Whether you are looking into buying a home or are currently a homeowner, it is always great to make sure you have the best coverage when it comes to homeowners insurance should you need it. We reached out to one of our preferred Allstate insurance agents, Kari Heatherly, to help provide the best tips when making sure you are covered and here is what she had to say:
If you are like most people, your home is your greatest asset. Because of that, it’s super important to make sure you are insured correctly! To protect your investment from MAYHEM, make sure you update your insurance regularly to include any improvements, major purchases and increased rebuilding costs.
To make sure you are appropriately covered, it’s important to ask your insurance agent the following questions:
- Do I have enough insurance to rebuild my home?
Make sure your policy covers the cost of rebuilding your home at current construction costs, not just enough to satisfy the loan on your mortgage. Don’t confuse the real estate value of your home with what it would cost to rebuild it. Essentially, you should have enough insurance to rebuild your home should it be completely destroyed. Think about this:
- Replacement Cost – Make sure your policy covers replacement cost for damage to the home. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
- Extended Replacement Cost – This can typically be added to your policy for a very minimal cost and provides an additional insurance coverage of 20 percent or more over the limits of your policy. This can be important if there is a widespread disaster that forces the cost of building materials and labor to increase.
- Ordinance or Law coverage – If your home damage is extensive, you may be required to rebuild it while meeting new and often more stringent building codes. Ordinance or law coverage pays a specific amount toward these costs. This is super important to consider when purchasing an older home.
- Water Back-Up – This coverage insures your property for damage from sewer or drain back-up. Most insurers offer it as an add-on to your standard policy because damage caused by sewer or drain back up is not typically covered under your typical home policy.
- Flood Insurance
Most home insurance policies provide coverage for disasters such as fire, lightning and wind or hail. They do not include coverage for rising water (floods). Flood insurance is available through the federal government’s National Flood Insurance Program, but can be purchased from the same agent that provides your home insurance. Even if you are not in a “flood zone” this is a great coverage to have! As you know – in Texas we experience all four seasons and sometimes that’s in ONE DAY! Make sure to purchase flood insurance for the structure of your house as well as for your contents. If you aren’t in a flood zone, the prices tend to be pretty reasonable (under $500/year)! Keep in mind that there is a 30-day waiting period before the insurance is valid.
- Do I have enough insurance to replace all of my stuff?
Most homeowners’ insurance policies provide coverage for your personal property for approximately 60% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of coverage on your home, you would be covered for $60,000 worth of the contents in your home, depending on the policy. This can be increased for very little additional expense.
The best way to determine if this is enough coverage is to do a quick inventory of your home, detailing everything you own and the estimated cost to replace these items if they are stolen or destroyed by a disaster. To help with this task, download “Allstate’s Digital Locker” app from your mobile Play Store. It’s free! Even if you aren’t an Allstate customer! This app not only helps you value your property, it will also keep a digital record for you so that if the worst happens, you aren’t having to remember everything you owned.
There are 2 ways to insure your personal property. Talk to your agent to determine which coverage is best for you personally.
- Actual Cash Value – This coverage pays the cost of replacing your property minus depreciation.
- Replacement Cost – This coverage reimburses you for the full current cost of replacing your property.
Here’s the difference: Heaven forbid, a fire destroys your home. You have a 10 year old TV in your living room. If you are covered at replacement cost, the insurance company will pay to replace the TV with a comparable new one. If you are covered for actual cash value, it will pay only a small percentage of the cost of a new TV because the old TV has been used for 10 years and is now worth a lot less than its original cost.
- Do I have enough coverage for additional living expenses?
Coverage for additional living expenses pays the extra costs of temporarily living away from your home if you have to move out because of a covered loss. It covers hotel bills, restaurant meals, transportation and other living expenses incurred while your home is not useable or while it’s being rebuilt. It’s important to remember that this coverage is only for those expenses that are above and beyond your regular living expenses. It’s not designed to pay your mortgage or regular trips to the grocery store.
Coverage for additional living expenses differs from company to company. Most policies provide coverage for about 20 percent of the insurance on your house and up to a certain amount of time. Make sure you know exactly how much coverage you have and whether there is a time limit. If the standard coverage is not enough, it can typically be increased for a few dollars more per year.
- Do I have enough insurance to protect my assets?
It’s important to have adequate liability protection. This protects you against lawsuits for injuries or damage that you or your family members may cause to other people or their property. It also pays for damages caused by pets. Liability insurance pays for both the cost of defending you in court and for any damages the court rules you must pay—up to the limits of your policy. Most homeowners’ insurance policies provide a minimum of $100,000 in liability coverage, but higher amounts are available.
It is important to purchase enough liability insurance to protect your assets. If the liability coverage offered by your insurance company is not sufficient for your needs, you may consider an excess liability (or umbrella) policy. These provide additional coverage on top of what is covered on your home (and auto) policies.
My final piece of advice is to make sure you are working with an insurance agent you can count on to explain your coverage before you buy and to walk alongside you should the day come when you actually need the coverage you purchased. As an Allstate Trusted Advisor, I’m always happy and willing to review your policy with you regardless of who you select to insure your home. Feel free to contact me or my staff to schedule a review by phone or in person. We look forward to the opportunity to meet you!
Call The Marr Team today to help sell or buy a home at 214-620-0411. We make sure that you are “COVERED” when it comes to Real Estate during the home selling or buying process!
Special thanks to our guest writer Kari Heatherly.
For more information or if you have any questions on coverage, contact The Heatherly Agency directly at 972-562-9263.