Many times, when people hear the word “insurance” they have one of two reactions: boredom or confusion. For something as ubiquitous at homeowners insurance, many people simply don’t know how it works, what it covers, or how it functions in the event of an emergency. Learning the basics of homeowners insurance is the first step to determining what kind of coverage is best for your home and family, and when trying to determine exactly what’s covered in the event of a catastrophe.
Basically, homeowners insurance is a kind of “risk management” for your property. You pay a premium to the insurance company as a way of transferring costs in the event of a loss due to a natural or human disaster, such as fire or theft. By doing this, you protect yourself financially by not being responsible for the full value of the lost property if it is damaged or destroyed. For example, if a home is destroyed by a tornado, the homeowner will not be solely responsible for the entire cost of rebuilding the structure and replacing all of the belongings. While homeowners insurance isn’t required by law, many mortgage companies do require it in order for loan approval.
What Does Homeowner’s Insurance Cover?
• The structure of your home – As its name implies, homeowners insurance covers the structure of a home. If the property is damaged and needs to be repaired or rebuilt, homeowners insurance will cover the cost of doing so. However, it is important to note that not all coverage levels will give you a payout that will fully cover building costs, and not all types of disasters are included in all policies. Insurance against damages caused by flooding or earthquakes may require a separate policy.
• Possessions – Homeowners insurance can also cover the items in a home, such as furniture, appliances, art, and other personal belongings. It is highly advised that homeowners keep an inventory of their possessions. Additionally, it is important to note that not all items will be covered 100%. For very valuable items, homeowners may want to consider purchasing a separate policy to cover the item specifically. Many times, the maximum payout homeowners can receive for belonging replacement is dictated by the amount of structural insurance the homeowner has on their property – 50-70% of the structural insurance is usually the maximum coverage homeowners will receive.
• Personal liability – Personal liability coverage comes in to play in events such as someone outside of your family sustaining injury on your property, or someone in your family damaging someone else’s property. Personal liability can also cover damages by pets. It is important to note that liability coverage does not prevent a lawsuit from being filed, but it does assist homeowners with the costs of settlement.
• Loss of use – If a homeowner is displaced from their home during reconstruction or repairs, loss of use coverage will help pay for the additional living expenses incurred as a result. This includes hotel rooms, meals, rental costs, etc. However, loss of use coverage does not extend indefinitely and there are usually strict limits on per diem expenses that are covered.
What Kinds of Policies Can Homeowners Choose From?
Depending on the premium homeowners are willing to pay, there are different levels of reimbursement they will receive for destroyed or lost property. The lowest level is actual cash value coverage. Actual cash value coverage covers a home and the belongings inside based on the current value of the items. This means that as the value of your home or belongings depreciates, the amount of payout received will be lower. As a result, homeowners may need to fork over extra cash to cover the entire replacement cost.
Replacement cost coverage is somewhat self-explanatory. This kind of coverage covers the actual cost of replacing an item or rebuilding a home up to the policy limit. Guaranteed replacement cost coverage plans allow homeowners to rebuild or replace their property even if it is over the policy limit, although this kind of coverage is usually considerably more expensive.
How Much Does Homeowners Insurance Cost?
There is no single answer to the question of cost, as the amount homeowners can expect to pay for insurance is based on a number of factors. The value of the home is taken into account, as is the current condition of the home and the location of the home. Dangerous structures on the property, pets, or high-risk features such as pools or trampolines can increase insurance premiums.
The homeowner’s history is also taken into account. Insurance companies consider credit history, past insurance claims, and other personal factors when determining coverage cost. The level of desired coverage also plays a big role in determining how much a homeowner can expect to pay annually for insurance.
What Happens If My Insurance Company Refuses to Pay Out?
Knowing your level of coverage in the event of theft, injury, or natural disaster is important. If you’ve chosen to only pay for an ‘actual cash value’ level of coverage, you may end up handing over more of your own money than you would like to rebuild your home or replace belongings. It is also wise to have a complete inventory of all valuables filed away in a safe place, such as in a safety deposit box or with a lawyer, so that this list can be accessed easily after a disaster.
However, even the most diligent homeowners may find themselves in a sticky situation with their insurance company. It is unfortunately well-documented that insurance companies will often go to great lengths to avoid paying out the full cost of repairs and replacement as a way to pad their own bottom line while leaving homeowners stuck high and dry after an emergency. For anyone who thinks that they’re being unfairly shortchanged by their insurance company, contacting an insurance claims adjuster may be the wisest move.
Insurance claims adjusters, also called public adjusters, work to help people receive the amount of coverage they’re owed by examining homeowner’s policies and independently assessing a home’s damages to see if the homeowner received a fair settlement. A good insurance claims adjuster can help homeowners get the payout they need to get back on their feet. A public adjuster acts as the homeowner’s representative to the insurance company and will attempt to renegotiate a claim that received a substandard payout.
Texas Public Adjusters
ClaimsMate works with homeowners all over the state of Texas to pair them with a public adjuster that can assist them with insurance payout problems. For anyone who feels they have not received a fair and reasonable reimbursement from their insurance company, ClaimsMate can help you receive the settlement you need to rebuild your home or replace your belongings. For more information, contact ClaimsMate today.