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What You Don’t Know Could Cost You
A Few Simple Tips to Protect You and Your Property
The subject of homeowner's insurance is an interesting one to say the least. In order to obtain a home loan, a borrower is required to have a homeowner's policy in place. The important question is, how many of us really know the details of the insurance we carry? Oddly enough, this type of insurance doesn't seem to be monitored as closely as health or life insurance. For whatever reason, we tend to stay on top of those plans.
To help make homeowner's insurance a priority, YOU Magazine set out to interview an expert on the subject. Actually, we went one step further and located someone with a rather unique perspective on the situation.
In terms of homeowner's insurance over the last few years, no region of the country has relied on coverage quite like the residents of the South. Jeff Platz, a native Floridian, has seen the devastation first hand. He's also seen the difference between a good homeowner's policy versus a bad one. Jeff is not only a 17-year veteran of the insurance trade, he's a third-generation agent.
According to Jeff, the first and most important question homeowners should ask when shopping for a plan is the A.M. Best rating of the company they're considering. He says a qualified agent should have that information on hand, along with the number of claims their company has paid. Jeff went on to say, "The cheapest plan isn't always the best one." New companies pop up all the time, and if you live in an area which carries certain risks, you need to make sure your carrier is set up to handle them.
Just as each state varies in terms of climate and topography, so do their indigenous homeowner's plans. Platz recommends staying informed of potential local risks, as well as what a company can offer you in terms of protection against them. In Florida, for instance, law and ordinance coverage is available at a low cost and helps to defer a homeowner's expense when bringing an older home up to current hurricane code. For those who own condos or homes governed by a homeowner's association, loss assessment coverage can help to cover bills the association must pay for damage to common areas.
Platz also recommends that every homeowner become familiar with the liability portion of their policy. ACV policies (which stand for Actual Cash Value) pay claims based upon the depreciated value of the item or items lost. However, replacement cost policies will pay the full cost required to actually replace items. In order to make the claims process as smooth as possible, Platz advises homeowners to take pictures and video footage of their entire home from floor to roof. He recommends keeping two copies, one inside the home and the other in a safe deposit box.
In order to be sure you're carrying the right amount of insurance, it's not a bad idea to have your home appraised every five years or so. The cost (per square foot) to rebuild a home has a tendency to go up, especially if you live in an area which has recently experienced a real estate boom. If disaster were to strike, you need to have the proper coverage in place to make your home whole again.
In terms of policy buyer mistakes, Platz says there are three that are especially important to avoid. The first is being dishonest on an application. If you own an investment property where you do not reside, don't tell the insurance company otherwise. He says it is absolute grounds to reject any claim.
Next, Platz says if your property contains a detached structure–such as a guest house, a barn, a workshop or a garage–be sure to list them on your insurance policy. Your insurance will typically pay up to 10% of your policy amount on a claim for other structures; however, this could be inadequate if anything other than your primary dwelling were to require total replacement.
Jeff also says many homeowners make the mistake of covering the value of the property as opposed to just covering the dwelling or detached structures. He says, "If a hurricane hits, the dirt is still going to be there." Save yourself a little money and insure only what you'll need to replace.
Jeff has one last bit advice for anyone who's going to take advantage of the equity in their home and put it toward a remodel. He says as soon as you do, you'll need to revisit your plan and possibly upgrade it as well.
It's been said that insurance is one of those things we like to complain about, until we need to use it. Hopefully, this article will enable you to ask the right questions so you can avoid insurance worries in the future.
Jeff Platz has been an insurance agent for 17 years. He currently owns First Florida Insurance, LLC in Jupiter, Florida and can be contacted via email at email@example.com.
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