What Homeowner’s Insurance Policy Should You Choose?

Real Estate Podcast with Patrick Fitzgerald

I get a lot of questions about homeowners insurance from clients as well as Realtors. So, today I’d like to discuss a few important points about this subject. Rates are going up sharply due to some pretty massive national losses from a lot of the insurance companies. Hurricane flooding in Houston and other natural disasters in California are creating massive claims for insurance companies, driving up the costs. But, you should know that if you are going to finance the home, homeowner’s insurance is mandatory. Many times, insurance companies try to get your business by offering you a low rate. However, they increase the deductible over the usual 1% deductible. Let’s say that you have a $250,000 house with a total roof loss due to hail and a new roof costs $10,000. To reach your deductible you will have to pay $2,500, which means you will get a check for $7,500 to pay for your roof. If you elected to take a 2% or even a 3% deductible, you are going to get next to nothing for that roof. Since the roof still needs to be repaired, this can take a major toll on your checkbook. For this reason, you should be careful what deductible you select when you choose coverage. “You should select a policy with a 1% deductible even if it has a higher rate because if something does happen a higher deductible could mean you spend more.” There are many coverage options available today. You should select replacement coverage. This type of coverage means that if you have a fire and all of your furniture is destroyed, you will get brand-new furniture even though it may be old. Foundation, sometimes called slab, coverage will protect you from cracking due to covered events. You also want water coverage for any seepage of water or broken pipes in the slab. Water can cause a tremendous amount of damage. What controls the rates you get, though? Credit scores, the age of the home, the age of the roof, and location all influence your rate. Many people also wonder about bundling their insurance and if they will get a deal. When you combine your auto insurance and homeowners insurance with the same company, you can get discounts on both. Always ask for the bundle deal. If you want to know more about insurance, you can go to the Office of Public Insurance Council’s website. Here, they have information about homeowners insurance broken down into coverage, what it means, etc. If you have any additional questions for me, please feel free to contact me by phone or email. I would be happy to assist in any way that I can.