What newcomers need to know about homeowners insurance
When people relocate, the speed at which they must find a home and make certain decisions can be quite accelerated.
This is often the case when looking at options for homeowners insurance, especially since the cost can be an important factor in the overall financial obligation of buying a home.
As such, I have enlisted the assistance of Roland Cardner, owner of Texas Insurance Agency, who has provided answers to many of the frequently asked questions that newcomers tend to have about homeowners insurance.
He offered the following tips and information.
When buying a new home, at what point should the home buyer obtain homeowners insurance quotes?
“I think that as soon as someone gets serious about making an offer on a house is when they should begin looking for homeowners insurance, because the quote will help them determine what their annual insurance cost will be for that specific home,” Carder said.
How are homeowners insurance quotes calculated?
“Insurance agents run a C.L.U.E. (Comprehensive Loss Underwriting Exchange) report, which tells them if there have been any prior insurance policy claims on the house, and what was involved. The report also looks at the home buyer as an individual, and any previous claims that they might have had. “Insurance agents also run an insurance score on the home buyer, which is based on the home buyer’s personal credit history. “In addition, insurance companies look at where the property is located, and many other factors, such as: the age of the home, the age of the roof, the exterior materials (i.e.: brick, wood veneer, stucco, etc.), the number of stories, square footage, and whether the home has a pool.”
Is flood insurance necessary or recommended?
Just because a home hasn’t flooded or is located in an area that is not prone to flooding, doesn’t mean that a home isn’t at risk. For that reason, Cardner said that flood insurance is always recommended to every homeowner in the Houston area.
“I am a firm believer in flood insurance, because when you look at the transfer of risk versus the premium you are paying, it’s probably one of the best insurance values on the market today.
“It doesn’t matter whether a home is in the 100-year floodplain or the 500-year floodplain, that means nothing in terms of where the water will decide to go.” What does flood insurance cover? “The homeowners insurance policy does not protect against rising surface water, so flood insurance basically plugs that big gap. It provides coverage to the home from rising surface water outside of the home from any source. That includes overflowing streams and bayous, as well as rising surface water that might result from city workers who break a pipe in front of a property.”
What is the cost for flood insurance?
“The cost is determined by the location of the property. For example, if a home is located in Flood Zone X, which is the lowest premium zone, the policy will cost $450 a year through FEMA.
“That policy will cover a $250,000 replacement cost on the home, and $100,000 on the contents. There are two separate deductibles of $1,250 each, meaning that the homeowner will pay a total of $2,500 in deductibles.”
Should people obtain insurance riders on special items of value, such as jewelry and art?
“Expensive jewelry and those kinds of things need to be scheduled on what is called an Inland Marine Rider. It is also referred to as a scheduled personal property or personal articles floater. By scheduling or itemizing a piece of jewelry or art, you are protecting that item from everything that can happen to it, anywhere in the world. So, it’s the most comprehensive coverage on the market.
“A person can also buy additional unscheduled coverage on a homeowners insurance policy, but that coverage is limited to target theft, and the homeowners insurance deductible would apply.”
What is the best way for people to document their personal belongings for insurance purposes?
Cardner said that it is a good idea for people to take and safely store photos and/or videos of the contents of their home.
“When a claim occurs, having that documentation is invaluable, because it removes any question that the insurance adjuster might have regarding the items that the homeowner had in the house at the time of the loss.
“It also helps homeowners remember what they have, because when they have a claim, it can be difficult to remember everything, especially when they are under pressure to do so. We always recommend photos and documentation for homeowners, and as an insurance agency, we will keep that information in our files for our customers.”