15 Minutes Not Enough For Homeowners Insurance

Question: How do I know that I have the right homeowner’s insurance coverage?

Answer: Most people will spend more time figuring out what movie to watch on Netflix than setting up homeowner’s insurance on their most valuable asset(s). Despite how fast and easy insurance companies make the process, you should be spending more time with a real person designing an insurance policy that fits your home and your risk tolerance.

Two weeks ago, ARLnow columnist Peter Rousselot wrote an article about a home flooded with sewage because of a back-up in the public sewer line that didn’t have proper Water & Sewer coverage and was denied coverage by the County, thus costing them almost $20,000 and a ton of headache. According to my insurance partners at Day, Deadrick, and Marshall (DDM Insurance), Water & Sewer Back-up Coverage is one of many things commonly missing from most homeowner’s insurance policies written by popular “fast and simple” insurance providers.

In addition to having the right coverage, a good insurance provider will also make sure you understand what is NOT covered that people often think is covered. Basement flooding from heavy rains is a good example of something that is often not covered, a lesson many locals have learned the hard way over the last few years. If you understand what isn’t covered, you may make different decisions on where and how you store valuables or where you invest in expensive renovations.

I asked the team at DDM Insurance what some of the most common mistakes are that they see in other homeowner’s insurance policies they review and outlined some of them below:

  1. Sewer Water Drain Backup (what was missing in the policy for the homeowner in Peter’s article): Applies to sump pumps, wells, toilets and piping within the structure.  Separate coverage applies to the breaking or freezing of pipes, but any other back-up or over run of these sewage systems within a home require this coverage and should be no less than $25,000.
  2. Additional Living Expenses:  It covers hotel bills, restaurant meals, and other living expenses incurred while your home is being rebuilt. Typically, most policies will cover 20% of the value of your home, but for those with lower valued homes, it may be appropriate to increase this limit.  In the event of a total loss, it is very reasonable for these expenses to be over and above that amount.
  3. Guaranteed Replacement Coverage on the Dwelling:  This provides additional coverage on the dwelling if there is a total loss, so the client gets a percentage over the dwelling coverage listed on the policy declarations.  Those percentage options are usually 25%, 50%, or 100%, so if you have $100K on the dwelling coverage, with this endorsement, you get up to $125K, $150K or even $200K.  This is a must because you never actually know what it will cost to rebuild until it has to be done.  The replacement cost estimators that insurance companies require to be done are only estimates so this endorsement gives people a cushion so they are not out of pocket in the event the house is totaled.
  4. Supply Line Coverage: This helps to defray the cost to replace the incoming/outgoing water and sewer lines from the street to the house.  This covers the cost to dig up the front yard, replace the busted pipe and then backfill/repair your yard. It often costs $5,000-$10,000+ for this type of work, depending how far your house is from the street and the amount of landscaping/hardscaping to dig-up/replace.

You should also consider who the actual insurer is because when a claim is filed, the quality of service and responsiveness of your insurer is critical. Like anything else you buy, the cheapest providers often render the cheapest service when called upon.

If your homeowner’s insurance was set-up online or without involvement by a real person with expertise in local insurance practices, I highly recommend getting another opinion from an insurance agency/provider who offers a more personalized review of your policies. I also don’t suggest taking those recommendations and sourcing the cheapest version of it elsewhere because oftentimes, the personalized service you get (or don’t get) building a policy is reflective of the quality of service you’ll get when a claim arises.

For a review of your current policies or help setting up a new policy, I highly recommend contacting Matt Deadrick (mdeadrick@ddminsurance.com or 301-937-1500 x13) at DDM Insurance, who I use personally and recommend to my clients.

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Question: If somebody slips and gets hurt on the icy sidewalk outside of my home, will my homeowner’s insurance cover medical bills?

After last week’s blizzard, I got a lot of questions related to homeowner’s insurance coverage, so I reached out to a reliable professional to address your questions. This week’s column is brought to you by Max Olson, a third generation insurance professional who owns the Olson Insurance Agency in Arlington VA. More information can be found at www.NationwideMax.com. Take it away Max…

Homeowners Insurance can cover most winter-related claims if the policy is set up properly. Considering the average home insurance claim is over $8,000, it’s important to know what is and isn’t covered. Lets look at the most common claims and how coverage can be extended from your home insurance policy. 

Trip & fall lawsuits

Make sure to properly clear your sidewalk area once safe to do so because ultimately you could be liable for someone tripping and falling on the sidewalk outside of your house. Your home insurance should provide some coverage for this (typically around $300,000) under the personal liability coverage. If you desire more coverage than this, you may want to talk to your insurance agent about getting an umbrella policy. 

Burst pipes due to freezing

The home insurance policy will cover the damage that the water causes but it generally won’t cover the damage to the pipe itself. If the pipe is damaged and a slow leak is found weeks later, generally most policies will exclude coverage saying that the damage is a maintenance issue. 

Wind damage

Whether wind directly damages your home or causes a tree to fall on your home, most policies cover the resulting damage. The deductible that you pay for this type of claim may be different than your normal deductible. Depending on your policy, this could be 2-5 times larger than your normal deductible. Some insurance companies have raised these deductibles across the board and unless people have actually read their declaration pages at renewal (not common) they aren’t aware of the changes. 

Water backup

Often, after the snow begins to thaw it can create a large amount of water around the house. If you have a sump-pump, make sure that your insurance policy covers “Water/Sewer Backup” or the damage caused if your sump pump fails might not be covered. This is one of the most common home insurance gaps that I see. 

Overall, homeowner’s insurance is a great way to protect yourself from the damage that Mother Nature can do to your home. Every few years just make sure to review your coverage and deductibles with your insurance agent so when something does happen, you won’t be surprised that the coverage is different than you expected.