Tag: Home Insurance

Discounts on Insurance Policies?

Does it seem that some people are able to get discounts on everything?

There are a few tricks to get better rates on insurance. Insurance companies study the statistics of the general population to try and find indicators of clients that will not generate claims.

What are the companies looking for in a client?

There is some good news! Insurance companies prefer couples over singles. Service careers also are given a discount with many insurance carriers: military, police officers, fire fighters, educators and medical staff. Ask your insurance agent if you are eligible for any discount based on your employment. You will have to provide a copy of a license or employment ID to qualify but some companies give as much as a 10% discount.

Another area that indicates a responsible insured is education level. Any completed education above a high school diploma can help reduce your rate. Trade schools, junior college, bachelor’s degrees, masters and doctorate degrees all qualify for discounts and preferred rates. If you belong to any group, professional organization, or credit union many companies will offer an association discount.

You may be thinking – I do not fit any of those categories. There are other ways so don’t give up. Have you been in the same area for several years? Companies look for people who do not move constantly because it shows stability.

Another way to receive a discount is to either pay the policy in full in advance or put your payments on automatic payments with a bank account or a credit card.

What is an insurance score?

This leads to credit scores and how they can help you. There is an insurance score that is different from your credit score. Your Insurance score looks at your insurance history. Have you had continuous coverage? What is your driving record like? How many claims have you filed, and have you missed any payments? Another rating factor is how many people are on your policies. Believe it or not, the more people the cheaper the policy (per person)!

Young drivers are killer on the cost of an auto policy, however there are ways to soften the blow. All young drivers should complete a driving course taught by a local driving school. Parent taught students pay more for insurance! A young driver should be in an older vehicle and limit their driving to a defined area. The driving telematic devices that are installed in the car to track driving habits are also a way to gain a substantial discount if you are a good driver consistently over time.

Rates do not improve for younger drivers until about the age of 25. The idea that boys cost more than girls is not true anymore.

Do you have questions or would you like a quote for coverage? Just ask! You will find my contact info below.

Blog Contributor

Karen Tannery 

Account Executive

281-712-7272

karen.tannery@goosehead.com

Home Insurance Deductibles and Gambling Bets

Some people look for ways to keep their home insurance costs low. There are ways to do this wisely and other ways are just foolish. A deductible is the amount of money you pay before your insurance company will pay. For the example, the average home is around $250,000. (hypothetically) and a 1% deductible is $2,500 for any claim, 2% would be $5,000 and 5% would be $12,500. What is your gambling tolerance level?

Most people want a low to medium risk – the 1% to 3% deductible range. The cost difference in most homes is minor for the deductible difference. Yes, the higher the deductible the lower the premium, but before you go straight to the 5% or higher deductible look at the cost savings. It is usually not worth the return over about 3%.

It is usually not worth the return over about 3%.

If you are a young couple with little money just feeling lucky to get into a house – keep your deductibles low so that if anything does happen it will not be catastrophic to your family. Older couples who have a little more financial reserve might consider a slightly higher deductible because they could afford to take a hit financially if something happens to their home. You alone know your financial situation.

The “average roof” on our “average home” is about $20,000. So, if you get hit in a hailstorm and you need a new roof what are you comfortable paying out of pocket? Percentages based on your coverage A of $250,000- 1% at $2,500, 2% at 5,000, 3% at $7,500 or higher?

In Texas, most policies have two deductibles: Wind/Hail and All Other deductibles. The Wind/Hail covers damage to your home by weather – wind, storms and hail. This is the most commonly used coverage. It is also the most expensive of the coverages. If you can afford to pay a higher deductible, this is one place you can choose to have a higher deductible for a lower rate.

The downside is that if you need to use your coverage, the cost out of your pocket will be higher. Another consideration is the All Other Perils deductible to reduce the overall cost. This is a much lower impact to the overall cost of the policy. However, selecting a higher deductible will help lower the premium slightly. This deductible is used for theft, fire, and water claims – anything but storm damage. Assess your own financial situation and carefully review the differences in premiums to find the best balance for yourself.

Do you have questions about coverage or would you like to receive a free quote? Contact me at the info below.

Blog Contributor

Karen Tannery 

Account Executive

281-712-7272

karen.tannery@goosehead.com

How much Insurance do I need for my home?

People often wonder how home values are determined for insurance. It is sometimes difficult for buyers/sellers to separate the market value from the insurance value. Insurance value is the cost to replace/rebuild the home. No consideration is given to the land value or the location. You can have a $1,000,000 home to purchase only insurance valued at $487,000 because the cost of the land is not a consideration. The flip can also be true, a house on the market for $220,000 might take $300,000 to rebuild. Simple math formulas must be applied to the home.

Do not skimp on the overall coverage amount and here is why. Before Harvey the average rebuild cost per square foot in the Houston area was about $100. After Harvey the scarcity of building supplies shot the price up to $160 per sq. ft. and the price has only recently started to fall back to about $110 to $120 per sq. ft over two years later. A 2400 sq. ft. house needs to be covered for at least $264,000 to make sure there are enough funds to rebuild the property.

When looking at an older home, consider the risk of old systems and materials that are no longer available. It can be significantly more expensive to insure a smaller older home that has not been updated than a much larger 5-year-old home.

There are two levels of coverage as well, Replacement Cost and Actual Cash Value (ACV). Avoid ACV whenever possible- Why? The insurance adjuster will look at what the property insured is really worth- 10-year-old carpet is worth about $50 per room. No where can you purchase replacement carpet for a room at $50! Replacement coverage is exactly as it states- the amount of coverage needed to replace the insured property. ACV is really no coverage at all.

What exactly is Homeowner’s Insurance?

Insurance can be confusing because there are so many parts. Broken down the foundation of all policies are the same.

Coverage A – the Building – The amount your home is covered for in the event of a total loss. (Should be around $110 per sq. ft.) This covers the structure of the home and anything built in or attached. (Flooring, cabinets, appliances, and the A/C System.)

Coverage B – Other Structures – This is to cover the other structures you may have on your property. (Completely detached garage, a shed, a she-shed, a gazebo, the fence, etc.) This coverage is usually equal to 10-30% of the Coverage A amount.

Coverage C – Personal Property – The best explanation I have heard is this – If you could pick up the house and shake it, everything that falls out is your personal property. Another way to look at this is, if it goes with you when you move – it is personal property. Mathematically the amount is about 40-50% of the Coverage A amount.

Coverage D – Loss of Use – If you can’t be in your home, this pays for you to live somewhere else. Everyone thinks this is for floods or fires, but what if the water line to your home breaks, can you live for weeks with no water? A burst pipe in a kitchen can shut it down for weeks – can you live there if you can’t prepare food? This coverage is usually 10-30% of the Coverage A amount.

Coverage E – Personal Liability – This covers you if you, a family member or something under your control damages or causes harm to someone else or their property. Example – Your tree hangs over into the street. A windstorm comes through and a branch from your tree lands on a brand-new car visiting a neighbor. You are covered. A tree in your yard is blown over and lands on your neighbor’s house doing damage. You are covered. The fence blows over and kills your neighbors pedigreed pet. You are covered. This coverage is incredibly cheap. It is recommended that you have $100,000 more in coverage than the value of your home (Coverage A).

Coverage F – Medical Payments – A child comes to your home and decides to climb a tree which gives way causing the child to fall and break an arm. This coverage will cover the medical bills of the guests and visitors – not your own family.

Additional Coverage A – In response to situation like Harvey, this coverage provides additional funds to repair your home in the event of a disaster which is defined by law as an event that impacts three or more homes. Example- you have your home insured at $110 per sq. ft and another hurricane comes through the Houston area and your home is damaged by wind and subsequent rain- not flooding. The prices of repairs skyrocket and the cost to repair is now $150 per sq. ft. this Additional Coverage A is then available to make sure your home is repaired completely and with equal replacement materials. You will pay additional premium for this coverage, but it is minimal. ($25 to $50 per year on the average policy).

Do you have questions or would like a free quote? Feel free to contact me.

Blog Contributor

Karen Tannery 

Account Executive

281-712-7272

karen.tannery@goosehead.com

Homeowners Insurance and Home Warranties

Let’s talk Homeowners Insurance

While you never want to leave yourself without a safety net, you also don’t want to overpay for insurance you don’t need (and will hopefully rarely use). Aim to strike a balance that will provide you with adequate protection at an affordable price.

Homeowners Insurance Covers Things Like: 

• Structure
• Roof
• Windows
• Furniture/Personal Belongings
• Liability for Non-Residents Injured on Property
• Liability for Damage or Injury Caused by You or Your Pets

Most Standard Policies DON’T Cover Things Like:

• Malfunctioning Systems and Appliances
• Floods or Earthquakes
• Slow Leaks
• Power Failures
• Neglect or Aging
• Faulty Repairs

Home Warranties

Some homeowners choose to supplement their insurance coverage by purchasing a home warranty, which covers many of the systems and appliances in your home that are NOT covered by homeowners insurance. While policy terms and coverage vary, a home warranty will often cover the cost (after deductible) to repair or replace components of your HVAC, electrical, plumbing and some appliances that fail due to age or typical wear and tear.

Unlike homeowners insurance, home warranties aren’t required by mortgage companies. But many homeowners like the added financial protection and peace of mind that home warranties provide.

A Home Warranty Covers Things Like:

• Plumbing
• HVAC
• Electrical
• Major Appliances
Minimize Risk, Maximize Value

Now that you understand the basics of homeowners insurance, you should be ready to start shopping for a policy that best fits your needs and budget. Your goal should be to minimize your risk while maximizing the value your policy provides.

Once you’ve purchased your policy, avoid setting the annual renewal on autopilot. Instead, take some time to consider factors that have changed over the past year. Home improvements, a shift in market conditions, a new home-based business, or even growth in your overall net worth could mean it’s time to reassess your coverage.

Need Guidance? We Can Help!

If you have questions about purchasing homeowners insurance or a home warranty—or if you would like a referral to a reputable broker—give us a call! We’re here to help.