DADE CITY, FLA. - Is your Dade City home your most important asset? Buying a home is a grand achievement and investment. In case anything happens, wouldn’t you feel at ease knowing you, your family, your possessions and your home are covered?
When it comes to Homeowners insurance there are many things to review, analyze, include and determine. We’ve created a Homeowners Insurance checklist to relieve you of any doubts or unanswered questions you may have.
Whether you're buying a home, or curious about the coverage you may currently have, we encourage you to read on to see if your checklist is adequate. Who knows, you might learn something new!
First Things First
Do you know what coinsurance is and what percentage you’d need to carry? The basic definition for coinsurance is “a clause that requires an insured to pay part of a loss if coverage provided is less than a specified percentage of the value of the property at the time of the loss,” (Diana Fink, Founder of Central Insurance School). Basically, if a building valued at $250,000 is insured with an 80% coinsurance clause on a policy, the insured must purchase at least $200,000 in coverage. The insurance company is not responsible for any clauses lower than 80%, and will penalize the insured. (Formula below with example)
Purchased Coverage: $80,000
Property Value: $200,000
$80,000 / ($200,000 x 80%) x $10,000 = $80,000 / $160,000 x $10,000 = $5,000
What does this mean for you?
Let’s suppose you insure the previous stated home for $150,000. This would be only 60% of its value. Suppose you had a deductible of $2,500 on this policy and a tree falls on your house resulting in $20,000 worth of damage. Your homeowners insurance company will only pay $9,500 towards your claim. This is because you underinsured your house. In this case, you have self-insured 40% of this house. 100% - 40% = the amount you have insured (60%).
Covered Peril: $20,000
Percent you have self-insured: 40%
$20,000 x 40% + $2,500 = $8,000 + $2,500 = $10,500
*$10,500 is the amount that you will have to pay since you did not meet the coinsurance standard.
Second Things Second
Do you know what it would cost to rebuild your home? Hopefully you’ll never need to find out, but if something were to happen you’d want to make sure you have enough coverage to replace your home. It might be helpful to have your agent run a Costimator report (designed to model and assess manufacturing costs) on your home to provide you with that specific information. While you’re at it, take a detailed inventory of your house and include that in your estimate. Make sure to account for furniture, clothing, technology, etc. because these are also things you’d need replaced. If you’re an overachiever, keep updated photos of each room and its contents in your phone. It’s best to capture the area from one corner of the room to the other to ensure all important items are photographed. Why not just keep ‘em in “the cloud” and call it a day!
Now that you know the price of your home and its belongings, here are some important things to remember when shopping for homeowners insurance:
In case of a fire or other natural disaster: Make sure you have sufficient coverage on your home and its contents.
Recent Additions: (ex. A carport or Florida room) Anything that adds extra square footage to your home yields a need for higher replacement coverage.
If you own a condo or apartment: Find out what your associations insurance policy covers and what you’re responsible for (aside from your personal possessions)
Prized Possessions: If you have fine jewelry, antiques, furs or firearms make sure to contact your agent to discuss the coverage you’d need on these items. (Jewelry is only insured up to $2,000 unless specifically scheduled with an inland marine policy.)
Flood Coverage: Check the flood zone map of your community through FEMA.gov. *Remember, homeowners insurance does not include flood coverage.*
Some insurance companies (not all) do rely on your credit score. As we should be trying to improve our credit score very early in life, it’s okay if yours isn’t the best! It’s never too late to start taking measures into your own hands. Implement ways on how to improve your credit score starting with your everyday activities and daily tasks.
An important takeaway: KNOW EXACTLY WHAT YOUR INSURANCE POLICY ENTAILS. We know you might not want to read through pages and pages of words and phrases that might be a tad confusing. Ask your agent to review it with you and point out major points you might need to know.