The Best Homeowners Insurance

What is the Best Homeowners Insurance?

This is a very deep and complicated question but hopefully one that won’t keep you up at night once you read this.  We’ll help you peel back the layers of a policy to determine what those coverages will help you feel better about your policy.

Now to say it is the “best” is subjective.  The best would probably imply that it covers everything, and it wouldn’t cost very much.  Even in a perfect world that is not likely, but we can give you an idea on the things that you need to ask for and confirm when you purchase a homeowners policy.

Your policy won’t cover everything – there are exclusions to the policy and good ole’ wear and tear won’t be covered. 

So here are the basic coverages that will come with your homeowners policy to start:

1. Dwelling – your house
2. Additional Structures – think of things like a detached garage, pole barns, pools, fences, gazebos.
3. Personal Property – the things you move in and out of your house like clothes, furniture, TVs etc.
4. Loss of Use – if you were displaced because of a claim, the insurance company will assist in getting you set up with a hotel or temporary housing.
5. Medical Payments – payments to cover the medical bills for those injured on your property.

Now those are the basics that everyone gets, and the limits will vary by the dwelling amount you set since most of them are typically a percentage of your dwelling.  So, review them carefully to make sure it is enough.

So, let’s get into the dwelling and see how it is settled.  You’ll want at the minimum what is considered extended replacement cost (at least 25% or 50% of the dwelling limit listed).  But to really make sure you have nothing to worry about you want guaranteed replacement cost if your carrier offers it.  That means that if you are carrying 100% of the replacement cost of your home, it will be rebuilt, guaranteed, even if it exceeds the limit listed on your policy. 

While we are discussing the dwelling, and personal property, you’ll want to review the coverage form.  And here you will want special form coverage.  There is basic and broad form, but they are limited.  Special will cover everything, except those items specifically excluded in a policy.  It will be worth the extra money.

Endorsements are where the real power of a homeowners insurance policy comes into play.  Remember, we just touched on some of the basics of a policy.  This is where you can supercharge your policy or make some real mistakes if you aren’t careful.  Always work with a qualified agent to determine what you need.

Some of the endorsements you need to consider are:

1. Sewer and sump pump back up – is that basement finished? Even if it isn’t, many of us have a furnace, hot water heater and washer/dryer downstairs.  A sewer backup could be very costly if you don’t carry this coverage.
2. Service line coverage – the service lines such as your sewer, aren’t considered part of your house and therefore not covered by many carriers. If you have an older home or have a lot trees in your front yard, you will want to get this coverage.  Otherwise, you are in for a costly repair.
3. Ordinance of law – if you live in a much older home you need to inquire about this. While you might be carrying extended or guaranteed replacement cost, keep in mind that any updates that need to be made due to new building codes could drive the price up and these variances would only be covered by this endorsement.
4. Equipment breakdown – things breakdown from time to time. Air conditioning, furnace, or a refrigerator.  This endorsement can help with repairs.
5. Scheduled items – double check the internal limit of your policy for items such as art, jewelry, guns and money or securities. Most policies will have a cap on what limit the policy will cover.  If your jewelry is more than the limit within the policy, you’ll need to discuss scheduling the items to achieve a higher limit.
6. Earthquake – while the name speaks for itself, it is an item that is often overlooked by insureds. Discuss the coverage with your agent because the deductible isn’t the same as your dwelling or personal property deductible.  It is often a percentage of your dwelling – 10% or 15%, even 20 %.  Make sure you know what you are choosing if you want this coverage.

These are just a few and there are some others you might want to consider – especially if your carrier doesn’t offer a robust bundle of coverage but rather a more a la carte policy.