10 Surprising Insights to Homeowners Insurance

First-time home buyers should be aware of what homeowners insurance can do for them. Many people may assume that this insurance covers anything and everything related to a home. Once you get past this misconception, you will have a clearer understanding of what the plan usually covers and how you can expand upon it. Here are important things to know about homeowners insurance before you purchase a home.

  1. You can reopen a claim after you receive a check from an insurance provider

Natural disasters covered in your policy can lead to a claim and a check from the insurer to repair the damage. The agency will first send an insurance adjuster to your home to assess the repair costs. Afterward, if you discover further damage that wasn’t evident at first, you may reopen the claim and file to receive more funds. Each state has its own rules, but typically you have a year from the event to file a claim.

2. Houses close to a fire department or fire hydrant cost less to be insured

You can get a break on insurance costs if you move to a home near a fire department or fire hydrant. The thinking by the insurer is you have fewer risks when fire authorities are nearby with the capability of putting out fires quicker. Fire departments are rated on a scale of 1-10 by ISO, and insurers can use these ratings to factor into premium costs.

3. An insurer cannot cancel your policy without a valid reason

Just because an insurer approves you for a homeowners policy doesn’t necessarily mean it will always last forever. The insurer reserves the right to cancel policies for specific reasons, usually due to issues such as failure to pay the monthly premium, fraud, misrepresentation on the application, or abandoning the property. Each time the term is up for renewal, the insurer has the option to renew or discontinue the policy.

4. Your dog may make it harder to purchase a comprehensive homeowners insurance

Typical homeowners insurance policies cover damage caused by pets such as dog bites. It’s common for homeowners who own aggressive dogs to carry a liability limit up to $300,000. Some insurers do not offer plans for dog owners, especially if they have a history of owning dogs that bite victims who file expensive claims. Other insurers may raise rates when they learn you own a dog or exclude dog bites from coverage.

5. Home insurance may not cover your home remodeling project

Adding a room or other structure to your home may require special coverage. You should first discuss the idea with your insurance agent to know what happens if damage occurs during the project. If the renovation increases your home’s rebuilding costs, then your home might be at risk of being underinsured. The work may require contractors and subcontractors to submit proof of insurance to ensure you won’t be liable if a mishap occurs.

6. You can purchase valuable water-damage insurance coverage at affordable prices

Insurance industry reports show that from 2008 to 2012, one of the top reasons for homeowners insurance claims was water damage. This damage included the bursting of frozen pipes. However, many standard homeowners policies only provide limited coverage for water damage, and many don’t include flooding. Typically, it would be best to buy flood insurance as a separate policy due to its high risk to the insurer. An add-on for this coverage can be purchased at a very reasonable annual amount.

7. Your lender might restrict the size of your insurance deductible

Homeowners often choose to increase their deductibles as a way to save money on monthly insurance premiums. That means they pay less now but later when they file a claim, such as paying the first $1,000 before the coverage takes over and paying the rest up to the coverage limit. Your insurer, though, may limit the amount of your deductible.

8. The worst disasters may not be covered by your standard plan

One of the worst natural disasters that can happen is an earthquake. Yet earthquakes typically are not covered in standard homeowners plans due to the massive damage they create, which is a high risk for insurers. You will need to take out separate coverage to protect against seismic activity, regardless of your region’s history with earthquakes and tremors.

9. Homeowners insurance is very diverse

There are various types of homeowners insurance coverage, so it’s important to know your options. The HO-1 policy, which was designed to provide minimal coverage, has been discontinued in most states. Meanwhile, the HO-2 policy is broader and covers up to 16 hazards that might damage your property. An even more popular option is the HO-3 policy, which has even more comprehensive coverage as it protects all perils except those listed as exclusions. Other policy options exist as well.

10. Home insurance might not cover your most valuable possessions

Not every item imaginable you keep in your home is automatically covered by a standard homeowners plan. For example, if you own certain vintage jewelry, it may be too hard to price for a standard plan. While gemologists typically agree on the value of contemporary jewelry, sometimes there are wide disagreements on antique or vintage items. The hardest possessions to price are those that are so unique they’re impossible to replace. For those items, you will likely need an appraisal and special coverage. However, home insurance can provide limited coverage for your belongings outside your home. For example, if your phone, laptop, or tablet is stolen from your car, auto insurance may not cover it, but your renter’s or homeowners insurance policy can cover it.

These surprising facts about homeowners insurance should help you realize that you are better off with a customized plan to protect your most treasured belongings. Contact our insurance experts at Advanced Insurance Group to learn more about your options. We help take the stress out of home insurance and direct you toward the right coverage for all your needs.

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