Home Owners Insurance-What you don’t know. Did you know there are different kinds of Home Owners Insurance? Most agents don’t tell you that however. When you call and say you are buying a home and need to get insurance…they give you the basic Home Owners Policy. You are covered for most things you can think of, but they neglect to tell you that they depreciate items over time.
Example: You bought a home, and a hail storm comes through and you need new shingles. You think, I have a $500 deductible and insurance will pay the rest. Think again! You have 20 year shingles in the home, and they are really only good for about 15 years…the singles are 10 years old, so they are only going to pay one third the cost of the roof. So if it is $6000 to install new shingles, you have to pay $4500. HOWEVER! If you had purchased Replacement Value insurance, you would pay your $500 deductible only.
The things we learn in life lessons. My home had been broke into about 15 years ago. They stole jewelry, TV’s, etc. I had receipts, photos and those things that most folks probably don’t have. Well by the time they depreciated out the TV’s and VCR’s, etc. I didn’t get squat! Unless you have a jewelry rider on your policy, there is a small limit of usually $1000 for jewelry and computers and such. I had about $38,000 in property stolen that I had receipts and photos for, and I received a check for $1050.00 from the insurance company.
So I always let my home buyers know to ask about Replacement Value Insurance. It isn’t that much more a year, and believe me it will more than pay for itself if you only ever need it even once.
You still need Jewelry or Computer riders if you have more than the company’s allotted amount.
Also…did you know when you buy a car, and get the life insurance to pay if off if something happens to you…that the insurance company can cancel it within the first two years. So, if something were to happen to you or a spouse, all they have to do is refund the monies you paid to date and they are off the hook. It is true! It’s in the small print! (Another life experience)
Start your search for a home at www.Luxury-Homes-in-Austin.com .
Good information it is always good reminder of what we need to know.
Sherry: I am guessing that, more or less, you get what you pay for. I would also guess that insurance policies with unbelievably low premiums are probably the type where the insured item depreciates as you describe above. I would also guess... LOL... that if you insisted on replacement of the damaged items when you were initially getting your insurance policy... that, of course, the premium would be higher. This makes sense.
When looking at a premium price that looks too good to be true... it usually is. What you get for nothing is what you see when you close your eyes... nothing !
Sherry: You can never have too much insurance. I have home owners, a jewelry policy, personal liability, health, ....I even have insurance for my vetrinary bills.
Thanks for reminding us to read the small print. It also a good reminder to use a professional broker that you trust.
My point is that most people don't realize you can upgrade an insurance policy. I have never met a salesman who offered it. I was at a luncheon where a local Insurance Person was speaking, and when it came to questions, and I brought this up...he blew it off like it didn't matter, and wouldn't answer questions about it. I have never sent him any of my business! I am guessing he doesn't make any additional commission, or something was up that he would do that. I couldn't believe it!
@ Chris Ann: Sounds like the only policy you have left to buy... is a life insurance policy on your insurance agent... LOL
Karen-No kidding! LOL! But I am sure there would be a "Insurance agent clause" so they wouldn't pay out. LOL!
I have found insurance companies are in the business not to pay, but your point is well taken. Thanks!
Carol- Exactly!
A lot of negativity here about insurance. First of all, the insurance industry is controlled by the state in which it operates. Every state has an Insurance Department. In the state of Pennsylvania the only clause that I've seen for life insurance is a 2 year suicide clause. There are actually people out there that try to take out life insurance before committing suicide.
As for homeowners insurance, there are times when people try to use their homeowners insurance as a maintenance policy. Roof shingles have a life span and need to be replaced.
Rich-Didn't mean to sound negative...but just trying to inform. It is life lessons that we learn from, and I have had to learn a few of these myself the hard way! I have learned that when my insurance agent says "yes, that is covered"...I know to say "show me the part where it says that in writing."