Questions you should ask about Homeowners Insurance

The National Association of Insurance Commissioners offers a wealth of insurance information at Insure U. When shopping for homeowners, here are some questions that NAIC suggests that you ask your agent:
• Are the agent and the insurance company licensed by my state insurance department? For how long? (Your state insurance department can confirm the answers to these questions.)
• How can I find out the claims history of the home before I buy it?
• If I submit a claim, how will it affect my premium when I renew the policy?
• What discounts are available?
• What does the policy cover? What doesn’t it cover? What are the limits to the coverages?
• How much coverage for my personal property do I need?
• Should I buy flood insurance or earthquake coverage?
• How will my credit history affect my premium?
Learn more at A Consumer’s Quick Guide to Home Insurance (PDF)

Buying a new home? Factor insurance issues and costs in your planning

As the economy eases and the real estate market shows signs of revival, many people whose home buying plans were on hold are now beginning to look around. If buying a new home or vacation property is on your agenda, the Insurance Information Institute (III) has some advice for you: make insurance considerations an important part of your home buying process. In addition to looking at considerations such as location, neighborhood, and home features, you need to do a risk assessment of the home and property so you don’t find yourself owning something with some unpleasant surprises down the line.
For a quick overview of issues and considerations that you should be thinking of, see III’s Home Buyer’s Insurance Checklist and short video on the topic:

New Year’s Resolution: inventory your possessions

Whether you rent or own, it’s critically important to know your stuff. Do you have a home inventory of all your possessions? According to the National Association of Insurance Commissioners (NAIC), about half of those recently surveyed do not.
Nick Hytrek talks about the importance of logging your possessions in a recent article in the Sioux City Journal, and notes that the post-holiday period is a good time to start one or update any that may exist:

“It’s a lot easier to take inventory now rather than after a fire has gutted your home. There’s enough to think about without having to try to remember everything you owned once the insurance adjuster arrives.
“After a fire, they basically hand you a piece of paper and a pencil and say write down all your possessions,” said Wynn Gochenour, executive adminstrator at Paul Davis Restoration. “Most people don’t do it beforehand, but wish they would have.”

We’ve previously suggested Know Your Stuff, a free online tool issued by the Insurance Information Institute, that is great for this purpose. It offers a room-by-room inventory system that allows you to create, view, save, and print real time reports. You can learn more about this inventory system in a brief video clip. Hytek’s article also notes that there are national companies that will come in and do home inventories and valuation for you – a service that might be worth it if you have expensive collections.
Hytek offers the following tips for taking a home inventory, sourced from NAIC:

  • Document each item as completely as possible, including brand and model number.
  • Include receipts and/or canceled checks to prove what you paid for items.
  • Remember to include items you don’t use regularly, such as holiday decorations, sports equipment or tools.
  • Review your insurance policy to know what is covered and whether your possessions are insured for actual cash value (the amount it would take to replace or repair the item after depreciation) or for replacement cost (the amount it would take to repair or replace the item without deducting for depreciation).
  • For rare or valuable items such as jewelry, antiques or art, you may want to consider adding additional insurance — a rider — to your policy.
  • Keep the completed list outside of your home. Store it at your office, a family member’s house or safe-deposit box.
  • Update the list annually.

Vacation and second home insurance

If you’re planning a trip to a vacation home, it’s a good idea to think about insurance coverage before you go. Whether you plan to vacation in a second home or visit a time share, a rental property, or a home exchange, the National Association of Insurance Commissioners (NAIC) offers useful vacation home and property insurance considerations.
It’s a good idea to check your policies to be clear about the extent of what they will and won’t cover while you are traveling and staying in some type of temporary lodging – generally, a Homeowners policy will extend some coverage for your personal belongings. Also, be sure to review any trip or travel benefits or coverage that might be available from your credit card.
If you have a second home for vacation use, the insurance issues require more consideration. Homeowners coverage for a second home can vary significantly from the terms in your principal home’s insurance policy and requirements may be different if you are in a different state or a different area. Your coverage needs will vary depending on how often your home is occupied and whether the home is for your own use – owner occupied – or whether you rent it to others. You may need additional coverage if your vacation home is a waterfront property or if it is located in an area that is subject to natural disasters such as hurricanes or floods. You may also need additional coverage such as boat insurance or “named peril” insurance.
We often don’t think about insurance until we need it – and then, it can be too late. If you haven’t considered the insurance issues related to a second vacation home or to temporary vacation lodging, you might want to give your agent a call.

Are you covered? Check your flood risk

From New Hampshire to Wisconsin to Maryland, state insurance commissioners throughout the country are urging residents to buy flood insurance. Flood insurance is particularly important as we count down to this year’s hurricane season. Your homeowners insurance may cover you for water damage from a burst pipe, but if your water problem was started by Mother Nature, you are likely out of luck since most policies do not cover flood damage.
While you may think your flood risk is negligible, floods and flash floods happen in all 50 states. Here are a few interesting flood facts you may not know:

  • Your home has a 26% chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9% chance of fire.
  • Last year, one-third of all claims paid by the National Flood Insurance Program. were for policies in low-risk communities.
  • A car can easily be carried away by just two feet of floodwater.
  • Last year, one-third of all claims paid by the National Fllod Insurance Program were for policies in low-risk communities.
  • Most homeowners insurance does not cover flood damage.

To find out the risk for your home or your business, enter your address to create your flood risk profile and assess your risk of financial loss. Or check your local FEMA flood map. You can also use this interactive tool to see the inch-by-inch cost of a flood in your home – as little as an inch or two of water in your home can add up to thousands of dollars in repair.
Talk to your agent about flood insurance – if you are in a low to moderate risk zone, insurance can be very affordable. Your agent will know the options and will know if your community participates in the National Flood Insurance Program (NFIP), which helps homeowners, renters, and business owners to secure coverage.