Understanding Your Homeowners Insurance CoverageSubmitted by Helping Families Build A Financial Legacy on June 14th, 2017
Do you receive your homeowner’s policy and immediately read it from cover to cover? I think for most of us the answer is “no”. Typically, homeowners obtain a policy for their loan closing and may not take a second look at the coverage until they need to file a claim—which maybe too late. June is when my homeowner’s policy is up for renewal and since we made a few improvements over the last couple of years, I wanted to confirm our policy still meets our needs.
I contacted Stephanie VanSlyck of Magruder Agency in Brandon to help review my policy and asked her to share with me some of the answers to common questions.
How do I know if I have enough homeowners insurance coverage?
First, you’ll need to know the cost to replace your house including demolition in the event of a complete loss. Typically, you only have information on the market value. When you purchase a home, look up the value on Zillow or on the property appraiser’s website, that’s the market value. The replacement cost can be different. Your agent has special software to help you determine the appropriate level of insurance based on your circumstances.
And if you’ve had the same policy in place for several years or made any upgrades like a new bathroom or kitchen, you’ll want to evaluate your coverage to determine if it’s still adequate. Some insurance policies have inflation provisions that automatically increase your coverage each year, but this still may not be enough to cover improvements.
How much personal property covered? Does my insurance cover my engagement ring?
Generally, your personal property coverage equals ½ of your standard Coverage A (dwelling). And coverage for replacement cost is not automatic. Replacement cost means you’ll be reimbursed for the current cost of the item not the current market value. So, if your 3-year-old sofa is damaged in a fire and needs to be replaced you’ll be reimbursed for the cost of a new comparable sofa, not the value of a used sofa.
Jewelry and other high value items may be covered but only up to a stated limit. It’s best to discuss the coverage with your agent to see if a separate policy is appropriate in your situation.
When do I need flood insurance? What does flood insurance cover?
Everyone needs flood insurance! Especially, since flooding is excluded from your homeowner’s policy. According to FEMA, flooding is the most common natural disaster in the United States. And it’s just not for people living on the coast—even people in low risk areas need insurance. In addition to flooding from a rising waters along the coast, your house can have flood damage caused by heavy rainstorms. Road construction, new development and clogged storm water drains can all impact the flow of water and result in a flood in an area without a previous history.
How much liability insurance do I have? Will I be covered if my dog bites someone?
Liability insurance coverage defaults to $100,000 per occurrence but can be increased to higher amounts. I recommend higher limits especially if the client has a pool. For liability protection consider adding an umbrella policy which covers claims in excess of the limits of your homeowners and auto policies.
Most basic homeowner’s policies issued in Florida do not cover dog or any other animal bite. Some carriers do allow coverage for certain dog breeds but you’ll need to specifically request the coverage. A separate canine liability policy is also available.
Why is it important to work with an insurance agent?
Everyone has a unique situation. An insurance agent learns about your lifestyle, identifies risk, then offers recommendations to properly protect your assets. We build relationships with our clients and they appreciate the advice of a professional. After all, no one walks out of a claims situation and says, “I had too much coverage”—usually it’s “I wish I had more.”
Lori Nadglowski, CFP®, MBA has a passion for helping families and those in need. After over two decades of experience in the financial services industry, she took that love and founded Laurel Wealth Management, LLC, a firm dedicated to helping clients build a financial legacy. For more information about Financial Planning, please contact me at 813-252-0799 or firstname.lastname@example.org.
Laurel Wealth Management and Magruder Agency are not affiliated and are separate entities from LPL Financial.
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not provide personal service. This may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.
Please keep in mind that insurance companies alone determine insurability and some people may be deemed uninsurable because of health reasons, occupation, and lifestyle choices.