They Probably Aren't In Your Policy (But Should Be!)
Guest Post By Eric Kossian
Almost all of the biggest and best insurance companies offer less than ideal home policies. There is little difference between auto policies offered, but 95% of homeowners actually don’t have the home coverage they want and they think they have. Worse yet, they are likely paying more money while getting less coverage.
Here's what to look for:
1. Does your home have “Full Replacement Cost” or just “Extended Replacement Cost”?
The Insurance Journal reports “20% of homeowners after a total loss do not have enough coverage.”
(Potential out of pocket: over $100,000+)
2. Does your policy limits covered perils to Named Perils: “Broad,” or “Special”?
Broad and Special limit the types of things that can go wrong (peril) to their list of just 16 or 17 covered perils and you must prove the covered peril caused the loss. “Comprehensive Perils” is offered by a superior companies. Unless specifically excluded, the loss is covered! With Comprehensive Perils the burden of proof is on the carrier to pay or prove the loss is excluded.
(Potential out of pocket: unlimited.)
3.Does your policy include “ordinance and law” coverage to pay for current code requirements or will your policy just pay to replace what was there?
This is key for homes over 25 yrs old as there are many new code requirements.
(Potential out of pocket: $3000 – $34,000)
4. Does your policy have “Additional Living Expense” which will not pay for your hotel and food if authorities require evacuation unless the home is actually damaged?
(Example: 3 week evacuation for an approaching wildfire like the ones we have seen around Leavenworth and the Methow Valley in recent years.) Broader “Loss Of Use” typically pays for 24 to 45 days when “civil authority prohibits use” (no actual home damage required.)
(Potential out of pocket: up to $11,250)
5. Does your Additional Living Expense reimburse 12 months or 24?
For a larger home, or in rural areas where the number of homes having to be replaced after a large wildfire exceeds the number of quality contractors available, it's very unlikely the 12 month limit on additional living expenses will be enough. Better policies provide a time limit of 24 months. (This is playing out in Twisp, Pateros and the Methow Valley right now after the fires of 2014.)
(Potential out of pocket costs $50,000.)
6. Does your policy cover Backup of Sewer or Drain?
Many policies exclude this common occurrence. Better policies include $10,000 or more.
(Potential Out of Pocket: $10,000)
7. Does your policy provide an Identity Theft resolution service and $25,000 of ID Theft Reimbursement?
With all the compromised personal data out there for you and your children, it is not a matter of “if” but when and how often your ID will be stolen.
(Potential Out of Pocket: $25,000)
Amazingly, the better policies are typically available for less premium.
Why? The single biggest indicator of future claims is credit score. If it's good, get up to a 51% discount for good credit score!
Eric Kossian, a graduate of Seattle Pacific Univ., started his insurance career in 1988. He rose to Underwriting Specialist with State Farm, responsible for the profitability of 50 San Francisco area agencies before starting his independent agency, InsurePro, catering to financially responsible clients throughout Washington State. Contact: [email protected] or 1-877-548-5488, www.InsurePro.info