Typically most people buy insurance for their home, car, life and health and it’s a major component of your monthly budget. With the effects Covid has had on the economy and household incomes, it is reasonable for people to take time to look at their insurance policies to find cost saving options. If you are one of them, PLEASE use caution.

I started my agency because I saw the mistakes consumers were making with the insurance policies they were buying and the lack of service they were commonly getting. In 15 minutes I can save you 15% but will you have the level of protection you need or had? There is often money to be trimmed from your insurance policies; but do it cautiously. Be educated before embarking on this.

Your first step should be to identify what policy format you have, the coverage limits, special endorsements, exclusions, and deductibles. Homeowner policies are not all the same. There are different options available for a Homeowner’s policy that make you an easy target to be lured into purchasing a cheaper policy without realizing that you are dropping coverages. Two quotes from the same company can offer different coverages.

Today there are supposed to be 2 standardized formats for a Homeowner’s (HO) insurance policy (HO-3 and HO-5).  To stand out from their competition, and to complicate insurance further, companies customize their policies with special endorsements which usually add coverages to the standard format chosen. Some may also delete or exclude coverages, making it that much more confusing. It’s no wonder people are upset after a loss to learn that they’re “Not covered for that!” How should they have known?

The common HO 3 policy covers your home and any separate structures for losses resulting from fire, wind, hail, riot, explosion, lightning, vehicle  or aircraft, vandalism, volcanic action, smoke, falling objects, weight of ice or snow, plumbing, collapse, electrical power surge, or theft. It has been expanded to now be referred to as an “open perils policy” meaning that if the policy does not exclude it, the loss is covered.

To confuse you more, your personal property, or what was previously called “contents coverage”, includes those specifically identified coverages but not the expansion to “open perils”. It seems like I’m splitting hairs but there are often losses that fall into the “open perils” category.  To deal with that void the HO 5 policy offers “open perils” for your home and contents;  but qualifying for that coverage is not always possible and pricing is often substantially different.

Both of these Homeowner formats include liability coverage which protects you from the costs for damage or injury you cause to someone else. Since anyone can sue you for any reason, the defense coverage included with this coverage is very valuable. The base limit is $100,000 of liability protection but that limit can, and should be, raised at a nominal cost. $500,000 is a very common limit today.

Along with the liability limit is a coverage known as “medical payments”. It is intended for those minor situations where you may not have been negligent but know that an injury occurred from an activity taking place on your property. Best example of this is when someone falls on your sidewalk while it’s snowing. During a storm, you can’t be expected to keep your sidewalk clean in the off chance someone visits. That coverage usually starts with a $1,000 limit but can be inexpensively increased to $5,000 or more.

As the coverages expanded so did the deductible you had. Until the 1980’s most consumers had policy deductibles of $100 or $250. Today it is common place to have a $500 or $1,000 deductible. Many companies also require you to carry a special deductible for when, and if, we have a hurricane. Those deductibles are typically 1, 2 or 5 percent of the home’s insured value. A home valued at $500,000 would then have a $5,000, $10,000 or even a $25,000 deductible for hurricane damage. Not all companies are requiring these hurricane deductibles. As long as there are insurance companies willing to write your policy without such a deductible, I advise my clients to avoid it. 

Confused yet? The reality is that the most common homeowner’s policy sold today is the HO 3. Most on line companies sell it as the basic HO 3. Most insurance agents sell a hybrid form with endorsements adding some of the HO 5 coverages, but at lower limits.  Those additional coverages and higher limits added to the HO3 mean a lot to you when a loss does occur. 

 It is tough for most consumers to identify how well protected they are with their Homeowner’s policy. You can call an 800 number or go on line for your insurance and miss out on the warm fuzzy feeling of being covered. I’d be lying if I said you can get that confident feeling from all insurance agents.  It’s your home that you need to protect; find an agent or other resource that you trust is giving you the level of protection you need at a competitive price.