What I should know about homeowners insurance.

This past week friends of ours lost their home and their beloved pets to a house fire. Their entire house burned to the ground. Thankfully, they and their four children are safe but they will now need to rebuild their home. And this tragic event prompted my husband and me to review our homeowner’s insurance policy to make sure we had adequate coverage. 

Pat and discovered that nope, we don’t have enough coverage to cover the cost of rebuilding our home should something happen to it (like a house fire or tornado). We also realized that we didn’t have enough contents coverage either – to cover the replacement of our contents. This is mostly due to inflation and the rising costs of labor but is also due to the fact that it’s been years since we last updated our policy.

We also realized that several of our fire alarms are no longer working…thankfully, my husband employs firefighters part-time so they were actually the ones to bring it to our attention that our alarms weren’t working properly and were outdated and needed to be replaced. 😳

I share this because sometimes we need horrible events to happen for us to realize that it’s been a while in looking at our policies and ensuring that certain things (like fire alarms) are in working order. We get comfortable and even complacent and therefore don’t pay attention as well as we should.

So if it’s been a while for you too, make it a point this week before you get caught up in the tidal wave of Christmas gatherings to check in on your insurance policies to make sure you have adequate coverage.

Some tips for making sure your homeowner’s insurance is adequate:

• Get a fireproof safe and store important information like birth certificates, SSN info, Wills, and other financial information.
• Take a video tour of your home and all the contents in it. Save the video to a flash drive and store it in a fireproof safe and back up the video to the cloud service of your choice.
• Your home insurance should cover your home rebuilding costs – not the purchase price of your home. Your insurance agent and/or an appraiser can assess the rebuilding costs of your home. Quick example: it’s roughly costing between $150 and $200 per square foot to build homes right now (dependent on your specific area of course). So if your home is 2,000 SF then it would cost (just to rebuild – no furnishing or finishing touches), between $300,000 and $400,000 to rebuild your home. So if your homeowners only covers $250,000 then you could potentially be out a significant sum of money to rebuild your home.
• Other things to consider in your home insurance policy:
  • Replacement of your belongings.
  • Coverage for any outbuildings you have (detached garage, shed, in-laws suite, etc.).
  • Cover injuries and damages that happen on your property.
  • Reimburse your living expenses while you can’t live in your home.

What does a Standard Policy Cover?

A standard homeowner’s insurance policy does not typically cover sewer backups or flooding. So if you have a septic tank definitely make sure you talk to your agent about adding sewer coverage into your policy. Same with if you live anywhere near a source of water (including that little stream in your backyard). 

A standard insurance policy typically covers:

• Damage from an aircraft, car, or vehicle
• Explosions
• Falling objects
• Fire and smoke
• Lightning strikes
• Riots or civil commotion
• Theft
• Vandalism and malicious mischief
• Volcanic eruptions
• Water damage (from within the home only) *double check your policy for this one as some policies do exclude this. 
• Weight of ice, snow, and sleet
• Windstorms and hail

Again, this doesn’t include things like sewer or flooding as those are usually policies you’ll need to add on separately. Other items you may need to add to your policy are:

• Flood Insurance.
• Earthquake Coverage. This is typically available as a separate policy or as an endorsement to your current policy. 
• Maintenance Damage. Believe it or not, but most homeowners’ insurance policies do not cover mold, infestation from termites, and other pests (look into getting termite protection if you live in an area prone to them), or damage due to lack of maintenance. 
• Sewer Backup. Sewer backups are not typically covered by your standard policy nor are they typically covered by a flood insurance policy. You’ll need to either add it on as a separate policy or get it as an endorsement. 

What to Consider:

Remember that the key to making sure you have adequate insurance is to make sure that the valve of your belongings (the contents inside your home), as well as the potential costs of having to rebuild your home, are correctly accounted for. Imagine having to replace all of your furniture at one time. Then imagine having to replace all of your family’s clothing, your dishes, your cookware, food, etc. As you can imagine that can be substantial so make sure you review your policies today!

I know this is a lot to think about during the holidays but tragedy can happen at any time. In fact, most house fires occur during December and January. So let’s not be naive to think that this couldn’t happen to us because it totally could. Let’s do what we can to help make sure that if tragedy does occur, we aren’t left trying to navigate this without adequate coverage.

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