When looking at insurance quotes our eyes automatically drift to the bottom line premium quoted. But what about all the stuff above it? Not all home quotes and/or policies are created equal. One of the key parts of a home quote and/or policy is the deductible. Below is a list of things to keep in mind as you consider a home quote and/or policy.
- Some deductibles are flat and some deductibles are percentages. Percentages are typically used in coastal areas where there is a higher probability of wind, hurricane, etc. A percentage deductible is based on the dwelling value listed in the policy. If the dwelling value increases the deductible increases as well.
- Some deductibles are specific to a type of coverage; Water Back-Up, Water Damage, Hurricane, Tropical Cyclone, Named Storm, Wind/Hail, etc. You may also see the term All Other Peril which means where a specific deductible is not identified the All Other Peril deductible applies.
- A home policy can have multiple deductibles which can be a problem if a claim triggers more than one deductible. Understanding how each deductible applies at the time of a claim is important.
- Some deductibles are dictated or required by the insurance company. This decision can be based on where the home is located, such as coastal. One insurance company may require a higher deductible than another insurance company.
- Some home policies waive the deductible for large claims or a total loss claim. Knowing when a deductible waiver applies is important. This can be beneficial in deciding on a high deductible.
- Some companies offer a reducing deductible if you remain claim free.
It is important when you are reviewing a home quote that you be aware of the deductibles. While a high deductible will reduce the policy premium, a high deductible can be detrimental if you can not afford the deductible at the time of a claim or the losses that occur are below the deductible. An insurance agent can help you review all the deductibles applicable to a quote and/or policy. An agent can also help you select a deductible that fits your financial situation while providing you the most advantageous premium.
This Friday, June 28th is National Insurance
Awareness. The day was created to encourage everyone across the nation to
review their insurance policies.
Below are some tips to help you observe the day:
- Review the home value. The value of the home
should be based on current construction costs, not market value. You should
review the home value every 3 to 5 years.
- Review the home credits. If you have installed
an alarm or have turned your alarm service off you should update the home
- Review the deductible. The higher the deductible
the lower the premium. Also a higher deductible will discourage you from filing
small claims which can impact your ability to obtain coverage in the future.
- Review the endorsements included in the policy.
If you have switched insurance companies recently a coverage may have been
dropped during the process.
- Review drivers listed on the policy. All
licensed drivers residing in your home should be listed on the auto policy.
Failure to do so could result in a denied claim for unlisted drivers.
- Review ownership of the vehicle. If the loan or
lease agreement has been satisfied update the policy. This will prevent delays
in payment at claim time. Any change in titled ownership should also be
reflected on the policy or a new policy purchased for the vehicle.
- Review deductibles. Insurance companies
continually increase the price breaks for higher deductibles. As with the home
insurance a higher deductible will save you premium and discourage you from
filing small claims.
- Review usage of each vehicle. Vehicles used for
Uber or Lyft services do not have coverage while being used for this purpose.
Vehicles used for business purposes may also not have coverage if used for
business at the time of a claim.
- Update items to be listed along with values.
Appraisals should be completed every 3 to 5 years to keep up with market
values. Use an inventory such as Collectify
to manage your collection easily.
- Update properties, vehicles, drivers,
recreational vehicles, boats, etc. at each renewal. Failure to update could
result in no coverage under the umbrella.
- Make sure the underlying insurance policies for
each of the above meets the minimum liability requirements to avoid a coverage
- If you do not have coverage for the underlying
insurance policy for each of the above obtain it at your earliest convenience.
With the help of a Trusted Insurance Advisors they can help
you review your policies at any time, not just this Friday or at renewal. A
Trusted Insurance Advisor is there to help you every step of the way. Call your
Recently I had a client purchase a new investment property.
He had valid concerns regarding the coverages for that investment property.
Below are coverages to consider for maintaining the profitability of your
- Contents – Many owners of investment properties
forgo coverage for contents or personal property kept at the investment
property. They assume the tenant will provide all coverage for the tenant’s
contents. What if the property owner has to re-carpet the home or puts new
appliances in the home? These types of items can be considered contents by the
insurance company. What if the property owner uses the basement or attic for
storage? These are considered contents. Contents coverage is not automatically
included in all investment property policies. You must request it and indicate
a limit needed to cover all contents of the property owner.
- Fair Rental Value – If the property owner is
unable to rent the property due to a covered loss the property owner will not
be able to generate a profit from the property. Depending on what the cost of
rent is will dictate the limit for Fair Rental Value. You should aim for 6
months of rent or more after a covered loss, which can also be impacted by time
of year or location of the home.
- Water Back-Up – This is a very hot topic when it
comes to home insurance but many property owners overlook it when owning an
investment property. An investment property has the same exposure to water
back-up as a primary home; sump pump, back-up generators, toilets, tubs, sinks,
etc. To make matters worse not all insurance companies offer water back-up on
investment properties. Make sure to ask for it or your insurance agent may overlook
it during the quoting process.
- Ordnance or Law – In some cases especially with
older homes there may be a need for additional money for updating an investment
property to meet new codes or compliance requirements, such as sprinklers,
smoke detectors, elevation, safety glass, etc. Not all policies are created
equal. You may have 10% of the dwelling value which may or may not be enough
depending on the property. An increase in the limit may be necessary for homes
that are coastal, older, located in the city, etc.
- Loss Assessment – Some investment properties are
located in communities that have a Homeowners Association (HOA). As a home
owner in the community the association has the right to assess fees back to
home owners. Not all investment property policies provide Loss Assessment and
if they do it may not be enough. It is best to understand what the HOA can
assess for and how much they can assess. Once this information is known you can
adjust the insurance policy accordingly.
Ultimately the plan for owning an investment property is to
generate a profit or a return on your investment. Without the appropriate
insurance you could lose money due to unexpected issues. A full assessment at the beginning of your
endeavor reduces the chances of problems down the road. Talk to your
independent insurance agent today about your investment property insurance needs.