• Which elements of a home insurance policy are the most important?

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    Miley from CA asked us: “Which elements of a home insurance policy are the most important?”

    Our Answer: All aspects of your home insurance policy serve a specific purpose but there are two areas where you need to focus special attention: replacement costs and personal liability. Let us explain:

    1. Personal Liability: This is arguably the most important aspect of a home insurance policy because it can protect you in the case of a lawsuit. You never know when and what you’ll be sued for in today’s society and even if you’re proven innocent, defense costs are expensive. You still have to pay those. Make sure your homeowner liability limit is the same as the rest of your insurance policies and that you aren’t under-insured.
    2. Replacement Cost: This aspect of a homeowner policy extends through two forms of coverage: Coverage A (your residence) and Coverage C (your belongings). If you don’t elect to use replacement cost on both of these coverage types, you stand to lose a lot of money if your house or personal belongings are destroyed.
    • Coverage A:
      If you insure your house for less than the estimated replacement cost to save money, you could pay an out of pocket penalty if your house is completely or partially destroyed. But if your house is insured for the total estimated replacement cost, you will be covered during an accident.
    • Coverage C:
      When you insure your personal belongings, make sure you choose the replacement cost option. It will cost more but if you lose everything in a fire, your insurance company will pay the cost to replace the items rather than the amount of each items’ depreciated value.
  • My insurance company does not pay for a claim another company would pay. What can I do?

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    Daniel from NYC dropped us a tough question last week: “What can I do if my insurance company (Home Owner’s Policy) doesn’t want to pay out on a claim that other insurance companies would cover?”

    Our answer:

    It’s important to remember that not all insurance companies or policies are created equal so it’s very possible that one company will for a claim that another will not. If you think your claim has been wrongly denied, there are several steps you can take.

    First you want to make sure that you completely understand your policy, the claim and why it was denied. This means reviewing your policy and trying to understand the insurance language. Your insurance company can also tell you why it was denied.

    Next, you need to make sure that you have all the details and can provide supporting evidence and document as to why you believe your claim should been approved.

    You need to do this because your next step is filing an appeal. Any kind of supporting evidence in your favor may help get your claim reversed but this is not guaranteed. If your claim is denied once again, the last option you have is to hire a lawyer and take your insurance company to court. This can be an expensive and drawn out process so make sure you weigh the cost with the benefit.

  • What are the best home insurance deals around?

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    The eternal question for homeowners and renters looking for insurance is of course the price question. So, Rand from OR wants to know: “What are the best home insurance deals around?”

    It’s easy for people to constantly give you generic advice on how to save money on your home insurance policy but when you’re trying to compare policies, it’s easy for it to all being to blend together. Sometimes, we just want to know who has the best prices to make our lives easier. Here’s a list of the top 5 insurers who offer great pricing on their homeowner insurance:

    1. USAA Insurance: USAA Insurance or United Services Automobile Association offers different kinds of policies and automatically comes with full replacement cost coverage.
    2. Country Insurance: This company offers multiple discounts on premiums to make sure you don’t over pay for your insurance.
    3. Amica Mutual: According to some tests, Amica rates tested 30% lower than your big business insurers.
    4. Auto Owners Insurance: This company offers much more than auto insurance. In a head to head test with State Farm, Auto Owners pulled away with lower premiums and they also offer discounts.
    5. Erie Insurance Group: Home insurance is offered in several states and certain discounts can apply. In a recent survey, 96% of customer said they planned to renew.

    Because home insurance prices depend on many varying factors, it’s hard to develop a definitive list but the insurance companies above are a great place to start when you feel lost.

  • Work at Home: Why are home insurance companies now requiring that I have a separate policy to cover my business?

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    If you run a business out of your home, don’t assume your homeowner’s policy will cover your business. It may be tempting to forgo business insurance to save some money but it’s not a good idea. So, take the money you’re saving on renting a brick and mortar store and put it towards business insurance. Most insurance companies have always required that home based businesses have the right commercial policy but many business owners have only just started realizing the need.

    Insurance companies realize that running a home based business increases the risk of an accident on your property. If you get a package for your business and the delivery person slips and falls, without business insurance, you’re responsible for the medical costs. Or, if you experience a fire that destroys much of your business equipment, your entire claim could be denied if your insurance company wasn’t aware of your operations. There are several ways that you can get adequate protection with interrupting your business finances.

    Depending on the type of business you run, a rider to your current homeowner policy may be all you need. This is the most affordable option but will only add around $2,500 of extra protection. This is ideal for a business that doesn’t require much interaction or have valuable items on-site. On the other hand, it may be not field large claims like injuries or lawsuits.

    An in-home business policy provides coverage up to $10,000 and includes policies that cover employees as well. This can cost up to $500 per year but insuring your business is well worth the cost. If you need more than $10,000 coverage, purchase a business owner’s policy. Best for high revenue generating businesses and those that use expensive equipment, this can provide millions worth in coverage as well as peace of mind.

  • What Are Some Good Home Insurance Online Comparison Tools? (Hint: We Are!)

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    It’s important to shop around for home insurance to get the right policy for the right price but it can be confusing once you begin your search. There are many different resources for comparing home insurance policies so how can you be sure which one is the best? When you work with us, we guarantee competitive rates and personalized policies but no matter who you choose to work with, there are a few things you need to keep in mind while comparing insurance policies.

    To make an accurate comparison, you need an average to base prices on. If you visit your state Department of Insurance, you can find average prices as well as ratings and reviews of insurance companies. This is valuable information because there are many aspects that make up a positive insurer, not solely price. Be sure to ask family and friends how they feel about their current insurer. Once you have a few insurance companies in mind, shop online.

    Online shopping yields quick quotes and basic policy information but if you need more coverage, don’t be afraid to make a phone call to a representative. Insurance representatives are there to help walk you through an insurance policy and can assist with your selection. Be sure to independently research company ratings and financial health. One company that offers cheap policies may not have the capacity to pay a claim to you when it’s required. The other company whose policy is slightly higher may be more financially stable.

    Don’t forget to include things like coverage limits and a comfortable deductible limit. Working with independent insurance agents will give you unbiased advice but if you want to go it alone, keep the above in mind when comparing insurance. Our website has useful information on how to choose the right policies for you.

  • Are Apartment Service Plans Or Insurance Plans Worth It?

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    Absolutely! Too many renters forgo insurance because they believe that the landlord’s policy covers everything or that they just don’t need the protection. This couldn’t be further from the truth. While your landlord’s policy includes coverage for the actual building and structure of your apartment, none of your personal belongings are covered. If a fire breaks out and destroys your bedroom, your landlord will repair the damage to the walls and floors but replacing everything is up to you. Many individuals accumulate personal belongings over a period of time so replacing everything in one fail swoop can be expensive.

    Renter’s insurance can provide protection for everything in your apartment. If the entire unit is a total loss, you’ll have to replace items like silverware, sheets, and towels in addition to electronics and large furniture. It’s important to get the right amount of coverage. Generally, it’s best to use the 200% method. Try to inventory every room in your apartment. It’s a tedious job but normally, you will only have to do it once. Total up the value of everything you own and purchase coverage limits twice the total. This takes inflation into account in case damage occurs years from now.

    If you have specialty items, ask your insurance agent about scheduling them. This places an individual coverage limit and rules out normal exclusion policies. This way, your valuable items are covered no matter what. Ask about specific exclusions for certain items like jewelry and fur. Another bonus of a renter’s policy is liability protection. If someone is injured in your home, you can be sued. Liability will protect you and help pay for defense costs. It can also provide coverage on certain items even if you’re away from home with them.

    Renter’s insurance is always worth the cost and the best part is, it’s extremely affordable!

  • If I Make A Home Insurance Claim And It Is Denied, Can I Expect My Premium To Rise As A Direct Consequence?

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    Filing a claim with your homeowner’s insurance won’t necessarily cause your premiums to go up, whether it’s approved or denied. Homeowners always assume that filing a claim will raise premiums, similar to car insurance, but home insurance companies base rates on several different factors. These are always incorporated into rate increases, which can happen even if you avoid filing any claims for years. If you’re paying for home insurance, it doesn’t make sense to not use it when you need it but it’s a good idea to consider if there will be long term repercussions.

    If you make 3+ claims per year, it’s likely that your premiums are going to rise because of your claims. Your policy may even be dropped. So how do you know when to make a claim? Before filing a claim, analyze your current policy. If the damage to your house is minor and you can take of the repairs out of pocket, avoid filing a claim. This may cost you more money but it could save you more in the long run. Of course, if you only file one claim for minor damage in a 5 year span, that probably won’t the one thing that raises your rates.

    Insurance companies are mainly concerned with where you live, the risks you face, the type of home you have and how much coverage you have and will base rate increases off these items. Rates are normally raised for an entire region so just because you made a claim that year, don’t assume that’s why your rates are increasing. If you’re ever confused about a rate increase, contact your insurance company. Your agent should explain why rates increase and if you’re concerned about making a claim, ask someone how it will affect your rates. Don’t be afraid to use your home insurance but be smart about it as well.

  • What Information About My Home Should I Have Available When Purchasing Home Insurance?

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    When you start shopping for home insurance, it can be overwhelming. Many times, it’s during the home buying process and most mortgage lenders require insurance before allowing closure on the house. Once your home is secured, start your search for insurance as soon as possible. This will give you adequate time to research companies and compare policies and quotes. Just be ready to answer many questions. Knowing the answers ahead of time will help streamline the process and make buying a home that much easier. Some are simple and others are more complicated. Here’s a list of things you should know when applying for insurance:

    • Address
    • County
    • Year and type of construction
    • Square footage
    • Type of heat (gas, oil, electric)
    • Type and condition of roof
    • Do you have forms of alternate heat?
    • How many feet to a fire hydrant?
    • How many miles to a fire department?
    • Do you have a garage?
    • Do you have a porch or deck? What are its measurements?
    • Do you have any form of security?
    • Do you have smoke detectors or fire extinguishers?
    • Was your home built before 1990?
      • If so, when was the roof replaced?
      • When was the heating updated?
    • What kind of electricity do you use? Fuse box or circuit breaker
    • What was the purchase price?
    • Do you currently have coverage?

    You should have some idea of what kind of coverage you’re looking for. If you don’t know anything about insurance, work with an independent agent or conduct personal research. It’s a wise idea to invest in replacement value but there are many other aspects to take into consideration. Make sure you purchase enough liability insurance to cover personal assets. If you have a pool or dogs, let your insurance company know about those as well. Being prepared will help you find the best coverage.

  • If I make a home insurance claim and it is denied, can I expect my premium to rise as a direct consequence?

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    You buy home insurance in case something goes wrong, but should you hesitate when filing a claim? If you’re worried about your insurance rates going up, you’re concern is legitimate. While insurance companies may claim that filing a claim won’t increase your premium, the fact of the matter is that’s normally just not true. Whether your claim is approved or denied, it’s likely your premium will go up. There have even been horror stories of homeowners being dropped for multiple claims. Keep in mind that different insurance policies have different methods of handling claims. Some will raise your rate after three claims in two years while others will raise your rates if you make more than one claim in eighteen years!

    Of course, some claims are going to raise your premium more than others. A liability claim for a dog bite will raise your premium more than a damaged rug. Water damage is also going to raise your premium. Additionally, examine your home insurance policy to see how long claims will stay on your record. Even small claims can raise your premium hundreds of dollars for several years. But, it’s not always premiums that get raised because of a claim. Sometime, insurance companies will raise your deductible amount so that the homeowner will share a greater burden of the loss in future claims. You can’t change this deductible amount either. Before you’re forced to make a claim, speak with your insurance company to find out how claims, small to large, are handled. It’s not exciting to review your policy page by page, but it may be the only way to understand how a claim will affect your premiums. Always think twice before making a claim on your home insurance policy. It could affect you for years to come.

  • If I can afford the deductible, should I set a 5% deductible on my home insurance instead of 1%?

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    In the past, homeowner policies included a flat rate deductible amount, regardless of your home’s value. It was in the 1990’s that things began to change. Calculating a deductible based on a certain percentage of your home’s value was introduced to earthquake insurance first, but has now spread to major homeowner policies. In this method, let’s say your home value is $300,000. A 1% deductible is going to equal $3,000. A 5% deductible is going to equal $15,000. If you can afford it, it’s an easy way to lower your premium amount, but it can also be dangerous. If you’re volunteering to raise your deductible amount significantly, make sure you have the assets on hand in case something happens. A freak windstorm can come through at any time and if you’re not prepared to pay the deductible, you may find that you’re raiding personal assets to fix your home. You should also ask your insurance agent if raising your general homeowner deductible will affect situational deductible. Some insurance companies already impose a 5% deductible on those who live on the coast for hurricanes. Other separate deductibles include those for wind, hail, and earthquakes.

    Of course, not all home insurance policies offer percentage deductibles, but raising your deductible is a sure fire way to lower your overall insurance premium. Just be aware of situational deductibles, whether it’s offered at a flat rate or percentage wise. Raising your deductible is okay as long as you can afford the damage when it happens. Speak to your insurance agent to see what your options and how much it could lower your premium. If the savings don’t equal  the amount you desire, it may be best to leave your deductible at a lower rate.