Home insurance premiums have increased considerably over the last 10 years. Currently, the average rate is $1,000 which reflects a 69% increase over the past decade. However, homeowners have no idea that they may have to pay extra these days. Companies are secretly reducing back basic coverage, hiking deductibles and adding new restriction to standard policies.
Insurance rates vary from company to company. It is difficult for a consumer to spot the difference while shopping around. Most consumers instantly fall for low home insurance quotes or companies with big names. They don’t even bother to check if the insurance policy meets all their requirements or not. Similarly, insurance policies normally contain dozens of pages with clauses written in highly legalized language. An average consumer will never go through the entire policy and know what it covers and what not.
The consequences can be quite drastic. For instance, you would have to pay thousands of dollars for the damages you think were covered when a catastrophe finally strikes. It is also pertinent to mention that homeowner’s policy is the least profitable type of policies for insurance companies due to many different reasons. Unexpected weather changes and increased number of natural disasters have inflicted serious financial damage to many companies.
Insurance companies have increased their rates and are no longer offering policies in some disasters prone areas. They have taken these steps to increase the profits. They are also cutting coverage because regulatory bodies have not allowed them to hike premiums in some states. This makes it important for you to ensure that your house which is also your biggest investment is well protected and fully covered.
Beware of Thin Water Coverage:
Will your insurance provider pay the damages caused by a burst or leaky pipe? The answer is no on most occasions. Insurers have significantly decreased coverage for similar damages in recent years. The increasing number of water damage related claims means that companies are less generous towards water damage. They are including various clauses which make it impossible to get coverage for water damage. For example, they can mention in the policy that leaks cannot last more than 2 weeks no matter they are hidden behind a wall or an abyss in the basement.
Solution:
Water coverage for your home is not as comprehensive as it used to be. However, you need not to worry as there are many easy solutions to this problem.
- Increase Your Coverage:
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Find an insurance provider which offers coverages for drains, pipes and sewer. Such a package will cost you 10% to 20% more than your average premier. It is better to compare home insurance quotes offered by different companies who also include coverage for pipes and sewerage. This will help you to save considerable amount of money in the long run.
- Be Vigilant Yourself:
It is never a good idea to rely solely on your insurance provider to cover your damages. You should be vigilant enough to prevent any water damage in the first place. For instance, you can install wireless water alarms behind water washer and heater, sinks and other such places. These alarms go off even at the smallest leaks. Keep an eye on your water bill as well. Any unusual activity may be a hint to a bigger problem.
Real Damages may Exceed Your Coverage:
Insurance providers have backed off from their promise of covering total damages to your home no matter what. This decision is a result of so many disasters which have struck different parts of the country in recent years. Hardly any company, especially in disaster prone areas, provides such a guarantee these days. Some of them also require you to purchase “extra coverage” if you want to fully secure your home. However, this may lead you to pay thousands of dollars extra in terms of insurance costs.
Solution:
- Purchase Extended Replacement Coverage:
Extended replacement coverage is a good option and enough to cover almost all types of damages. A typical insurance provider costs 10% and 25% of your premium and onto your replacement benefit respectively. Similarly, you can further secure your personal property by buying replacement cost coverage. These are basically the typical insurance policies but reimbursed based on the depreciated value of your property.
- Understand Your Policy:
Most homeowners don’t bother to read their policies. Even if they do, they don’t try to fully understand what it means. Misinterpretation of even a single phrase or word can cost you thousands of extra dollars. You must fully understand your policy in order to avoid complications and disappointment in the long run.