While a lot of time is spent designing and building your home, picking an insurance policy is usually done via a quick phone call. The agent sends you a quote and you sign on the dotted line. You are protected right? Well, after living through two very severe hurricanes over the past two years and seeing the devastation brought to people’s lives made worse by issues with their insurance companies, we thought very carefully about the policy we used to insure our home. I sat down with 29+ year Insurance Property Claims Manager to get answers to all the questions I had about insuring our home.
Q: There are primarily three different types of agents you can use to purchase your policy: a captive agent, meaning they work directly for one company or group of companies and can only offer you one quote, an independent agent, meaning they represent as few as one company or up to several dozen insurers that they can shop your rate with, and a direct agent, meaning you buy directly from the insurance company. Which of these three options is the best to use when buying your insurance?
A: How you purchase your policy is just a personal preference. What is most important is the relationship between you and the agent. The more he or she knows about your needs, the better they can serve you with products that suit your needs best. Do not just search for the best policy, search for the best agent.
Q: How much insurance do you need?
A: Most insurance companies require that you carry coverage to 100% of the valuation they give your home. Remember, most policies provide coverage for not just the cost of rebuilding but the cost of demo as well. That is why in most cases your home is insured for well more than its market value. Demo and debris removal is very expensive.
Q: How do we ensure we have enough coverage?
A: Most insurance companies will do a valuation based on the square footage, style, fixtures and other amenities you intend to include in the finished home. If you have wedding rings or other jewelry, make sure to not the limits on your policy. If they only cover $4,000.00 for jewelry and your wedding ring cost $10,000.00, you will be out the extra $6,000.00
Q: What are some key terms we need to know?
A: Know your policy! What are the perils? What are the exclusions? See the Conditions portion of the policy, so you know what your expectations are as well.
Q: What steps can we take to have better, cheaper coverage?
A: Shop your insurance, but in most cases today with all the discounts, you are sometimes better to stay with the same carrier you have your current homeowners, auto and other lines of insurance. There are always exceptions though, so it doesn’t hurt to shop around. Many builder risk type policies will roll right into a homeowners policy once you occupy your home.
Q: What exactly does flood insurance cover? Do I need it?
A: Flood policies vary based on what you choose to cover. Costs for this insurance are pretty high, so many people will go with just the minimum coverage. However, depending on where you lie in a floodplain or in coastal areas where storm surge may occur, it may be required.
A few notes from me: A good rule of thumb regarding flooding, water from above, i.e., rainwater or a burst pipe is generally covered by normal homeowner’s insurance, but water from below, i.e., backed up sewers or ground flooding generally is not. One major issue that occurred during the hurricanes that affected Florida was insurance companies denying coverage because the damage to homes was from storm surge, not wind. So if you live anywhere near water and have the possibility of storm surge, flood insurance is a good idea.
Q: Any other advice or tips?
A: Know what you are buying and know what you do and do not have covered. Many builder risk type policies do not or will not cover personal property. So if you are building your own home or doing work yourself, you need to know if your tools that would typically be at your current residence are damaged or stolen from the building site, they may not be covered under either your current homeowner’s or the builder’s risk policy, especially if stolen. You also need to know that outside of weather-related issues, theft and vandalism are the other two greatest risks you have during the building process. Building materials on site are usually covered, but saws, nail guns, compressors, etc. may not be covered if left overnight and then stolen.
When it comes to claims, my husband works with restoration companies and customers who have suffered loss every day and has learned a few things about dealing with insurance companies. If you are not happy with the price they give you to fix your home, call in a public adjuster. They will only get paid if they get you extra money. Generally, they charge 10% of whatever additional amount they are able to procure for you. Make sure to file a claim as soon as the damage has occurred. You would hate to have a claim denied simply because you waited too long to file it. Also, be very meticulous in your recording keeping. Take notes of who you spoke to, save all your receipts, contracts and appraisals. If a contractor asks you to sign an ‘assignment of benefits,’ do your due diligence to ensure you are working with a legitimate contractor, especially after a major event like a hurricane. Also, while you should not be scared to file a claim when you truly have an issue, do not file a lot of little claims. A good rule to follow is if it cost less than your deductible to fix it, repair it without involving the insurance company. This minimizes the claims history for your property ensuring you maintain low premiums.
I hope you found this information useful! A very big thank you to my source in the industry for all your valuable information! If you have any questions or additional input, let me know!