We have all seen the commercials and news programs on how to save quick on your insurance. But have you seen any on how to keep your home and belongings safe while maintaining that same affordable price? Probably not! There can be lots of tips, tricks, and gimmicks to insurance but here are four important things to remember to get the most out of your homeowners insurance.
1. DON’T Insure to value
A lot of people think that they are overpaying for their insurance because their home is insured for replacement cost when the actual market value is considerably lower. That is not the case. People tend to get the two confused. Replacement cost and value are completely different. Replacement cost is the amount that it would cost to rebuild the home and the value is what the house is worth on the market today.
Your standard home insurance policies will cover the home for replacement cost. Market value policies are rarely sold. Right now, market value policies are more expensive because the insurance company will surcharge the policy the difference between the replacement cost and the market value. For example, if your home’s replacement cost is $250,000 and the value of the home is $90,000, the insurance company will surcharge the policy because of the $160,000 difference. Which in this case would be a substantial surcharge.
2. DON’T Neglect maintenance
Neglecting maintenance around the house can end up costing you and leaving you uninsured. Roofs are one the biggest problems we see. Roofs age and deteriorate over time which can cause serious damage to homes. With most companies when shingles start to lift or curl it will make the home ineligible for insurance and then your mortgage company will most likely add expensive insurance onto your mortgage in order to secure their interest. If your roof is starting to age (lift, curl, or deteriorate), I recommend that you get it replaced. When you do, contact your agent to see if you are eligible for a discount. Most insurance companies offer discounts for a new roof along with the plumbing, heating, and electrical.
3. DON’T opt for the cheap policy
Cheap is just that...cheap! This is your house we are talking about. You’ve worked hard for it. You sleep there. Your family calls it home. You have a lot invested in it. So a cheap rate policy shouldn’t cut it! That doesn’t mean that you can’t find a great affordable policy with quality coverage, because you should. It just means when you are looking for home insurance don’t go for the lowest price without first looking at the fine print. Some companies will skimp on coverages like sewer back-up coverage, personal property replacement, and ordinance of law coverage to save a buck when another company will offer them at the same price. These are coverages that most people need and want but later find out they were never included on their policy. By then it’s too late.
4. DON’T forget to schedule property
If you have a wedding ring, engagement ring, or any other jewelry make sure to schedule it on your policy. Policies only give limited coverage for jewelry in the event of a theft and no coverage if the piece is lost. If your jewelry exceeds your policy limits, schedule it to get full replacement and also replacement if it is lost. Keep in mind, if you do not schedule it you WILL NOT have coverage if it is misplaced, if it disappears, or is lost. It doesn’t cost much to do so and you will be happy in the end.
Following these tips can keep your home and belongings safe, and also keep dollars in your pocket. If you feel like you may not be insured properly contact your agent to ensure your assets are protected.
Written by Matthew Perry is an agent and partner at EW Smith Insurance Agency in Wyandotte, Mi.