8 Tips on Homeowners Insurance

Health insurance and homeowners insurance … both are coverage we know we need but rarely take the time to understand. That is until we need it.
Hurricane IKE’s recent roll through our area sent a lot of Spring Texas homeowners scurrying for their policies. Unfortunately some homeowners were taught a painful financial lesson that they won’t soon forget.
8 things you should know about homeowners insurance?
1. Two Deductibles- Unlike automobile insurance, your homeowner’s insurance has two deductibles.
The first deductible is for wind/hail damage and it is a % of the rebuilding cost. The lowest percentage available is 1% with the deductibles of most insurance companies being 2% to 5%.
The second deductible is for “other perils” which would be fire, lightening, theft, and smoke damage. Insurance companies offer a fixed deductible with the lowest typically being $1,000.
2. Flood Insurance is separate- Flood insurance is NOT included in your homeowner’s insurance policy. The policy has to be purchased separately.
3. Flood insurance is not effective immediately - Don’t wait until hurricane season or until the weatherman says there is a hurricane on the way before securing flood insurance. Because insurance companies require you wait 30 days before your flood insurance policy becomes effective.
4. Does not cover replacement- If you have trees that fell and had to be removed, your homeowner’s insurance does not cover the cost of new trees to be planted in their place.
5. Food spoilage has a deductible - A lot of us experienced extensive power outages due to Hurricane IKE. By the time the power was restored, our refrigerated food had spoiled. Since the spoilage was caused by a wind / hail incident, our food spoilage was part of our wind/hail deductible.If food spoilage was the only damage we experienced, our spoilage would have to be more than 1% of our rebuilding cost before our insurance would kick in. Farmers has coverage on the Texas Family Home Plan of $500 for Food Spoilage with a $100 Ded.
6. Coverage not automatically adjusted - Review your policy annually and make the necessary adjustments to reflect the value of your home and its contents. Don’t put yourself in a position of being under insured. Adjust the value of your policy to match your home’s price appreciation.
7. Watch your renewal terms - Earlier this year, State Farm insurance changed their customers wind/hail deductible from 1% to 2%. There were some very unhappy homeowners who discovered through the claim process that their deductible had doubled. When your policy renewal shows up in the mail spend the time to review the deductibles. Don’t assume they are the same as last year.
8. Discounts available - Some insurance companies offer a “multi-line” discount if you purchase both home and auto insurance from them. Don’t forget to ask about discounts.
Don’t wait until the next hail storm or hurricane rolls through Houston, Texas before you review your homeowners policy. Instead make a commitment to yourself to find and review your policy before your policy teaches you some tough financial lessons.