Homeowners --How you can and must Protect yourself
from Financial Disaster
Special Report
For most people, insurance is a mystery. Because they don't
understand it, a lot of people think they're being ripped off. I'm here to end
all that. I've prepared this special report loaded with "inside" advise
and information on how to save money on your Homeowners insurance without sacrificing
valuable coverage.
Has this ever happened to someone you know?
Susan and Bill returned home from a pleasant evening out only to find
their home engulfed in flames. They lost most everything . . . . the furniture, clothing,
art work, and their collection of antiques. How were they going to replace this
stuff? Where were they going to live? How long would it take to rebuild?
They started thinking about their Homeowners insurance. It had been
many years since they originally purchased their policy. They never really paid much
attention to it. Always figured nothing would go wrong. Now, they were scared!
What was covered? What wasn't?
It took a few missed phone calls, but finally Susan and Bill caught up
with their agent Jim. They told him the whole story. The next day Jim came
down to walk through what was left of their home. At the end of the tour, Bill
looked at Jim and he said "Well"? Bill could tell by the look on Jim's
face that there was something wrong. Jim's eyes darted away as he said "Well,
Bill, I'm afraid we might have some problems".
Has This Kind of Thing Ever Happened to You?
How Many Times Will It Happen In The Future?
How Will You Ever Know?
Your Home is one of your most valuable assets. It
can also be most dangerous in terms of what it can do to you Financially when you
have a loss. So, let's take a look at a typical Homeowners Policy. The
following coverages are normal to this type of policy.
Policy Form - A standard policy is
called an HO-3 (Special Form). It is appropriate for most owners of a single family
owner occupied home. It provides coverage for your Home, Personal Property, and
Personal Liability. The structure(s) are insured against risk
of direct physical loss, sometimes referred to as "All-Risk", whereas the
contents are normally covered on a "Named Perils" basis.
All-Risk - Covers direct physical loss
to the "Dwelling" and "Other Structures" subject
to limitations and exclusions. The exclusions point to coverage provided by
endorsement, other policies, or are considered uninsurable. Flood and Earthquake are
examples of exclusions that can be purchased separately. War and Nuclear Disaster
are examples of Uninsurable exposures. Consult your agent for a complete list of the
limitations and exclusions.
Named Perils - Covers direct physical
loss to your Personal Property caused by the following perils unless
excepted or excluded: Fire or Lightning, Windstorm or Hail, Explosion, Riot, Aircraft,
Vehicles, Smoke, Vandalism, Falling Objects, Weight of Ice, Snow, or Sleet, Accidental
Discharge or Overflow of water from a Plumbing or Heating system, Sudden and Accidental
cracking, burning, or bulging of a hot water or air-conditioning system, Freezing, and
Damage from an artificially generated electrical current. Consult with your agent
for a complete list of exceptions and exclusions applicable to your policy.
Dwelling - The structure located at the
address listed on the policy and used principally as a private residence, including
structures attached to the dwelling on the same or contiguous foundation, but does not
apply to fences, land, and exterior walls that do not support the dwelling roof.
"Guaranteed Replacement Cost" coverage for the structure is optional. Be
sure to ask for it.
Replacement Cost / Structure - If you
insure your Home for 80% or more of its replacement value, settlement will be on a
replacement value without deduction for depreciation. Those insuring their home for
100% of its replacement value may purchase a Guaranteed coverage for a few dollars more.
Some policies offer unlimited coverage while others may cap their maximum pay out
at 20% of the insured value. Natural Disasters over the past 10 years have caused
Insurers to re-think their position on this coverage and impose caps.
If you insure for less than 80% of your homes replacement Cost, you will
only be partially reimbursed for your loss. See the section below entitled
"Valuing Your Home" for assistance at determining it's Replacement Cost.
Other Structures - Structures on the
residence premises separated from the dwelling and its foundation including but not
limited to: Barns, Fences, Detached Garages, Gazebos, Sheds, or Swimming Pools. (Note
- Coverage does not apply to Other Structures used in Whole or
In Part for Business purposes or Rented or Held for Rental to any person
not a tenant of the Dwelling, unless used solely as a Private Garage. )
Personal Property -
covers Personal Property owned by you while it is anywhere in the world. A 10%
limitation applies at any residence other than the one being insured. Be sure to
purchase "Replacement Cost" coverage for your contents. Without it, you will
receive a depreciated amount for anything damaged or destroyed. Coverage is greatly
reduced for Money, Bullion, Securities, Watercraft, Jewelry, Furs, Silverware, Goldware,
Precious & Semi-Precious Stones, Business Personal Property, and Electronic Apparatus
equipped for use in a motor vehicle. For example, Money, Gold, and Silver are
covered for a combined maximum of $200. Specific endorsements and / or
policies are available to properly cover these items. For more information, consult
with your agent and be sure to review the section entitled "Special Limits of
Liability".
Replacement Cost Coverage / Personal Property -
This coverage must be specifically requested. It allows for the replacement of
damaged Personal Property on a new for old basis of like kind and quality. The
coverage limit is usually increased from 50% to 70% or more of the Dwelling limit when
Replacement Cost coverage is provided. Ask specifically for replacement Cost
Coverage on your contents. Without it, you will receive a depreciated amount under a
claim. Note - It does not apply to Antiques,
Fine Arts, Paintings, Statuary, Collector's items and similar items which by their
inherent nature cannot be replaced.
Loss of Use - If your home becomes
uninhabitable as a result of a covered loss, this coverage provides for any increase in
living expenses incurred by you so that you can maintain your normal standard of living.
Most policies pay up to 20% of the insured value of the home. Some will pay
up to 12 months with no limit, but will push claim settlement to reduce their overall pay
out.
Liability - Protects the Homeowner
against bodily injury or property damage arising out or personal activities. Defense
costs are included even if the suit is groundless, false, or fraudulent. Exclusions
under this coverage generally point to other insurance such as Auto, Business, Boat, and
Aircraft or are considered uninsurable such as war. Due to past court cases, new
exclusions have been added to eliminate coverage for the transmission of communicable
disease and mental abuse. Most policies include a basic limit of $100,000. I
suggest you increase the amount to $300,000 or more. The additional premium isn't
costly. If your Net Worth is substantial, you should consider a separate liability
policy called an Umbrella. For $200 - $300 you can extend liability over both your
Homeowners and Auto Policies by $1,000,000.
Medical Payments to Others - pays
necessary medical expenses that are incurred by a person other than a household resident
on the residence premises or arise out of activities of any insured such as golf or any
other non-professional sports.
Valuing Your Home - Once
you decide on an agent / insurer for your Homeowners insurance, ask for a copy of the
Replacement Cost worksheet from your agent. Review it for accuracy and keep with
your policy. It will be used later if it becomes necessary to settle a major loss.
Remember to update your coverage to reflect any major home improvements and add the
cost to your worksheet.
So, that’s a quick overview of the coverage found in a typical Homeowners Policy. Please
be aware that this information is offered for general purposes. It is not a legal
definition of any policy, many of which vary slightly, and is not a substitute for reading
and understanding your own policy!
Now, let’s look at some of the Tricks of
the Trade to see How You can Save Money on your Homeowners Insurance!
Money Saving Tip #1 - Raise
Your Deductible. Your Deductible is the
amount you pay when you make a property claim before your insurance "kicks in".
In other words, if you have a $1,000 claim and a $250 deductible, you pay the first
$250 and your insurance company pays the remaining $750. The disadvantage of raising
your deductible is that you will pay more when you make a claim. The advantage is
that the premium will go down. Most insurers set their basic policy deductible at
$250. Lower deductibles are normally surcharged. You can save approximately
10% by raising your deductible from $250 to $500 and usually twice as much for $1,000
deductible. Even if you end up paying your deductible, you will probably save money
in the long run as the average Homeowner files a claim once every 10 years. In any
event, it is not wise to file for small claims that you can afford to pay. Insurers
can use loss payments as a reason for surcharging or canceling your policy.
Money Saving Tip #2 - Protective
Devices. Insurers provide credits on your policy for Local Burglar
Alarms, Fire Extinguishers, and Dead Bolts. If you have these items, check your
policy for a credit. If not, consider installing. Credits are typically twice
as high for Central Station Fire &/Or Burglary Reporting. Your agent may forget
to uncover this information, so be prepared to ask.
Money Saving Tip #3 - Age of
Dwelling. I realize you can't change the date when your home was
originally built, but you may qualify for a preferred policy with lower rates if your
roof, plumbing, heating, and electrical systems have been updated in the past 20
years. Additionally, some companies surcharge homes over 20 years old while others
do not. Ask your agent if you're getting the best deal.
Money Saving Tip #4 - Coverage
Packages. Many companies now offer coverage packages to add such
things as replacement cost, all-risk contents, back up of sewers or drains, and increased
liability limits as a single endorsement. Even though you may already have all these
coverages, you could be paying more for them individually then you would under a coverage
package.
Money Saving Tip #5 - Fire Hydrants.
Where you live can have a big impact on what you pay. Premiums are based on the
quality and location of the fire fighting resources. If there is a fire hydrant
located within 1000 feet of your home, make sure your agent knows about it. Many
rural areas start without fire hydrants and they are added later. During the
interim, look for an insurer who uses alternative water sources. More on this topic
in our Homeowners Bonus Report.
Money Saving Tip #6 - Check the
Insured Value of your Home. Homeowners Insurance is often purchased in
haste. It's easy to overpay if you insure for the full market value of the
property. Don't include the value of land! The cost for the basic Homeowners
policy is based on the dwelling amount so if you over-insure, you over-pay. Not too
long ago, Allstate agreed to reimburse policyholders in California over $100,000,000 in
excess premiums due to their agents systematically overvaluing client properties. Be
careful not to underinsure your property as well. This can cost you too in the event
of a claim. See the section above entitled Replacement Cost / Structure.
So, there you have it. Six (6)
ways to save money on your Homeowners insurance.
This is certainly useful information and will save you money on your Homeowners
Insurance if you are able to take advantage of it.
However
What if I told you that this is just the tip of the iceberg? What if you
could save 10% or more with just a few more tidbits of information? Well, you can!
In my special Bonus Report, I reveal "Insider Knowledge" as to what
goes into getting the best rates. No fluff, just straight talk on what you need to
know. Where to look for the best rates, what credits you need to ask for, how
insurers assign rating classifications, and much, much, more.
Take your first step toward getting the best Homeowners Insurance deal in
town. Just click on "Bonus Homeowners Report"
to order a copy. Your satisfaction is 100% guaranteed. If you are not able to
save 10% or more on your Homeowners Insurance after applying the information contained in
this Bonus Report, we will cheerfully refund your money. All I ask is that you
document your efforts.
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