Home Insurance Checklist…Getting the Best Value

While your home may not change much over the years, insurance isn’t “a set it and forget it” decision. Changes in your life, home improvements, and construction in the general marketplace can change your insurance needs.

If you’re house hunting, start thinking about insurance coverage early on. Discuss options with an insurance professional to help you consider coverage issues that may impact your home-buying decision. Suppose you own a home and haven’t considered your options in years. In that case, you might be surprised to know that insurance options are constantly changing. So, it’s wise to review everything periodically and consider alternatives if you’re concerned you’re not getting a good value.

Here are some issues to consider:

Buying a New Home?

Location, size, construction type, and condition affect the cost and availability of homeowner insurance.  Age of home, condition of the roof, construction up to current code, risk of flooding, and presence of a swimming pool impact insurance costs. Homes near the coast generally cost more to insure than inland homes and typically have a higher windstorm/hurricane deductible. The quality and location of the fire department in the city/town and the availability of fire hydrants are also insurance rating factors. Ask the current owner for a copy of the insurance loss history report on the home, such as a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report, which they can obtain from their insurance company. This will let you know if there have been any past claims so that you can inquire if it was repaired correctly.

What Would it Cost to Rebuild Your Home?

Remember that it typically costs more to rebuild a home than the current real estate market price. For insurance purposes, you want to be adequately insured for replacement costs to ensure you’ll have the funds to rebuild. Companies generally adjust this amount using formulas based on construction costs, but it’s wise to periodically complete a home replacement cost estimator to ensure that you aren’t over- or under-insured. Because replacement costs are estimates, we strongly recommend purchasing an extended or guaranteed replacement cost endorsement that provides additional coverage if repair costs exceed the dwelling coverage limit due to unforeseen circumstances.

What Would it Cost to Replace All of Your Possessions?

The value of furniture, clothing, appliances, electronics, and all other contents depreciates over time. Basic policies only provide “actual cash value,” which factors in a reduction for depreciation; we strongly recommend having “replacement cost” on the contents so that you would receive funds to replace possessions at today’s cost of purchase.  Creating one is essential if you don’t have a home inventory  of all your possessions.  Your possessions might be worth more than you anticipate, requiring additional coverage.

Do You Have High-Value Jewelry, Art, Antiques, Furs, Firearms, or Collections?

Some personal possessions such as jewelry, furs, firearms, and silverware have specific theft limits on a homeowners policy so that you may want special insurance protection in the event of a theft. Also, high-valued jewelry, art, antiques, or other collectibles could account for a large percentage of the personal property limit on your home insurance policy.  In such situations, you may want to consider having special coverage for such items by “scheduling” them separately under your home policy. This provides coverage for them in expanded situations and covers them separately outside the general personal property limit so that you will have protection for all your possessions.

Building Code Coverage

Building codes change over time. If your home is damaged, the cost to rebuild/repair may also involve costs to bring your home up to current building codes. Home policies typically have a limited amount of this type of protection called “ordinance or law” coverage. This amount may not be sufficient depending on the age of your home and potential changes to building codes. This option is worth investing in so that you don’t have a shortfall in a major claim.

Choose the Highest Deductible You Can Afford

Raising the deductible increases the amount you’ll pay out of pocket if you have a claim, but a higher deductible will lower your premium, which, over time, can provide savings. Home insurance should be considered catastrophe insurance to be used in the event of a significant loss.  A series of small claims can result in losing out on loss-free discounts, premium increases, and potentially your home policy being nonrenewed by the carrier. Be sure you have the deductible available in your savings in case of a claim.

Discount Opportunities

Some insurance companies provided discounts in some qualified situations, including:

• Home and auto insurance combined multi-policy with same company discount
• New Construction
• Central station fire & burglar alarms
• Smoke detectors & sprinkler systems
• Deadbolt locks
• Major home revitalization/renovations
• Credits for having a loss-free record
• Loyalty discounts
• Upgrades to plumbing, heating & electrical
• Wind resistant shutters

Optional Coverages that Can Be Worth Spending a Little More

• Earthquake insurance  – A standard policy does not cover earthquake damage; while New England isn’t a high-risk area, it does have a history of quakes.
• Home business – if you operate a business out of your home, business equipment and liability are excluded from home policies unless you specifically purchase coverage with a permitted incidental occupancies endorsement.
• Heating oil leak remediation
• Limited fungi, wet or dry rot, or bacteria coverage increase
• Flood Insurance
• Personal article floater for high-value items
• Service line coverage
• Home equipment system breakdown
• Water backup and sump discharge or overflow coverage – excluded from a standard policy, you can purchase some limited coverage in the event of such a situation
• For rental properties:
  • Increased rental income protection
  • Coverage for furnishings/contents
  • Lead poisoning coverage (homes built before 1978)

Is Your Home in a Flood Plain?

If you have a mortgage, your lender will generally require that you purchase flood insurance if your home is in a high-risk flood zone. However, flooding can occur in lower-risk zones, and a home policy does not cover floods. Visit www.floodsmart.gov or call to speak with an insurance professional about flood insurance. The premiums for flood insurance in lower-risk zones are less than you might assume, so it’s an option worth considering.

Provide Correct Information for ALL Application Questions

Providing inaccurate information can result in an inaccurate quote that could leave you underinsured. Be sure to identify any upgrades to your property. Also, incorrect information provided at the time of application could result in policy cancellation or denial of coverage in a claim situation, which is why answering questions accurately is essential.

Personal Umbrella Liability Protection.

Lawsuits can result in huge settlements if you or a family member are found responsible for injuring someone or damaging their property.  If you have a pool, a dog, a trampoline, or anything else that may create additional exposure, look for options to expand your liability coverage.  A personal umbrella liability policy can provide an extra $1 million+ layer of coverage over and above your home (and auto) policy limits.

At Murphy Insurance Agency, our knowledgeable professionals can help you compare options among eight (8) different insurance carriers and guide you in making wise decisions about homeowner, condominium unit owner, and renters insurance. Ultimately, you must decide the level and types of risks you want to insure against based on your needs and budget. Remember that it’s often worth spending a little more to have expanded coverage rather than risk a situation where your policy would not respond with financial support. Please Contact Us today to discuss your insurance needs

Saving money is essential, but being covered is even more important.