Marc Flores is an insurance advisor with Country Financial. Today, he’s here to talk about homeowner’s insurance.
As an insurance advisor I get asked the following questions all the time from new home buyers and even ones that have or own multiple homes. Why is homeowner’s insurance a necessity? Why does it go up? How can I keep my cost low? These are all valid questions; the answers are quite simple when you break them down.
Let’s start to the most common and the in my opinion the most important, why is homeowner’s insurance a necessity? Your home is usually the most valuable asset that you will ever own and as such you would want the to have it put back together. If there is a fire, tree damage, mold. It’s fair to assume you don’t want to pay to get that fixed or replace, do you? The policy will pay out what it needs to fix your home. While that side of homeowner’s insurance is obvious, there is a part that people don’t talk about or understand and that is your protection. The liability portion of your policy takes care of lawsuit’s that are spawned from injuries or accidents that happen on your property. Similar to damage to your home, you don’t want to pay for a $300,000 lawsuit out of pocket. These are just two simple reasons why you need to carry and maintain homeowner’s insurance.
Another thing I hear a ton about is, why does my insurance keep going up? Well the answer is quite simple; the answer is it’s the cost of doing business. The cost of materials, transportation and labor are all going up and the insurance companies have to adjust for the cost. Look at this way, is the cost of bread or milk the same over the last few years? No because the cost of business has increased. I know it’s the most glamorous answer but it’s the truth.
Lastly the third most common question I get it is what can I do to keep my cost low? There is a few different ways to save some money. The first being managing your deductible, similar to cars there is a standard amount which is $1,000 but you can also adjust that to ½% or 1% of the total home value. Meaning if your home is $210,000 and you choose the 1% option your deductible would be $2,100. The second is changing the peril code on your home. There are options for your policy to cover just fire and wind damage or just theft. Those are different ways to save from an agent standpoint. From a homeowner’s perspective, getting a new roof being cautious on calling in claims (more claims, higher the premium) updating fireplaces.
All in all, when you understand homeowner’s insurance it’s not as bad as it sounds. The important thing to remember is know what is covered and what is not. Flood and earthquake coverage are separate policies. Filing minor claims hurt in the long run, the more claims the higher the premium as referenced earlier. Talk to an insurance professional, preferably someone in your area who understands what you need.