Homeowners Insurance: Options That Cover Your Assets

When taking out a Greensboro homeowners insurance policy, you'll be presented with lots of options of ways to fine-tune your protection to best fit your specific needs. Sometimes these various options can seem overwhelming and are best handled with the assistance of a trusted insurance broker who can help guide you along the path of obtaining the best coverage for the best price.

At its most basic, your Greensboro homeowners insurance coverage will be designed to protect your investment in your home as well as protect the financial risk your mortgage lender carries in the event your home should be destroyed as a result of a covered peril.

What Your Policy Covers

Homeowners insurance policies are made up of a variety of coverages meant to protect you financially. If your home were totally destroyed as the result of a house fire, your dwelling coverage should be sufficient enough to cover the costs of rebuilding your home back to its pre-fire state, according to today's building costs. If your dwelling coverage limits are too low, rebuilding your home after it's been destroyed will mean dipping into your own personal assets to pay the difference between the costs for rebuilding and the payoff from your insurer.

Personal Possessions

Your Greensboro homeowners insurance policy should also have a section that provides coverage to protect you from financial loss related to the damage, destruction or theft of the personal possessions in your home. It's important here to have limits high enough to cover the repair or replacement of these possessions at today's costs. You may have the option to choose coverage that pays true replacement costs or actual cash value (replacement cost minus depreciation).

Certain high-value personal possessions such as jewelry, artwork, furs or collectibles will have specific payoff limits on a standard policy. Adequately covering these items (and your assets) will require buying additional coverage by way of a rider (or floater).

Liability Coverage

An often overlooked but extremely important part of standard homeowners insurance policies is the liability coverage. This may, in fact, be your biggest asset protection in your homeowner's coverage, especially if you have risky items on your property such as a swimming pool, a treehouse or a trampoline.

Liability coverage protects you against financial loss related to someone becoming injured or killed while on your property. It even covers you if your dog bites someone off your property.

Is It Wise to Skip Flood Insurance?

Here's a scary statistic – of all the natural disasters faced by U.S. homeowners, including hurricanes, 90% have involved flooding. This, according to the federal government (FEMA), makes floods the #1 most common natural disaster affecting our nation. And it doesn't take a hurricane to cause flood damage. Just a few inches of water coming into your house can cause significant, costly damage to your home and its contents.

Anytime and Anywhere

While certain areas are more susceptible to flooding than others, it's been shown that floods can occur anywhere and at any time. They can be caused by any number of conditions besides hurricanes, such as a rapid spring thaw, heavy rainfall or the accumulation of water following extinguishment of a wildfire.

Statistically, however, as few as 12% of homeowners carry flood protection. Even in coastal areas, which are most at risk of flooding, the percentage of flood-insured homes is only about 20%. This, in spite of the fact that a standard homeowner's insurance policy typically doesn't cover floods. Flood coverage is only available with a separate, specialized policy written for that specific peril.

Buying A Flood Policy

Though sold and managed through participating private insurance companies, insurance for floods is offered through the National Flood Insurance Program (NFIP), which was created by Congress in 1968 and is overseen by FEMA. To be eligible for this coverage through the NFIP, you must live in a community that participates in the program. See if your North Carolina community participates here.

Even if you reside in a low-risk flood area, you're still financially vulnerable to falling victim to floods. Those living in high-risk areas are likely required by their mortgage lender to carry flood insurance. If your mortgage is federally backed, the coverage is federally mandated.

Even those living in low- or moderate-risk flood areas should seriously consider buying flood insurance. Premiums are lower than in high-risk areas, and, statistically, more than 20% of flood insurance claims come from those with homes in low- to moderate-risk flood areas.

Since the protection is provided by the federal government, premiums within the same risk area don't change from one company to another writing flood coverage. Experts suggest you purchase your flood insurance from the same company that carries your homeowner's insurance. If you have a flood insurance claim, you'll likely have a homeowner's claim also. Dealing with a single agent makes claiming simpler.

Are There Gaps in Your Homeowners Insurance Coverage?

If, like many of our clients, you're wondering whether there are any gaps in your Greensboro homeowners insurance coverage, we've put together the following information to help answer your questions. It's not a bad idea to take some time every two years or so to get together with your insurance agent to review your homeowners coverage, since your home's value and your personal property situation may have changed during that time. Here, we'll discuss some common homeowners insurance gaps you'll want to try to avoid.

Most Common and Costly Claims

According to statistics found on the Insurance Information Institute (III) website, 6% of insured homes had a claim filed in 2017. Property damage, including theft, accounted for 98.1% of those loss claims.

In a study done by The Travelers Insurance Company, it was determined that the five most common causes of home insurance claims are:

• Wind damage – 25% of all claims
• Non-weather related water damage – 19% of all claims
• Hail – 15% of all claims
• Weather-related water damage (rain, snow, ice dams, etc. Doesn't include floods) – 11% of all claims
• Theft – 6% of all claims

While the five above listed claim causes account for the greatest number of claims, fires are responsible for the most expensive claims, accounting for approximately one-fourth of homeowners insurance claims costs. Typical causes for residential fire losses include misuse or failure of machinery or equipment, electrical issues such as faulty wiring or outlets and kitchen fires associated with cooking.

Filling the Gaps

With theft being one of the main causes for which policyholders file claims against their Greensboro homeowners insurance policies (fifth most common cause), you should pay attention to any cap limits on your coverage. Most policies have fairly low limits on valuables such as artwork, expensive electronics, jewelry, furs, antiques and collectibles. If you own expensive items like these you should look into getting higher coverages through a rider or endorsement to your policy.

If the coverage on your home isn't enough to allow you to rebuild it if it's totally destroyed (as in a house fire), you should revisit your policy limits. Building costs may have increased significantly since you took out your homeowners policy and the amount needed to rebuild may be much higher than it was when you bought the home. Make sure your policy limits are high enough to pay for a complete rebuild.