Homeowners: Are You Covered For The Next Disaster? Maybe Not
As the number and scope of extreme weather events and disasters grow, some homeowners are learning that their insurance coverage doesn’t provide all the protection they were expecting it to. According to Consumer Reports, the greater the damage costs, the higher the likelihood that there will be a disagreement over the claim, especially when you have a very large claim of $20,000 or more.
On top of unexpected coverage shortfalls, TSCL’s 2017 annual Survey of Senior Costs indicates that homeowners’ insurance was the fastest growing housing cost over the past year. In fact, since 2000, the national average homeowners premium rose 154%, a rate of about 9.6% per year!
Here are four ways to help you get more from your homeowners coverage:
- Understand what is covered and what isn’t. First the good news: You are probably covered in case a meteorite strikes your home. Now the bad: Your coverage probably doesn’t protect you from floods or even a sewer back up. You may be underinsured. Insurance industry surveys indicate, for example, that 43% of homeowners believe damage from heavy rain flooding is covered under the standard insurance policy. It isn’t. To be protected you must purchase supplemental flood insurance or other types of riders to your homeowners policy. The same may be true of wild fires, mudslides, sink holes and other natural disasters. If you live in a high-risk zone, consider adding flood or other supplemental coverage.
- Understand how much risk the insurer shifts to you. Deductibles can commonly range from $500 to $1,500, but claims for severe weather disasters can find you responsible for paying as much as 5% of your home’s insured value (up to 10 percent in Florida) before your insurer covers damage expenses. Example: Your home is insured for $250,000 and your policy calls for a 5% deductible for hurricanes. You would pay $12,500 out-of-pocket on any storm claim prior to your insurer covering the rest.
- Shop around regularly. You can save hundreds of dollars a year in premiums by shopping around. Some state insurance department websites publish rate comparisons for standardized coverage that can help you find the best deals. Another way to compare is to shop from an independent insurance agent who sells from multiple carriers. You can also try online sites like Insure.com, NetQuote.com and SelectQuote.com. When considering a less expensive insurer, consider getting auto coverage from the same company for savings of up to 30 percent.
- Ask about insurer discounts. When shopping, learn what the prospective insurer gives discounts for. Smoke detectors, burglar alarms and dead bolt locks can be worth a 5% premium discount.
Sources: “Homeowners Insurance Buying Guide,” Consumer Reports, January 2017. “15 Surprising Consumer Actions & Beliefs Related To Homeowner’s Insurance,” PropertyCasualty360.com, March 28, 2017.