Your home is a huge investment, protect it. Home insurance compensates you for losses to your home and the possessions inside of your home. You’ve worked hard for what you have, it’s important to have the right protection. There are many options of what home insurance can cover on your property, so let Fulshear Insurance help you understand your coverage and help you make the right choices that offer you the best protection.
What is insurance, and why do we have it? Insurance is a means of financial protection when you have suffered a loss. So, if there is a catastrophic event that results in considerable damage to your home, you need the confidence of having chosen a financially stable insurance company or “carrier” that can pay your claims and allow you to make the necessary repairs or rebuild your home and make you whole again. It’s not to make you better than you were before, but insurance is to return you to the state where you were or as close as possible before the catastrophic event occurred.
Homeowners insurance typically covers your home, the other structures on the property, personal property inside the home such as furniture, appliances, clothing, and home décor from a variety of perils including windstorms, fire and theft. Even though we can’t predict a loss, we can put measures in place to protect ourselves from that loss.
The Dwelling Coverage amount listed on your insurance policy is the reconstruction cost for your home and may vary greatly from the market value of your home. The dwelling coverage is not the price you paid for your home. It doesn’t have anything to do with the Market Value of your home or the Tax Value of your home. The dwelling coverage is made up of the cost to remove debris from a fire, tornado, etc, remove the slab if necessary, regrade the land, and rebuild your home as close to what it was before the catastrophic event occurred. The dwelling coverage amount is determined by the carrier using an Insurance to Value Index developed by Marshall & Swift/Boeckh (MSB). The dwelling coverage amount may vary from carrier to carrier, but overall, it’s the index most often used by insurance companies to determine the cost of removing debris, preparing the land and rebuilding your home.
If the MSB calculation shows your reconstruction cost to be $650,000, you shouldn’t be carrying only $400,000 worth of dwelling coverage. When it costs $650,000 and you only have $400,000, you have to decide what part of the home you aren’t going to rebuild, or you have to take out a loan at your own expense to be able to build the home the way it was before the event.
Most homeowners know little about their coverage other than the annual premium they pay. Keep in mind, paying a cheaper premium doesn’t always mean you have the best coverage or the best option for you. There are other factors to be considered, and finding out after you have lost your home that you didn’t have adequate coverage, isn’t the best time to find out.
Other Structures coverage is included in your homeowners insurance policy and is typically 10% of the dwelling coverage. However, it is important to review the amount of coverage to make sure it is sufficient to replace your other structures in the event of a total loss. Increasing the coverage is available at an additional cost. “Other Structures” is defined as structures which are separate and apart from the home. Other structures include:
While you can’t put a value on the sentimental items like pictures and videos of the family, Personal Property coverage does help protect your items such as furniture, appliances, clothing, linens, window treatments and any non real estate items in the home. These items are worth much more than you realize! In the event of a covered loss, you want to ensure you have adequate protection to replace the lost, damaged or stolen items we take for granted every day.
Items such as guns, artwork, jewelry, furs, coin collections or any type of collection may have a limit to the amount covered under the Personal Property section, so it may be necessary to add more coverage to your policy, which is called an Endorsement or Rider.
The following steps can help you determine the value of your items and be prepared in the event that you need to file a claim:
These records will help you to complete the claims process more efficiently and accurately if you suffer a loss.
Loss of Use
Loss of Use covers additional living expenses when you have been displaced from your home due to a covered peril. A peril is exposure to the risk of injury, loss or destruction. A peril listed on an insurance policy may include hurricane, tornado, fire, theft and other such events. It is important to know not all perils are covered by a homeowners policy. Know your coverage before you buy! The worst time to find out what your policy covers is after the peril as occurred. Loss of Use coverage reimburses the policyholder for the extra cost of living elsewhere while the home is being restored after a disaster that is covered on the policy.
Your home liability coverage protects you, the landowner, in the event someone other than a household resident is injured on your premises, you are responsible for damage to someone else’s property, or you are liable for another person's bodily injury anywhere in the world. Some examples which fall under this coverage include:
Liability insurance can pay for medical expenses, funeral costs, property repairs and even a lawsuit if the injured party chooses to pursue a claim through the court system. Liability insurance will not cover acts of violence or intentional damage.
Covers medical expenses, limited to a specific amount per person and/or per accident for injuries occurring on your premises to persons other than an insured, or elsewhere, if caused by you or a member of your family. An important feature of this coverage is that payment is made regardless of legal liability.
Replacement vs Actual Cash Value (ACV)
Actual Cash Value – When reading over the language in a policy, this is probably the most confusing. There are two places in a policy where you want to see Replacement Cost coverage as opposed to Actual Cash Value (ACV) coverage, and that is the Dwelling and Personal Property sections. A Replacement Cost homeowners insurance policy will pay what it costs to replace your home and personal property less your deductible. An Actual Cash Value homeowners policy will only cover the current depreciated value less your deductible. Actual Cash Value is figured by using the Replacement Cost less depreciation and less the deductible, so don’t be fooled when you see the words “Replacement Cost” and think you have a Replacement Cost policy.
Just because you have determined you have Replacement Cost Dwelling coverage doesn’t mean you also have Replacement Cost Personal Property coverage. You can have Replacement Cost Dwelling coverage and not have Replacement Cost Personal Property coverage. It gets confusing, that’s why it’s important to work with our Trusted Choice team of agents at Fulshear Insurance Group, Inc.
Deductibles are a big part of your homeowners insurance and are part of what determines the premium you pay. The deductible amount is normally based on the Dwelling Coverage of your homeowners policy. If your Dwelling coverage is $365,000, then a 1% deductible is $3,650. Choosing the right deductibles is very important to your financial health.
When you experience a loss, you are responsible for a certain dollar amount, which is determined by the amount of the deductible. Example: You have a total loss on your roof, which costs $18,000 to replace. You have a Replacement Cost policy, so there is no depreciation to be considered. If you have a 5% deductible on a dwelling coverage of $400,000, you are responsible for the first $20,000 in repairs. In this example, you would be responsible for the full cost to replace your roof. If you had a 1% deductible, you would be responsible for the first $4,000 in repairs, and the insurance company would pay the balance of $14,000.
If insurance is a measure of financial protection, then it’s important to understand what your coverage really means besides the premium you are paying. If it would be difficult for you to pay $18,000 out-of-pocket for a new roof, then having 5% deductibles to save $300 on your annual premium, probably isn’t the best option.
At Fulshear Insurance, we care that you have the right coverage. It only takes 10-15 minutes to provide us with the information we need to customize a package that allows you to sleep at night knowing you have the right protection for your home and personal property. We work with many financially sound companies and will shop your coverage to be able to present options that make sense. Call us today for your free no-obligation homeowners quote, so we can help you obtain the insurance you need.
Flood Insurance is not covered under a homeowners insurance policy. It requires a separate policy. Fulshear Insurance has options for flood insurance including Private Flood Insurance programs or the NFIP – National Flood Insurance Program, which is underwritten by FEMA.
If your home is vacant because you have moved and you are waiting for the sale of the property or maybe you are considering renting it, your homeowners insurance policy is not the appropriate coverage. If you suffer a loss while the home is vacant or being rented, your homeowners insurance policy probably will not cover the loss. Most homeowners insurance policies have clauses that state you must notify your agent in the event you move out of your home. Fulshear Insurance has options for both vacant and landlord coverage, so be sure to call us for your free no-obligation evaluation.