5. BUYING HOMEOWNERS INSURANCE

 

WHAT YOUR POLICY NEEDS TO INCLUDE

Having lived through Hurricane Katrina, we were forced to become experts on homeowners insurance: Here’s what we learned from what is the worst and most costly natural disaster in US History:

 

Don’ts

  • Don’t be foolish and think you don’t need insurance coverage for your home. When buying homeowners insurance, think in terms of worst case scenario.
  • Do not allow a company to provide you with homeowner’s coverage before you have checked with your state insurance commissioner’s office as to their reputation and or reliability.
  • Don’t just allow anyone to become your insurance agent. Check them out, ask how long they have been in the business, ask for references, etc.
  • Again, don’t do business with a company that you have never heard of before. Having gone through Katrina (before-during-after) Take our word for it, it’s a nightmare dealing with a sub-par homeowner’s insurance company or what the industry might call a “low end insurance company”. When it comes to homeowner’s coverage on your home, our attitude is go first class.
  • Don’t suffer from the delusion; “I can go cheap on my homeowners insurance because it won’t happen to me”. Thousands of homeowners in New Orleans suffered from the same delusion. Now they know better. If the experts say a flood, a hurricane or an earthquake/land slide is possible in your area, get the coverage. If the experts say a wild fire or forest fire could put your house at risk, make certain you have replacement cost coverage, and in all cases catalog every piece of personal property or valuable you have in your home. Take it from someone who returned home after working six days in a hospital as a volunteer during Katrina, to literally find everything either destroyed, gone or so toxic it was no longer usable, and then to discover that our insurance carrier was not in the mood to cover anything. Only do business with a well-known reputable insurance company.
 

Do’s
 

  • Do not do business with, and or do not place your homeowner’s insurance coverage with a company you have never heard of before.
  • Make certain that your home has adequate coverage for actual replacement of the structure and personal property in the event of fire or a natural disaster.
  • If you live in an area where flooding may occur, make certain you have flood insurance. This includes all areas near rivers or streams, all Gulf States, Hawaii and any state on the East Coast that could be affected by a hurricane or tropical storm. For those of you in California, Oregon, Alaska, Washington and or Hawaii, you should consider getting earth quake and or earth movement insurance. In the instance of earthquake or earth movement; they are two separate coverage areas and one may not cover the other. Earthquake covers the damage caused by an earthquake. Earth-movement would cover your home in the event a landslide damaged your home or your home was destroyed in a landslide. Recently dozens of homeowners lost it all after a severe rainstorm in California. In this instance, a hillside gave out, and over a dozen homes were lost. When it comes to special coverage or features on your homeowner’s insurance policy, ask your agent what he/she recommends, get it in writing, and be conservative.
  • When getting flood insurance, make certain you get the maximum coverage ($250,000) and that you get supplemental coverage for your personal contents. It’s relatively inexpensive, and hurricanes or flooding may become more active and destructive in the future. Be prepared and get the coverage just in case.
  • Make certain that your homeowner’s coverage has a “loss of use” provision that allows you living expenses, in the event your house is unusable or uninhabitable for an extended period of time. We would recommend at least six months (minimum).
  • Make a list and take photographs of all of your home contents. Consider purchasing additional  insurance coverage for expensive jewelry, art, guns or other items that may not be included on your basic homeowner’s policy. Make certain your insurance agent acknowledges it in writing, and has a copy of your list.
  • Keep a copy of your homeowner’s insurance policy and detailed photo’s of your home interior & exterior with contents, in a water-tight/fire proof safe place (like a bank safety deposit box) in the event your home or its contents are destroyed by a fire or natural disaster.
  • There are differing categories of insurance coverage. These range from what are called HO-1’s to HO-8, homeowners insurance categories. At a minimum you will need the “special form HO-3” or if you want to go to extremes, get the HO-5, which is called the “comprehensive form”. The “HO-5” is also the most expensive type of homeowner’s insurance, because it is the most thorough (covering almost everything except for floods, earthquakes and or a nuclear attack). Trust your agent on what type of policy covers you the best and use your own good judgment.
  • If you are not yet a homeowner, and you are living in a rental house or apartment, get renters insurance for your valuables. This is called “HO-4” coverage and every renter should have it. Its inexpensive and worth every nickel if something were ever to happen to your home/apartment (fire, burglary, flood, etc)

 

 

  

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