Many consumers shop for home insurance policies once and then forget about it. Outdated assumptions about homeowners insurance, however, can cost you a bundle. Here are some guidelines to help ensure you have the right coverage for your home.
Deductibles: Most homeowners insurance policies include a deductible ranging from $500 to $1,500. Recently, however, weather events including wind and hail, require homeowners pay up to five percent of the home's insured value to cover damages.
Exclusions: In addition, many insurance companies have added exclusions in contracts to avoid paying certain claims. For example, even with hail coverage included, a roof over 10 years old might be excluded.
Getting More from your Insurance Claims
- First, don't be afraid to make a small claim. Many insurance policies will not raise your rates after claims of less than $5,000.
- Negotiate with your insurer. On average, challenging a claim can result in thousands of dollars more than taking the insurance company's initial offer.
- Request a face-to-face meeting with the adjuster to go over their report.
- Obtain a second opinion through an independent contractor or public adjuster. Public adjusters take 10 percent of the final payout for their services, but studies show homeowners who utilized a public adjuster saw increased settlements ranging from 19 percent to over 700 percent.
- Find a public adjuster near you at napia.com. Choose one with several years of experience good references and a state license.
- If you ever feel misled by an insurance agent, contacting a lawyer is always an option. While lawsuits are rare, the Consumer Federation of America notes that courts have consistently ruled in favor of the homeowner.
Finding Better Coverage for a Better Rate
- Shopping around for homeowners insurance can often prove beneficial. Ask your neighbors, utilize an independent agent who sells policies from multiple insurance companies or find online rate comparisons at Netquote.com or Insure.com
- Bundling. Another way to save money on homeowners insurance is to "bundle" it with your auto insurance. Many insurance companies will offer the homeowner over 25 percent in "bundle" savings.
- Keep Your Credit Score Up! Many insurance companies use credit scores to establish premiums; the better your credit score, the lower your premium.
- Be sure to review your coverage needs every few years. Don't make the mistake of assuming that your coverage limits will automatically adjust to your home's rising or falling market price. The replacement—the current cost of labor and materials required to rebuild—must be evaluated. Ask for a customized estimate that includes unique features, construction details, age and costs of meeting local building-code requirements.
- Extended Coverage Riders. If you want to protect against the surge in material and labor prices that often follow a natural disaster, you'll have to buy an "extended coverage" rider, which adds up to 30 percent to your replacement-value limit.
- Additional Coverage. Sewer backups, flooding and earthquakes are not included in a standard homeowners coverage. To avoid paying out of pocket for damage, you'll need additional insurance.
- Special Endorsements. Coverage for furniture, electronics, clothing and other belongings is standard, but if you have expensive jewelry or artwork, you'll need to purchase a special endorsement to cover their full value.
- Liability Protection and Umbrella Policies. Typically, homeowners insurance includes $100,000 in coverage for a visitor who is injured in your home or if you or your pets cause someone harm. The more assets you own, however, the more advisable it is to increase that amount to $300,000 or buy a $1 million umbrella policy for added protection.
Quick ways to reduce your risks
- Smoke detectors, burglar alarms and deadbolt locks can be worth a 5 percent premium discount.
- Impact- and fire-resistant roofing materials made of asphalt, cement and metal can garner further discounts because they resist hail and wildfire damage. Noncombustible siding also provides increased protection.
- Cooking equipment is a leading cause of home fires, so never leave a stove unattended and keep a fire extinguisher in the kitchen.
- Replace the standard rubber hoses that come with your washing machine with steel-braided reinforced hoses. This simple fix can prevent thousands of dollars in water damage.
Your home is most likely your biggest asset. Take some time to make sure you're adequately covered.