling your home, check with your insurance agent to see which building materials may lower the rates on your homeowner’s insurance policy.

  • Home amenities - Some home amenities may lower the cost of your homeowners insurance policy (i.e. security system), while others may raise your rates (i.e. swimming pool, hot tub). Again, it is best to check with your insurance agent regarding amenities and how they affect your homeowner’s insurance rates.

  • Animals - Some dog breeds are considered higher risk because they have been associated with aggressive behavior and dog bites. Some of the most common dog breeds to earn this distinction include: Pitt Bulls, Dobermans and Rottweilers.

  • Personal possessions - If your home includes antiques and other valuable items, you may be paying more in homeowners insurance. Some of these valuable items may even need to be insured separately, thus raising your rates.

  • Liability coverage - Higher liability coverage equals higher premiums. Check with your insurance agent and ask about average liability coverage.

  • Deductible -Choose a low deductible and you’ll pay more in homeowners insurance; choose higher deductibles and pay lower rates.

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Homeowners Insurance: What’s Covered and What’s not

Monday, January 4th, 2010

Homeowner’s insurance policies are often a bit tricky to read and understand. There are some pretty bizarre things that are covered under a homeowner’s insurance policy, while other events that you might assume are covered are not. This is why it is crucial that you read and understand your homeowner’s insurance policy.

In other words, instead of stuffing your policy into a file cabinet and forgetting about it, take the time to review it annually so that you can decide if it is best suiting your needs. If your homeowner’s insurance policy falls short, consider switching to a more comprehensive policy or taking out specific riders that better protect yourself, your family, your home and your assets.

There are a few things that are generally always covered under a standard homeowner’s insurance policy, including:

  • Fire and smoke damage
  • Lightening strikes
  • Tornadoes and wind damage
  • Hail
  • Vandalism and theft
  • Falling objects

However, you may be surprised to find that there are a number of things that aren’t covered under a standard homeowner’s insurance policy, including:

  • Floods - You must purchase extra flood insurance, which is typically available through the federal government.
  • Earthquakes - Again, in order to be covered for earthquake damage you must have a separate earthquake policy, which is purchased from the federal government.
  • War and nuclear accidents
  • Home businesses
  • Any wear and tear on the home, including a home’s deterioration
  • Rodent and insect infestation
  • Unintentional damage
  • Theft from a home under construction
  • Vandalism to a vacant home
  • Any property belonging to tenants
  • Any damage caused by a domestic pet

Homeowner’s insurance policies become tricky when there are other circumstances involved. For example, if you go on an extended vacation and return to find that your home was vandalized or robbed, you are not covered, as most insurance policies consider a home vacant if you have not lived in it for 30 days.

If you have a small creek behind your house that swells and floods your home during a bad storm, your homeowner’s insurance policy will likely not cover the damages that results.

If you have personal property stolen from your vehicle, you are likely covered under your homeowner’s insurance policy, yet if a thief steals your home business computer equipment, you are not covered.

Sound a bit confusing? It is!

These examples are just some of the reasons why it pays to purchase a comprehensive homeowner’s insurance policy and to make it a point to read and understand every section of the policy.

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How to Lower the Cost of Homeownership through Lower Homeowners Insurance Rates

Monday, December 28th, 2009

New homeowners often fail to take into account the cost of homeownership when budgeting for a home. In particular, new homeowners think to budget for the cost of their mortgage, yet fail to consider how the cost of their homeowner’s insurance policy may affect their monthly budget.

As a new homeowner, you certainly don’t want to be faced with a tough budget that can feel downright overwhelming at times. To ease your financial stress, you will want to consider the many ways in which you can lower the cost of homeownership.

Perhaps the best way to lower your cost of homeownership is through your homeowner’s insurance rates. Many homeowners, for example, are under the assumption that homeowners insurance is similar from company to company, policy to policy, when nothing could be further from the truth.

From property value and geography to credit ratings and plan types, homeowners insurance can vary quite a bit in cost.

Credit Ratings

Your credit rating may play a big role when an insurance company determines your homeowner’s insurance rate. In short, insurance companies use an applicant’s credit history when determining insurance premiums, so the better your credit the better your homeowners insurance rates will likely be.

Insurance companies, much like any other company, determine rates based on risk; and the poorer your credit score, the more risk the insurance company is likely to assume. There are many reasons to maintain a good credit score; and even more reasons than you may not even be aware of.

Location, Location, Location

Your homeowner’s insurance rates may vary greatly, depending on the location of your home. For example, individuals who choose to live near the shore can expect to pay higher homeowners insurance rates than someone who lives inland. In other words, the idea of owning an oceanfront property may sound idyllic, but paying the costly homeowners insurance rates may just smash that idyllic image to bits.

Customization

Your homeowner’s insurance policy should not consist of a general, blanket coverage; instead, it should be customized to suit your individual needs and budget. For example, you may choose to raise your deductible on your policy to save money each month, or you may decide to take out a policy with a lower deductible to ensure that your next homeowners insurance claim won’t leave you broke. Either way, your policy should be customized to suit your individual preferences.

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Home Owners Insurance Deciphered

Tuesday, December 22nd, 2009

Home owners insurance can be a bit confusing for new homeowners. We all hear the horror stories: home owners not taking out enough coverage or the right kind of coverage and then not being protected when their house burns to the ground. It pays to educate yourself about home owners insurance so you won’t be one of those homeowners stressing out about their coverage on their most important asset. To understand how homeowners insurance works, you must first understand the primary components of a homeowner’s insurance policy:

Structure - This part of your homeowner’s policy protects the obvious: your home’s structure. The structure aspect of your policy is there to provide coverage in the event of fire, smoke, lightening, theft and extreme weather. There are some types of weather conditions, such as floods, that are not covered under a standard homeowner’s insurance policy, so read your inclusions and exclusions carefully to make sure your coverage is comprehensive.

    When choosing the coverage amounts for your homeowner’s insurance policy, make sure to take into consideration the fact that you are covering your home’s entire value - i.e. the cost of replacing your home if it were a complete loss. Your policy should not simply cover the remaining mortgage balance, as this would certainly leave you short if you needed to rebuild or completely renovate.

    Personal Property - The personal property section of your homeowner’s insurance policy covers your possessions and personal property in the event of damage or theft. It is important to make a detailed inventory of your home’s possessions, including any jewelry, artwork or antiques. Make a written list, as well as a video tape of your home’s possessions, and store it in a safe place, away from your home. Doing so will make the process of claiming losses easier. Reviewing your personal inventory is also a good way of determining if your policy is adequate and if you require additional insurance on any valuable items.

    Liability - the liability section of your homeowner’s insurance policy is incredibly important, as it provides compensation for liability claims and medical expenses. In other words, it protects you should someone become injured on your property.

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