Home Insurance – Whether You Own or Rent
All that fine print!
A while back, I wrote an article about Automobile Insurance. And I wrote it because I worked in the insurance industry for many years, speaking to clients and policyholders daily. There is so much that is misunderstood about these policies. Therefore, since I wrote one about Auto, I thought I should also give Home Insurance the same treatment in a post. I have more posts about using your money wisely here.
A Very Necessary Expense – Home Insurance
Like it or not, your mortgage holder will require that you cover their interests in your property with insurance. If something happens to this property that they hold the deed to, they will want it restored to its previous condition. So this is an expense you need……and want. Your interests must be protected also. This is typically your most valuable property asset and you will want it restored if it should be destroyed or damaged by a catastrophic event.
In addition, all your belongings are in your home, and those things would be hard to replace out-of-pocket. Be sure you have enough coverage in personal property. If you lost everything, think how much it would cost you to replace it all. Down to the last sheet on the beds!
Note: Are you insured for Replacement Cost or Actual Cash Value? This applies to the structure and to your personal property. Check your policy. It may cost a lot more to rebuild your property now than when you first insured it. Keep pace with inflation. Ask for a re-evaluation of your dwelling coverage.
Here’s a test:
Name everything in your house. Every item, every brand, every model, every appliance. I know, it’s impossible. How would you ever recall everything? I would guess that it couldn’t be done. But in the event of a catastrophe, you will need to itemize your losses when you make a claim and some “big ticket” items may need some sort of documentation to back them up.
What can you do? Here is a suggestion: Pick up that cell phone and make a video. Walk through your home and pan around the rooms, one by one, and get a sweeping view of everything. Include your closets and garage, workshops, barns, storage sheds. This video won’t be an itemized list, but a way to prompt your memory for the items that were in your house.
Open closets so that it shows you had all those clothes and shoes, and boots….Oh my! Do you have any receipts at all for any items in a file? Put those in a safe deposit box at the bank. Put your videos on a flash drive and put this in the safe deposit box too. ( This is an affiliate link.)
Update this once or twice a year. It would be such a life-saver to have all this stored in the bank if everything in your house was swept away in a tornado, hurricane or fire.
Oh, You Just Rent? You Don’t Need Home Insurance?
Au contraire, mon amie! You need insurance too! You need “Renter’s Form Home Insurance.” Even though you don’t own the property where you live, if that place burned or was swept away in a tornado, all of your things are gone just the same as they would be if you were living in a home you owned. Your landlord is not responsible. You would need to start over from scratch, item by item.
Make a video just like I advised above. Know what you own. Save receipts, proof of purchase, etc.
What About Liability in Home Insurance?
In the event someone is hurt or injured and feels that you are responsible for their injuries, they can sue you. Liability can also come into play for property damage too. What if your child flies his drone into the new greenhouse next door , shattering a huge glass partition and destroying all the exotic orchids kept beneath?
Renters? Same thing could apply. Someone could be injured slipping on a banana peel in your kitchen floor. That is surely not the responsibility of the landlord. It’s on you! And what if you accidentally leave the bathtub faucet on and it fills up and runs over, ruining the flooring, plus leaking downstairs into another tenant’s apartment, ruining his new computer and printer. That damage is on you! Not the landlord. Think about it.
What if there is a fire that is your fault in your apartment? The landlord expects you to repair/repaint? Or what if it’s rebuild? Get liability insurance even if you don’t want property insurance.
Special Insurance Coverages
You may have items of special value such as jewelry, hobby collections, items held for sale, etc. These may need a special endorsement or rider attached to your policy. For example, you may have become engaged and have a diamond ring with a value of $5000. Your renter’s policy may have a jewelry limit of $1000. Or there may a limit to theft of $500. Question and/or read your policy. You can add coverage for an additional premium.
In most cases, you need a separate policy or endorsement for Earthquake coverage. Flood insurance coverage is a special government policy and flood damage is NOT covered by regular home or renters policy form. And don’t think floods are only caused by rain and storms. V zones are areas which might become flooded by the velocity of water movement. A zones are areas which might become flooded by the accumulation of water movement. But the other zones B and C, might not seem to be in that much danger, but accumulation and velocity could occur in a “once in a lifetime” storm.
If you don’t feel you need flood insurance, what about if there was a water main break , a pool collapsing, culverts backing up, blocked by debris and flooding your basement? Your homeowners insurance could argue that this is not covered under the home policy.
Questions About Your Coverages?
Call your agent or Customer Service Department and ask them about your coverage to be sure you are adequately covered. It is better to know in advance what your coverages are, not after a claim.
Questions: U.S. Dept of Homeland Security, National Flood Insurance Program
Don’t Use The Insurance Company as An Estimator
It is important not to call the insurance company if you think you might have a claim. Just as with auto insurance, know what your damages are before you make a decision to have a claim put against your policy. After a hailstorm, for instance, if you think you may have damage, call a roofing company for a free estimate. If they tell you that you have damage, then you can make a decision to file a claim. A lot of companies count a claim with $0 payout on your record even if no payout is made. Calling your insurance company to have them check for damage is not the correct procedure. Get a roofer out there!
It is a great comfort to have insurance and know that you are protected in case of a catastrophe. Don’t use your insurance unless you need it. The same advice that I gave on the auto policy applies for the home also.
Protect your property. It is a good thing and you can sleep better because you have it and you know your coverage fully.
I’ll get down from my soapbox now.