ByAli Sahabi of Optimum Group, LLC
President, Building Industry Association (BIA) Baldy View Chapter
With summer fading and a short break before the holiday season consumes us, autumn provides a great time to focus some attention on the details of homeownership that are often overlooked but critically important to homeowners.
And one of the most important of these details is a benefit available only to homeowners: homeowner’s or residential insurance. This policy provides financial protection against disasters by protecting the house, the homeowner’s family and their possessions while covering both damage to the owner’s property and their liability or legal responsibility for any injuries and property damage they or their family cause to other people (including damage caused by household pets).
In insurance terms, homeowner policies like auto coverage are categorized as Property & Casualty (P&C) coverage and the first step you will want to take in ensuring that you have the best possible coverage for your home is to sit down with your current insurer and discuss possibly bundling any existing life or P&C policies you might already have. Some insurance companies will offer discounts for having multiple policies in your portfolio or special discounts for being a long-term policyholder. Then, compare those figures with quotes from other candidate insurance providers.
Consider a policy with higher deductibles. Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums, so make sure you are making ‘apples to apples’ comparisons on all of the various quotes.
When determining the amount of your policy, insure your home for only what it will take to rebuild the actual structure. The land under your house isn't at risk from the perils covered in your policy and you can save some money by only insuring what will need to be replaced. Remember that flood insurance and earthquake damage are not covered by a standard homeowner policy. The Federal Emergency Management Agency at www.fema.gov provides useful information on flood insurance as does the California Department of Insurance at www.insurance.ca.gov/01-consumers. A separate earthquake policy is available from most insurance companies and the California Earthquake Authority at www.earthquakeauthority.com on the web.
If you do actually raise your deductibles, ask your insurance agent or company representative what steps you can take to make your home more resistant to natural disasters. You may be able to save on your premiums by reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage which will save on both insurance and energy costs. Homeowners can often get discounts for adding smoke detectors, burglar alarms or deadbolt locks. Some companies offer to cut premiums if homeowners install a sophisticated sprinkler system or fire and burglar alarms that ring at the police, fire or other monitoring stations.
Carefully review the limits in your policy and the value of your possessions. Many products lose value over time, while others such as artwork, antique furniture or vintage musical instruments can increase in value. If you have any questions, ask your insurer for a list of qualified appraisers.
If you’re buying an existing home, check the CLUE (Comprehensive Loss Underwriting Exchange) Report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have. They report on claims for about 30 kinds of losses, from wind damage to dog bites. Visit www.LexisNexus.com and search for C.L.U.E. Home Seller's Disclosure Report.
Remember, when it comes to getting the best homeowners policy you can get, there is only one rule: cut costs but don’t cut corners. Make certain you have all the coverage you need.
The BIA Baldy View Chapter seeks to advance the opportunity to attain the American Dream of home ownership. For additional information on homebuying, home improvements or the benefits of homeownership, go to www.biabuild.com on the web.