When buying a home, or when it’s time to renew, don’t overlook the terms and conditions of your homeowner’s insurance policy.
Overlooking them could result in delayed, reduced or denied claims and higher premiums.
More insurers are shifting the risk and cost to policyholders, so it is critical for you to read your insurance policy, especially the fine print.
If you don’t understand something, get help from your insurance agent, broker or insurer, or someone who “gets” insurance policy jargon.
Shop carefully to find a low-cost insurance company with a good reputation for claims service. Ask about a “package” policy on your home and auto. These packages can usually save you money.
Some companies offer special rates to non-smokers and to homeowners who burglar alarms, smoke detectors and use fire-resistant materials. Shop coverage with at least three different companies and compare coverage on the structure AND content. Ask about replacement coverage compared to cash value coverage of the contents. Also ask about riders for special items such as good jewelry, art or antiques.
Remember that the higher the deductible, the lower the premium. Be sure your policy covers at least 80% of the replacement value of your home, but don’t over-insure. Policy premiums increase by a set ratio every year.
Keep track of your belongings for your home content coverage. Keep a list of things you own that you would want to replace. TAKE PICTURES of every room and every object you would need to replace or has value. But remember to keep the pictures someplace else besides home. After all, what good are they if your house burns down and so do the pictures!
Exclusions Most policies contain exclusions for floods, earthquakes, or landslides. In areas prone to floods, earthquakes, and landslides, you’ll need special coverage.
Policies also may not cover or limit coverage for mold damage, non-flood water damage, and food replacement. There are new exclusions in property insurance policies today that consumers are not aware of that can destroy their financial security after a serious loss.
Deductibles Deductibles are up-front costs you pay before benefits kick in. Most policies have two different deductibles, a flat dollar amount for most losses and a higher deductible for high wind-related losses.
High-wind losses can blow you away. Be mindful of Hurricane Sandy. Clarify with your agent or insurer what your out-of-pocket costs will be in the event of a high-wind related loss.
Hidden Expenses Check your policy for a provision called an anti-concurrent-causation (ACC) clause. It could result in a denial of claim if a structure is damaged at about the same time by two risks when one covered, (say, wind) but the other is not (say, flood). Even if one peril would have covered the damage, the ACC clause can limit or wipe out coverage for damage or destruction by two causes acting together.
Market demand cost increases Another, lesser known insurance-related pain can come from demand-driven rising construction costs that follow a disaster. Some policies don’t come with a guaranteed home replacement cost provision. In an after-disaster market that experiences demand surge conditions, your policy could leave you with a fixed amount stated on the policy. Your out-of-pocket expenses could cause a financial disaster.
Building codes Building code compliance issues increase rebuilding costs, but aren’t always covered by your policy. Some policies exclude additional costs if a local construction ordinance or building code requires upgrades, such as earthquake upgrades in a quake zone. You’ll have to purchase this coverage as an add-on to your basic policy.
Don’t become complacent with your insurance company or coverage. Read the fine print every year. The same coverage does not automatically roll to the next year.
If you need help finding a qualified company, your Realtor can recommend several that you can use to “shop”. If you need help I am only a call or click away at http://www.NormaSellsNJHomes.com