Comments on: Please Analyze My Homeowner’s Policy

By: Joe

Joe — Sat, 28 Oct 2006 16:10:38 +0000

I’m a fee-only licensed insurance advisor (so I don’t have ties to any insurers). I usually work for large companies, but I know a bit about personal insurance too. Lots of good comments thus far. My add’l comments: (1) An umbrella policy provides excess coverage over both your homeowners policy and your automobile policy (the bigger liability risk) and it is usually very cost effective. I highly recommend these. (2) The additional replacement cost endorsement is good. You might also check to see if a true “guaranteed replacement cost” coverage is available so you are not limited to 50%. Whatever it takes to replace, you get it. As the previous commenter noted, this is particularly important in a major catastrophe since building materials and labor costs skyrocket. (3) Yes, consider increasing the deductible but there are dimishing savings when you go over a certain amount. (4) “Value-added Package” endorsement – have no idea what this is. I suspect it may increase certain sublimits, but review your policy carefully. If you have high-valued jewelry, art, silverware, precious metals, furs, etc. you may need to have these items specifically scheduled. (5) While rare, “all risks” coverage for contents is nice to have. Most policies offer only “named perils” for contents. (6) When you shop around, make certain you stick with quality companies that will (a) still be around after a major catastrophe, and (b) have a decent reputation for paying claims without a lot hassle (tough to find these days).

By: GaryP

GaryP — Wed, 25 Oct 2006 08:07:48 +0000

An umbrella would not eliminate any endorsements – it only increases liability coverage. And by only I don’t mean you should not buy it. It is a definite must.

By: Steve

Steve — Sun, 15 Oct 2006 01:09:57 +0000

Would it be reasonable in this case to get an umbrella policy to eliminate the various endorsements on the policy?

By: 2 million

2 million — Fri, 13 Oct 2006 13:56:21 +0000

I added a $1 mill liability coverage to my policy and it was very minimal.

I concur about bumping up your deductible – if something happens that costs about $1,000 to fix are you really going to file a claim with the insurance agent? Depending on how handy you are most insurance claims of $1,000 to fix problems are

By: Matt

Matt — Fri, 13 Oct 2006 11:07:19 +0000

I’ll echo the commenter who said to up the liability coverage. All it’ll take to wipe out $300K of liability is a couple of lazy malingerers pretending to slip and fall on your sidewalk this winter and finding a crooked chiropractor to help them pretend to be injured.

Liability coverage is cheap, whereas un-covered liability can bankrupt just about anybody.

Also, I don’t know about you, but the coverage limitation on my policy is _higher_ than the assessed value of our house when I bought it. The cost of housing tends to rise.

By: KARL

KARL — Fri, 13 Oct 2006 01:14:45 +0000

[1st of 23] Nick says “$75 per square foot. $75/sq. foot will get you a very nice house in the event yours is completely annihilated. You could make that $100/sq. foot if you want to be extra-cautious.”

I say IT DEPENDS…on ALOT more than that. FIRST: your location [looks like Maryland]…I don’t know many areas in the USA where you can build a home with all the trim/finishes for $75 (unless you are the contractor). Home construction costs from the foundation up are more like $100-$150+ in normal circumstances. SECOND: Let’s say there is a forest fire (hurricane, earthquake…) that completely destroys not only your home but hundreds of others in your area. Consider 2004, when four (4) Hurricanes crisscrossed the State of Florida. Construction MATERIALS cost took a 20-30% JUMP in the Florida during the rebuilding period and the SKY was the limit for labor. THIRD: The “Additional Replacement Cost Protection” adds 50% to the Dwelling coverage (total replacement cost coverage of $339,000 BUT this generally means you must have your home insured for 100% of its replacement cost. This 50% additional protection will go to bring your home up to the current code and numerous other expenses you will incur in replacing the dwelling. ALSO: Are there any detached structures? (garage, boat house…) the max coverage you have in this category is $22,600…this amount may be ok and might not be. KEEP the backup of sewer and drains no matter what insurance company you choose, cheap valuable coverage. CONSIDER increasing the deductible to $2000 or $2,500 [depends on Travelers filed deductible levels in your state]. Evaluate your claim frequency along with the minimum claim amount you would consider filing to avoid non-renewal or cancellation so you continue to maintain your insurance for the BIG event. If you can cost recover in premium savings achieved by raising your deductible in a 4-5 year period, you should consider it. GOOD LUCK… BTW there is a free home inventory program you can download and personalize with your: store receipts, serial #’s, digital pics… @ http://www.knowyourstuff.org/ when you are done you can burn the inventory on a CD or DVD and store it away from your dwelling.

By: Chad Callahan

Chad Callahan — Thu, 12 Oct 2006 14:03:42 +0000

I use a service called Inventory Safeguard. It is an online home inventory service. Accounts are free for a limited number of items, but the pay tier is cheap too, about the price of a safety deposit box in my area. It allows you to store pictures and scanned versions of receipts. This came in handy a few months ago when my house burned, I had most of my big ticket items online and was able to easily print a list to give to my insurance agent. The site is http://www.inventorysafeguard.com.

By: Rob

Rob — Wed, 11 Oct 2006 17:52:49 +0000

Here are some additional tips: Save purchase receipts and appraisals for everything you expect to have your insurance policy cover (structure & all contents); take digital and print photos of your household belongings (before they are fire-damaged or stolen); store the receipts and photos in a fireproof, lockable safe, or off-site. You will have a much easier time recovering an insurance settlement if you document what you had before your disaster!

By: Nick

Nick — Wed, 11 Oct 2006 15:51:40 +0000

I’ll have a long, drawn-out series of 23 posts about this someday, but here’s what I’d recommend for your situation (from what I know of it):

For Dwelling Limits of Liability (LOL), set it at around $75 per square foot. $75/sq. foot will get you a very nice house in the event yours is completely annhialated. You could make that $100/sq. foot if you want to be extra-cautious.

I obviously can’t tell, but I’m guessing you don’t have $158k in personal property. Or are you holding out on us?

Up your personal liability lots. Hopefully you’ll never need it, but if your house ever kills someone, they may go after you for more than $300k. Fortunately you can probably reach $500k or even $1 million pretty cheap.

Everything else looks great!

By: jim

jim — Wed, 11 Oct 2006 15:18:34 +0000

You’re right I should. I’ll be shopping around in a few days and doing a comparison with my Geico/Travelers combination versus a single-company policy (since they usually offer discounts) and see who can beat this.

By: CK

CK — Wed, 11 Oct 2006 13:49:57 +0000

Well just to be safe I would clarify with your agent. This is something you defintely want to have your i’s dotted and t’s crossed on.

P.S. Are you going to shop this around to see if you can get a better deal?

By: jim

jim — Wed, 11 Oct 2006 12:56:55 +0000

From how I understand it, the line item “Additional Replacement Cost Protection Increased Amount – Maximum Additional Amount of Insurance 50%” increases the amount they payout for replacement from $226k to $299k which is how much the house is worth and probably the most they’d pay out now anyway.

By: CK

CK — Wed, 11 Oct 2006 12:45:07 +0000

Would 226K be enough to replace your house if it was lost? I’d recommend checking with local builders to see what they build for aprox 226K. If it’s not comparable to your house I’d up that number.