Preparing for a Hurricane

As the weather gears up for another long hot summer, it is easy to forget that a major hurricane could be just weeks away. That’s right, folks – June 1st was the official start to “Hurricane Season”!

The National Oceanic and Atmospheric Administration (NOAA) predicts a “near-normal” Atlantic hurricane season this year. But don’t be reassured by the word “normal” – it means that we can expect 9-15 named storms, 4-8 hurricanes with wind speeds up to 110mph, and 2-4 major hurricanes in category 3 and above with wind speeds over 111mph. There is no way of telling if or where these storms will make landfall. Before they arrive – in other words, right now! – it is a very good idea to not only check that your home insurance is in order, but also to follow some basic steps to prepare. Thanks to our friends and partners at http://velocityrisk.com/ for the following excellent tips!:

  1. Create an emergency communication plan: Pre-arrange an evacuation route and destination with other members of your household, and be sure to know how to share warnings and alerts with your family members.
  2. Stock up on emergency supplies: What you’ll need: lots of water, non-perishable foods, can opener, flashlight and spare batteries, battery-powered radio, first aid kit, whistle, plastic sheeting and duct tape, can opener, cell phone with chargers and a backup battery.
  3. Check your home insurance: Make sure your home insurance policy covers damage caused by wind, hail, and named storms/hurricanes. Verify that you have low deductibles so your out-of-pocket costs in the event of a claim are low. Check that you have a Replacement Cost (not Actual Cash Value) policy. If in doubt …. speak to your friendly insurance agency in Houston, Memorial Insurance!
  4. Consider buying flood insurance: Don’t wait until the next Hurricane Harvey is bearing down on you before you get flood insurance, because even if you buy it today, there is a 30-day waiting period before coverage takes effect. So plan ahead and get yourself covered BEFORE the next hurricane is on the horizon. And remember – flood insurance is NOT included in your home insurance policy!

Ten Things to Look For in a Home Insurance Policy

There are many different coverage options available in a home insurance policy. Which ones do you really need, and which ones can you go without? Let Memorial Insurance guide you through the small print!

Really Need

  1. Enough Coverage: As a rule of thumb, it will cost at least $100 per square foot to rebuild your home. So, if your home is 2,000 square feet, you will need an absolute minimum of $200,000 in coverage. If your home is custom built, or uses higher-than-average-quality materials, the replacement cost will be higher.
  2. Replacement Cost: If the worst should happen, you want the insurance company to pay the full amount that it costs to rebuild your home and replace everything inside it. So the policy needs to state Replacement Cost, for the dwelling and the roof. This also applies to your Personal Property (coverage C) – otherwise you’ll get only Actual Cash Value for your belongings, which will be a lot less than the items will cost to replace.
  3. High Liability Coverage Limits: The difference in premium between $25,000 and $300,000 in liability coverage is just a handful of dollars per year, so you should go for the highest available amount to make sure you are well protected if you are found legally responsible for someone else’s medical bills or lawyer’s fees.
  4. Low Deductibles: The deductible is the amount of money you pay out of pocket before the insurance takes care of the rest. In a natural disaster-prone area such as Houston, insurance claims due to weather events are common, so it makes sense to have low deductibles. Standard in this area for good policies is a 2% deductible for wind, hail, and hurricane, and 1% for all other perils. 1%/1% is also available in many areas away from the coast.
  5. Water Coverages: These include water backup, slow seepage, and foundation coverage, and are included as standard on an HOB policy form but have to be added (“endorsed”) to other kinds of policies. They are generally inexpensive to add, but give you protection against very expensive potential losses.

Go Without

  1. “Actual Cash Value”: Some insurance carriers (including several very well known household names) depreciate your roof. In other words, you’ll receive less from the insurance company than the amount it will cost to replace your roof, and the potential payout shrinks every year as your roof ages. If your roof is 10 years old and you have an Actual Cash Value policy, you’ll receive next to nothing for your roof claim – or even nothing at all, after your deductible is taken into account. Also see above for what Actual Cash Value means for your personal property.
  2. Personal Injury Coverage: This sounds great until you realize that it does NOT mean physical injury to a person. “Personal Injury” is coverage for slander, libel, and other lawsuits that most homeowners will be very unlikely to face. In other words, with this one you’re paying extra for something you don’t need. Tricky agents love to add this to a policy because it sounds like it offers a lot of coverage.
  3. Extended Replacement Cost: If your home is insured for $200,000, and you have 25% extended replacement cost coverage, this does not mean you will receive $250,000 from the insurance if your home burns to the ground. Extended replacement cost only applies if an entire area is affected (for example by a major hurricane) and the ensuing demand drives up the cost of labor and building materials, so your home costs more to rebuild at that particular time than it normally would. Adding extended replacement cost is a devious way that agents “add coverage” without actually giving you the correct protection. If your home is going to cost $250,000 to replace, opt instead for that full amount of coverage under the “dwelling A” section of your policy.
  4. Identity Theft: This is one of a number of optional endorsements available on a home insurance policy. If you want this kind of coverage, it is best to buy a specific policy and not mix it in with the homeowners insurance. Otherwise, you might find you are having to make an identity theft claim under your home insurance which can potentially increase your premium on renewal.
  5. Wind/Hail/Hurricane Exclusion: If you live in a coastal area (Galveston, Brazoria, and some parts of Harris) and you receive a home insurance quote that looks too good to be true, then it probably is! Some companies won’t insure your home in these areas unless windstorm coverage is excluded, due to the high risk of hurricanes. So while you’ll be covered for fire, lightning, vandalism and malicious mischief, you’ll be getting zilch from your insurance if the next Category 4 takes your roof with it. Thankfully, Memorial Insurance has many options for coastal homes, including specialist companies that do include wind in high risk areas, as well as standalone windstorm policy options.

If you have any questions, give your agent at Memorial Insurance a call and we’d be happy to explain further!

Depreciation Heartache! ACV vs Replacement Cost

When it comes to insurance, there are many common pitfalls for the unwary. Let’s examine one of these today: Actual Cash Value vs. Replacement Cost.

Actual Cash Value: In this case, if you have a claim, your insurance company will pay you the amount of your claim minus depreciation. Imagine that you have a 25-year composition roof on your home which you installed 10 years ago at a cost of $10,000. If your roof is destroyed and needs replacing, how much will you get from your insurance company? The short answer is: not enough! Your roof’s expected lifespan is 25 years, meaning it depreciates in value 4% each year, to end with a theoretical value of zero after 25 years. In this example, your 10 year old roof has therefore lost 40% of its value by the time the hurricane hits, meaning the maximum available payout under an ACV policy is $6,000. But your financial pain doesn’t end there – you also have to take into account your deductible. So if your home is insured for $200,000 and you have a 2% wind/hail deductible, you will be paying $4,000 out of pocket before your insurance company pays even one cent. Keeping up? Therefore the total payout you’ll get from the insurance company will be the $6,000 Actual Cash Value of your roof, minus your $4,000 deductible, making a grand total of $2,000 ……. just a fraction of what you will have to pay to replace your roof.

Replacement Cost: This is a much better option. Your insurance company will pay whatever it takes to REPLACE your roof to the same standard as the one that was destroyed. There is no depreciation – all you pay out of pocket is your deductible. So in this case, you would receive a lot more money from the insurance company.

Moral of the story? Now you can see why Memorial Insurance always offers Replacement Cost policies, and low deductibles! Whichever insurance agent you use, always make sure the magic words Replacement Cost are on your homeowners insurance policy! Replacement Cost is not limited to the structure of the house itself – it can apply to personal property too, usually as an optional endorsement for a small extra cost. Reputable agents should always offer Replacement Cost – for both the dwelling and the contents – as standard, but beware unscrupulous agents who may try and sell you an ACV policy to save a little premium. It’s just not worth it!

6 Things to Look For in Home Insurance Mailers

Ever had something like this through the mail? Most likely you receive several of them every year in the lead-up to your home insurance renewal. They may sound tempting …. but how do you know if it’s a good quote? What should you be looking for? Let Memorial Insurance be your guide!:

  1. Coverage amounts: Do these match your current policy? They are often lower, because less coverage means a cheaper price. Your agent has several tools available to work out exactly how much your home should be insured for.
  2. Bells and Whistles: On this quote, $1,000,000 in personal liability is eye-catching, especially if your current policy offers “only” $300,000 or $500,000. But if you have an umbrella policy (which you should!), you’ll already have the high liability coverage anyway. And if you want to add higher liability to a homeowners policy, it’s only going to cost a few bucks a year. So this feature is not nearly as impressive as it sounds!
  3. Extended Replacement Cost: Some agents offer relatively low dwelling coverage amounts, but add the extended replacement cost endorsement and tell you it’s additional coverage for your home. This is not true. Extended replacement cost applies when a large area is afflicted by a catastrophe (for example a Category 4 hurricane), and the subsequent increased demand for materials and contractors pushes repair costs sky-high. This endorsement allows for extra coverage but ONLY in the event that replacement cost increases in your area as a direct result of a natural disaster. If faulty wiring causes your house to burn to the ground, you’ll get only your basic Dwelling Coverage amount from your insurance company.
  4. Deductibles: This quote headlines with the 1% deductible, but notice the cheeky 5% deductible in the middle? This part is the deductible for a named hurricane. If you keep in mind that named hurricanes are one of the leading causes of insurance claims in many states, including Texas, do you really want to be on the hook for a 5% deductible the next time a major weather event blows through? In the case of this particular policy, you’d be looking at a $30,000+ out of pocket payment before the insurance company stepped in to take care of the rest. If this is something you can afford and would be happy to pay for, then stop reading here! In Houston, a 2% hurricane deductible is standard, with 1% also available in some areas. At Memorial Insurance, we’d be happy to provide several quotes with different deductibles so you can make an informed choice and NOT get a nasty surprise after the next hurricane.
  5. Total Premium: The advertised rate on this quote is NOT the final price, it is a guess based on you having the best possible credit and zero prior claims. To get the final rate, insurance carriers run an “insurance score” taking into account the above plus many other factors. More than nine times out of ten, when you call the agent to take the quote, your premium will increase.
  6. Exclusions: Sure, this quote tells you that your contents are insured for replacement cost. But how about the roof? See my earlier blog post for details of why you do NOT want an Actual Cash Value (ACV) policy. Moreover, are water coverages (slow seepage, water backup, foundation water damage) included? Most likely not, because these increase the premium, which would make for a less impressive mailout!

Moral of the story: if you’re interested in a quote you receive in the mail, make sure you get an “apples to apples” comparison with your current policy to make sure all the coverage levels match. Better still, why not give Memorial Insurance a call – we have most of the main home insurance carriers in our agency, so we will do the shopping and comparing for you, and make 100% sure you are correctly insured!

6 Things You Forgot to Insure!

Insuring your cat may help to keep those vet bills down, but what about the other things that people often overlook? Don’t forget to protect yourself against the following:

  1. Half of your car accident: Liability insurance will pay for damage to other people, their vehicles and property. But what about your own car? Omit comprehensive and collision coverage from your policy, and you’ll be paying the full cost of repairs by yourself.
  2. The bad decisions of others: 1 in 4 drivers is either driving around with no insurance at all, or has woefully inadequate limits. If one of these guys crashes into you, guess who could end up paying for the accident? That’s right: YOU. If injuries are involved, the bills could be astronomical. To avoid this nightmare scenario, be sure to add UM/UIM coverage to your auto policy.
  3. Your valuables: High-value items such as jewelry, art, or antiques need to be scheduled on your home insurance …. or can be put on their own policy. If you make a big purchase, don’t forget to protect it! Also, take a look at your policy every year to make sure you have enough coverage for any additions or upgrades to your home. As your home grows, so should your insurance.
  4. Flooding: No one in Houston should be without flood coverage, which is NOT included in your home insurance. If you aren’t in a designated flood zone, flood insurance offers high coverages and unlimited peace of mind for $450 a year or less.
  5. Extra liability: If you’re doing well in life, the sad fact is that you are at risk from people coming after everything you’ve got, especially if you’re at fault for a serious accident. Umbrella insurance is inexpensive and will give you up to $5 million in extra protection.
  6. Replacement cost: be sure your policy includes these two magic words, for both your home and your personal property. Some agents are sneaky and will give you Actual Cash Value coverage in order to reduce premium, and this means your insurance will pay you only a depreciated value for your home, roof, or contents. What is the actual cash value of a 10 year old roof? A lot less than it costs to replace it, for sure. And when you factor in the deductible as well, an ACV policy may give you almost no payout at all after that Category 4 hurricane hits Houston.

Any questions? Give your friendly agent at Memorial Insurance a call and we’ll be happy to help!

Less Premium, More Coverage …. GO LEAN with your insurance today!

With insurance, you get what you pay for. This is fine up to a point …. but what if the things you’re paying for include hefty marketing budgets, national TV advertising, huge numbers of offices and thousands of staff? State Farm, Nationwide, Allstate and other major national carriers spend millions of dollars each year to make you think of them when you’re in the market for insurance.

If you hate the idea of your premium being spent on annoying TV jingles, you’ll be delighted to know that there are alternatives. In Houston, there are plenty of insurance carriers who offer low premiums, high coverages, and excellent customer and claims service …. but you have never heard of them. They don’t run expensive office networks, and they certainly don’t advertise on TV. In fact, they won’t even pop up on your Facebook feed, and in some cases you would even struggle to find them on Google unless you know exactly where to look.

But don’t be put off. All insurance companies are rated for their financial stability, and the amount of cash they have in reserve to pay claims. The highest available rating for insurance carriers is with A M Best. State Farm, Nationwide, and Allstate are all examples of A M Best rated companies …. but so are City National, Occidental, and Universal. The latter three companies are lean insurers that are long-established, financially stable, and use their money to pay claims, not advertising. They sell their products only through independent agents and don’t have an office network to support. By the way, did I mention that Memorial Insurance writes business with all three of these companies? (and many more besides!).

Another point to consider is that the big names often don’t have the best coverages. You’ll want to see the magic words “replacement cost” on your policy. You also need comprehensive water coverages (for water backup, slow seepage/leakage, and foundation coverage).

So, why not send us your current declarations page from State Farm, Nationwide, or Allstate? We’ll be happy to give you an honest, no-obligation assessment of what you’ve got covered, and if you like, give you an “apples to apples” quote with our carriers for comparison. Why pay more to get less? GO LEAN with your insurance today!

Seven Things Your Home Insurance Policy Really Should Include

 

1. Replacement Cost This means that the insurance company will pay to replace your roof and contents. If your quote does not include the words Replacement Cost, you’ll be stuck with an Actual Cash Value (ACV) policy, which factors in depreciation before paying out on a claim. Memorial Insurance offers only Replacement Cost policies.

 

2. Low deductibles The deductible is the portion of the claim you pay before the insurance company takes care of the rest. Common deductibles are 2% for wind and hail, and 1% for all other perils. Any higher than this, and you’ll be paying a lot of money out of pocket before the insurance kicks in.

 

3. NO policy fees Some insurance agents charge a policy fee to their customers, over and above the commission they already receive from the insurance company. Why pay $150 to your agent to do a job that other agents offer for free? Memorial Insurance never charges policy fees.

 

4. Adequate coverage If your home isn’t insured to the full cost of rebuilding, you are going to find yourself seriously out of pocket in the case of a total loss. Remember that even if you have an older home, the cost to rebuild it will be at 2018 prices, so you’ll want a 2018 insurance policy to match!

 

5. Water backup This is when a blocked drain causes sewage and waste water to back up into your home. Coverage is inexpensive, but not included in a standard home insurance policy, so make sure your insurance agent adds it!

 

6. Reputable company Hopefully you never have to put this to the test, but some carriers routinely outperform others when it comes to paying out on claims. Ask your agent for impartial advice on which carriers are best when the worst happens.

 

7. Flood coverage Protection against flood is not included in any home insurance policy – it must be purchased separately. No home in Houston should be without flood coverage, so ask your agent about purchasing a flood insurance policy today!