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!

Independent Insurance Agent vs. Buying Directly Online

In the past, you didn’t have many options for buying home insurance, but those days are well and truly over. If you’re a homeowner, you’ll be getting bombarded every year with “too good to be true” offers in the mail, and every insurance company under the sun will be popping up on your Facebook sidebar as renewal date approaches.

Not only are there more options these days, but there are more ways to buy insurance, from a plethora of local agents, to companies offering direct quotes online in a matter of minutes.

It’s true, there are companies out there who will give you a real life quote for your home with just a few clicks of your mouse. So is this the way of the future? Could it really be the best course of action to just go online and buy the cheapest policy you can find, direct from the insurer?

It’s tempting, but before proceeding, ask yourself the following question: am I an insurance expert? If the answer is yes, go ahead and click away to see what is on offer.

However, if you don’t know your water backup endorsement from your water damage coverage, or your personal liability from your personal injury, then you need to get an independent insurance agent in your corner. Independent agents such as Memorial Insurance have access to many different markets and can find you a homeowners’ insurance product that suits your home, location, and budget.

Often, you will save money by relying on an agent’s expertise, compared to going directly to an online insurer and running the risk of buying coverage you don’t need, or not buying coverage you do.

When you’re in the market for a toaster, by all means go online and get it from the cheapest outlet you can find. After all, a toaster is the same wherever you buy it. The same can definitely NOT be said about insurance. This is why independent agents like Memorial Insurance are here to stay, fighting your corner and helping you navigate the insurance minefield to find the most suitable policy for your needs.

Photo credit: Franchise Opportunities .

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!