A few things your homeowner insurance does NOT cover

As a homeowner you expect your insurance policy to rebuild your home if destroyed by fire or damaged in a claim. While you can always ask your agent periodically (every couple years) to do a rebuild cost estimator to help ensure your home is insured properly sometimes it is what we don’t know that could hurt us.

Are you aware that your homeowner policy does not coverage mold or earthquakes?

In one poll 40% of respondents believed their home insurance covers mold. It either does not or has limited coverage. That’s become a pretty normal standard for insurance today. The poll also found 51% believed their policy covers damages from a earthquake. Some policies offer endorsements that you can purchase and add coverage but earthquake coverage is usually not included in your homeowner policy.

What about renters insurance?

17% of renters believe renters insurance is not important.

If you rent your home or apartment, do you carry renters insurance? According to a www.rent.com survey 60% of renters do not bother carrying renters insurance. Younger people are even more inclined to not carry renters insurance, a whopping 72% of respondents acknowledged this fact.

Fifty one percent of seniors who rent their home carry renters insurance. Many simply believe it’s too expensive. Yet the costs to have renters insurance are actually very moderate to reasonable at a cost of $180-$250 or so per year. However, the fact is many seniors are battling having limited income and too many hands reaching into their pockets. The cost of food and utilities, health care and other items goes up over time. Invariably, something gives and giving up their renters insurance is an easy decision for many.

Then again, American’s make choices:

50% of American’s spend at least $80 per month on coffee.
66% of working American’s spend around $148 per month buying lunch, instead of packing it and saving the money.
Renters insurance works out to about the price of two at the movies, per month

Why buy renters insurance?

A house fire takes place every 90 seconds. In an apartment you not only have to be concerned about your property but the behaviors and habits of other tenants. What if they cause a fire that spreads to your building? A break-in occurs every 15 seconds.

You don’t want to wait until there is a claim to buy it. Then it’s too late.

Do you worry about being dropped by your insurance carrier?

A story ran in the Wichita Kansas area spoke about a couple of clients who were being dropped by their homeowner insurance carrier. The client was upset and confused.

The reasons why an insurance carrier would drop you from coverage probably variers from carrier to carrier. But typically, it seems most insurance carriers look at a five year track record for claims. If you have one claim in five years they accept that ratio – unless (perhaps) it is some type of major claim involving water or theft. Then the rules or guidelines may fly out the window.

Theft and water damage claims are looked upon by insurance carriers as different than mother nature, wind, hail and storm claims. While an insurance carrier may drop someone for two mother nature type claims I would not say it is an absolute with every carrier. However, anytime you mix in a theft and water claim they ratchet up their dislike.

One key is to carry a higher deductible, at least $1000. If your carrier offers a $1500 deductible consider increasing.

Plus, have a few thousand dollars in savings set aside if possible for unseen, emergency situations like claims. If you have a claim for $1800 are you going to pay $1800 to keep it off your claims history or file and have an $800 claim (after your deductible). I am not advocating one way or the other except to say I would likely pay this type of claims out of pocket to keep it off my record.

Insurance has gotten to be a catch-all for every claim situation. Ideally, it’s major claim protection. Though I understand not everyone has the ability to pay $1800 out of pocket and would need to utilize the insurance policy.

Health insurance has been a terrible trendsetter for many. We go to the doctor and pay $25 copay. The bill might be $5000 but we’re so happy to only pay a small co-pay. In some ways we’ve gotten used to using insurance and expecting to pay a small amount.

One of my client’s had a major water claim. The bill totalled about $100,000. I heard this same carrier had another client with a fire claim that cost at least this much or more. How many insurance policies does this carrier need to recoup their losses? When they charge $500-$800 per year per policy it takes alot, especially when many other people are filing claims too.

We have to keep in mind that the risk is great for the insurance carrier too. That’s why they get nervous with fire and water type claims. Particularly with these types of events we, as consumers, must do a good job of minimizing the risk in our homes.