What do we mean when we say buy confidently? Insurance is complex and can sometimes be confusing. Understanding the differences between different companies, the coverage options is available, and how that affects your price allows you buy confidently. That’s what we do. As an independent agent we shop the market for you. We find carriers that want your business, and are competitively priced. We explain what we have put together and some alternatives that might make sense for you, and give you the confidence that you are buying what you need. That way there are no surprises in the event of a claim. So come experience the Gila Insurance Group Difference, and when it comes to insurance, Buy Confidently!
Home Insurance – The Uncomplicated Way!
Home insurance protects your most important investment. Many view it as a complicated thing that can’t be understood, but it can be! Insurance often gets a bad rap, but often that’s because claims don’t get paid like people think they should. It doesn’t have to be that way. Insurance is a contract, and will pay out exactly like the contract spells out. Unfortunately, far too often, people just simply don’t understand what they are purchasing. Here we try to break down and simplify what it is you need to have on your policy and how the different coverage options protects you. We are confident that as we uncomplicate home insurance we will be able to help you make the right decision on insurance and be able to purchase insurance confidently.
Home Insurance Basics
Uncomplicating Home Insurance – What’s Covered
The homeowners Insurance policy is one of the most amazing insurance policies because of how broad it is. It covers a lot of different risks. Just ask yourself, what do you want covered? Answer: the house, any other buildings, the stuff inside the house, if you couldn’t use the house because of a loss, you would probably want help paying for a temporary place. Plus, if someone sued you because something happened at the house, you wouldn’t want to lose the house because of a lawsuit. That is a lot of stuff, and a lot of risk. Good news! On a standard homeowners policy, all those things are covered, and more. In insurance we just call it weird stuff to complicated things.
Your House = Dwelling
The Other Buildings like sheds, detached garages, fences, etc. = Other or Adjacent Structures
Your Stuff = Contents or Personal Property
Help paying for a temporary place if your home is damaged and you can’t live it it = Loss of Use or Additional Living Expense
Protection Against Lawsuits if something happens at your house (or elsewhere) – Liability and Medical Payments
Coverage A – Dwelling – Dwelling covers the house and anything permanently attached to the house. This would from the foundation to the roof. It would include the kitchen bathrooms and home systems like the heating and cooling units, and permanent appliances.
Coverage B – Other Structures – This includes buildings or structures that are not attached to the home. Things like detached garages or shops, Sheds, fences, gazebos, barns, and other structures that are not attached to the home. If the garage is attached its apart of the house.
Coverage C – Personal Property – These are things that you would put into a moving van. Things like furniture, beds, clothes, dishes, and movable appliances (washer and dryer).
Coverage D – Additional Living Expenses – if you have a claim that makes it do you can’t live in your house. We will pay for the additional costs of living you incur because you can’t use your house. We won’t pay your existing expenses, just the extra ones.
Coverage E – Liability – If something happens at your house that causes a lawsuit (think a slip and fall, someone tripping on the stairs), we will cover the legal cost and any settlements associated with the lawsuit.
Uncomplicating Home Insurance – How it’s Covered
Almost more important than what’s covered, is how that stuff is covered. This is really where insurance gets complicated, and where peoples eyes start to glaze over. Let’s see if we can uncomplicate it here.
Peril – insurance word for stuff that causes an insurance claim. Example are fire, lightning, wind, hail, etc.
Situation: You own a home, and you’re buying insurance. Let’s say you had to buy insurance like a sandwich at a nationwide chain. You walk up and the person behind the counter asks, what do you want on it?
Answer: Everything! All of it! I want everything covered.
Unfortunately over time insurance companies have found some “perils” (remember things that cause insurance claims), are guaranteed money losers, so they started excluding them.
So the best you can get is a “Special” policy. It’s simple, you’re special so buy a special policy (most companies do it this way). What a Special policy says is we will cover anything that covers damage, UNLESS WE EXCLUDE IT!!! So what’s generally excluded? A lot of stuff, but there are 4 that you must be aware of (seriously go look at your policy… this is a REALLY short list).
- Flood – Fortunately you can purchase a separate policy
- Earthquake – Again you can purchase a separate policy or add to your existing policy
- Wear and Tear – Seems to go without saying, but you would be surprised
- Government Meddling – Things like war, or the government requiring everyone to have pink shingles, or the government blocking access to your house.
Well those aren’t terrible exclusions, and you might see why they are excluded, or maybe not.
Side note: your stuff is not insured on a “special” form, but something far worse called broad form coverage. Not to worry, for a fee you can purchase this too.
Uncomplicating Home Insurance – How much do I get if theirs a claim
Excellent question! It depends. It depends on what the policy says (remember its a contract). This is one of those things that really start to irritate people about insurance companies. If I have a claim: Fix it or Rebuild! Seems simple. So let’s see if we can uncomplicate it.
Insurance companies have to figure out how much to charge you. One of the ways they do that is to put limits on how much they will pay out. This should be an issue, because you get to set the limit (within reason the companies will have floors and ceilings).
The key word here is “replacement cost.”
Replacement cost – The cost how much would it cost to rebuild your home.
As long as you insure your home and the other buildings for the replacement cost, insurance companies tend to be pretty fair. If you have a partial loss (think hail storm) they will pay to replace the damage. If the home burns to the ground you get the limit. So insure the home at the replacement cost and make sure you are happy with that number.
A word of caution about two things here.
- If you decide to “get smart” and underinure the home to save money, the insurance company actually says in the fine print that they can underpay you in the event of a claim.
- Remember insurance companies don’t pay for wear and tear. So if half your house has to be repaired due to smoke damage and the other half insurance companies only have to paint 1 half of the house. Pretty goofy. If you are concerned about this, there are companies that for a fee (an endorsement or something that changes the policy), will fix the whole house.
What about your stuff or personal property? Excellent question again! Another goofy insurance thing.
Your stuff is not likely insured for replacement cost because let’s be real whats the value of a that beach t-shirt in your closet from last summer. Instead its covered for Actual Cash Value. I hate this because it introduces the element of negotiation with insurance adjustors. Maybe not about the t-shirt, but what about the 3 month old TV.
Again, you can get this covered properly, but you need an endorsement to get replacement cost on your stuff. Not an issue, most insurance companies allow you to purchase replacement cost on your stuff, for a fee. so make sure you get that.
Uncomplicating Home Insurance – 5 Things that make your policy awesome
So we have seen what’s covered, how its covered, and how much will be paid out on it, but we have also seen some holes in the homeowners policy, that don’t seem so awesome. That’s okay. There are 5 things that will make your policy awesome.
Endorsements – Something that changes how the original home insurance contract reads.
These things are called endorsements. Something that changes the policy and covers the holes. Usually they cost a little more, but generally speaking are very reasonable for what you get.
5 Endorsements to make sure you purchase
- Special Coverage On Personal Property – This is goofy and we already talked a little about it. Your house will be covered for everything unless its excluded. Meanwhile, your stuff is insured for only 16 things. So your couch can be insured differently than the wall behind it. This endorsement changes that and makes everything insured for the same things. There are still exclusions, but this endorsement makes sense.
- Replacement cost on personal property – Again goofy, and we already talked about it too, but rather than an old TV I want a new TV and I don’t want to negotiate with someone about it. This endorsement does that for you. You are still subject to the personal property limit on the policy, but you get to buy new stuff.
- Extended Replacement Cost – Replacement cost on your house should be enough, but what if it’s not? This endorsement creates a little bucket of extra money in case it costs just a little more to rebuild your house than the limits on your policy. For this to work your house has to be insured for the full replacement cost, but it provides peace of mind that you will have enough to rebuild your house.
- Water back up of sewers and drains – Gross, I know. Let your imagination run on this one. If sewage does a number on your house, this endorsement can help. There usually is a limitation of 5,000 or 10,000 on this endorsement.
- Personal Injury Liability – Have you ever said anything mean about another person. Of course. We all have. If you have consider this: what if what you said impeded them from getting a job, or cause other financial harm. Did you know you can be sued under the idea of defamation. Personal injury covers this and several other important liability issues that are generally excluded from coverage.
There are others, but here these ones are important and fills some of the holes you might otherwise see in a home insurance policy. Insurance companies are pretty good about thinking about stuff that could happen so talk to your insurance agent about things you are worried about. Or ask them how they have their own home insured.