Why Your Homeowners Insurance is Missing the Mark and How You Can Fix Them

Sep 16, 2020 | Personal Insurance

The worst things that can happen to a homeowner are paying a policy they don’t need; having insurance that can’t cover what they need. Oftentimes we think that just because we have insurance, it already means that we will be part of the coverage in case something happens. And it was already too late before we realized we were underinsured or even paying unnecessary policies. Now, what happens if you can’t get homeowners insurance?

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Not Having a Proper Understanding Of Your Own Insurance Covers

Not having a proper understanding of the coverage is one of the reasons why you can’t get homeowners insurance. This happens all the time. The phrase “I thought this is part of the coverage“ sounds cliché in an insurance company. Many think that this and that are already covered but assuming is a no-no, especially with your insurance policy. Make sure that you understand every little detail about your home insurance. Know your home’s needs and be vigilant in making decisions before signing your home insurance policy.

You Bought Your Insurance With the Wrong Insurance Agent

What else happens when you can’t get homeowners insurance? When we say wrong, it means your insurance agent didn’t bother determining your needs. The agent signs you up without ensuring you have the right insurance policies. This scenario is no new. Some insurance agents do the basics of their job: to make prospective buyers sign up without thinking thoroughly about what they need in their insurance. Also, be vigilant. Shop around. There are agents called “captive agents “ who work for captive insurance companies.

They have limited policies and sell only one product since they are under one insurance company. As a result, the policies they offer tend to be less customized for the client’s needs. Therefore, make sure that you find an insurance agent who has not just the capabilities of explaining your insurance policies but also has concern for their clients. They must ask you what you want to be part of the coverage and explain everything. Good communication with your agent is crucial for fully understanding your insurance coverage. Don’t hesitate to ask questions. One good sign to spot a concern and professional insurance agent is when you see their willingness to know your needs. Those who pay attention to the details and explain everything you want and need to know to ensure you are adequately insured. 

Underinsuring Your House

This is one of the main reasons your homeowners’ insurance is missing the mark. Many think it is okay to insure their houses with the minimum or most standard policies to save money.  Little do they know that if, in any case, they need to file a claim and they are underinsured, that will be a total problem. Most homeowners buy only the insurance that can cover their mortgage, which is only around 80%-90% of the house’s value. Now the question is: How to know the right amount to insure your house?  Here are some tips:

  • You should consult a professional home-replacement cost estimator. By this, you can be sure they can give you the right estimated amount for your house. Some insurance companies give this service for free, especially to high-value customers. However, it might cost you around $300 if the insurance company you are with is not giving it for free. 
  • You can make an estimation yourself. Since DIY ( Do It Yourself) is not hard to do now, why not try it? Patience and meticulousness is the key. There are web tools that you can check online to estimate replacement costs. Other websites will charge you around $8. It has questions that you need to answer. This questionnaire can be 20-30 minutes long or more, depending on how many questions the website has. But if, in any case, you are not willing to spend a buck and think that you can do it without the help of the web, you can do it yourself. 

More information about underinsuring your home

  • There are specific ways or things that you need to do to get the estimated amount.
  • You can start by listing all the materials used to build your home. From the kind of cement, flooring,  walls, ceilings, and roof. Is your house a modern style or an antique kind?  Every detail is essential. Take note if you hired an architect and engineer to build it and a professional interior designer to decorate your house. Second, go to each room and list everything that might add to the value of your house. Personal belongings are big factors that can contribute to your house’s value more than you think. Your paintings, jewelry, furs, and gun should be listed if you have one. Special coverages might be needed to add to your policy for expensive possessions. Make sure that you keep all the receipts of your purchases as well. Remembering the number of your personal belongings is good, but having the receipts to back it up is way better. Lastly, don’t forget to list down all the upgrades done in your house. This can add value to your property significantly, so don’t underestimate any changes, no matter how small or petty you think it is. Now once you have all the information needed. You can talk to your trusted insurance agent about what policy best fits your needs. 

What happens if you can’t get homeowners insurance? Another instance is Assuming That Natural Disasters Are All Covered

Again, assuming things can never do us good. Especially assuming coverage in your homeowners’ insurance. A good example is flooding. This coverage is not included in a standard homeowners insurance policy. If you are living in a flood-prone area, it is almost mandatory for every house to have a flood policy added to its insurance. Houses near the river,  lake, and ocean are the most prone ones needed to acquire this policy. Also, areas prone to natural disasters can cause floods like hurricanes, tornadoes, hail, and storms if you remember what happened to the victims of Hurricane Katrina.

They said their insurance agents had told them they didn’t need to add flood insurance to their policy. While it is very obvious that they need it. Still, the court ruled that their insurance companies were not guilty and were not held liable to pay any damages caused by floods due to Hurricane Katrina. That said, if you know that you need a specific policy, you better have it. And if you want to be certain,  you can consult and visit the National Food Insurance Program’s site. They can tell you if you need to have extra coverage for floods. Ask your trusted insurance agent to add it to your policy if needed. 

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Having The Wrong Impression About Your Deductibles

We know that our deductibles are the amount we need to pay when we claim before our insurance kicks in. However, most deductibles are not flat rates. For example, Your house was damaged by a hurricane. Your deductibles will often turn out to be a percentage of your coverage. From 1%, it can go up to 5% of the insured value for a flood. Same thing with the earthquake. Your deductibles can go as high as 10% – 15%. Knowing how your deductibles work is vital for being prepared to pay a certain amount in case you need to file a claim. However, there are options as well where you can ask for the same flat rate regardless of the claim. But this plan can be expensive, and finding an insurance company that offers it may be challenging.

What else happens when you can’t get homeowners insurance: Lack of Coverage

In general, this is always the reason why you get underinsured. Whether you say it, you know it or not. Still, understanding every detail about your homeowners’ insurance policy is your job. You might say your insurance agent didn’t tell you this and that. However, it is your decision. So might as well educate yourself about every bit of your policy. And be smart in choosing your insurance agent. Knowing that you are working with someone you can trust is a good start to having a better outcome in deciding what you need in your insurance.

Here are the other things that you need to keep an eye on:

Replacement Cost is Better Than Actual Cost

If you have the actual cost chosen on your policy, the insurance company will pay the current amount of your possessions. So let’s say your five-year-old couch was damaged. You bought it for $1000 five years ago. But its current value depreciated to $500. Your insurance company will only pay you $500 for its cash value, unlike if you have Replacement Cost coverage. The insurance company will pay you the amount of money that you can buy for the exact same couch that you have. 

Loss of Use Coverage

Though most homeowners insurance covers this, you still need to ensure that you will be covered enough until your house is rebuilt. Insurance companies will provide you with money to pay for a temporary home where you can stay. Also, will pay for your basic expenses. But this coverage has limits. Hence,  making sure that you are fully covered is very important. Being covered for two years while rebuilding your house is the ideal time that you should get. Ask your insurance agent about this coverage to ensure you are fully covered.

Do not hesitate to contact us regarding what happens if you can’t get homeowners insurance here at Team AIS in Denver, CO. We’ll get back to you immediately.

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