Adam Roche's Blog
You found the right house, put in the new carpet, buffed the wood floors and moved in all your belongings. Then one day after being out with your family, you come home to find all your sewer pipes backed up and an inch of water in the bathroom and creeping out into that new carpet. You have company coming this weekend, but it’s okay, you just call Hank your insurance agent, and it will all be taken care of, right? Wrong. Most policies don’t actually cover sewer damage.
That’s Right! No Coverage
Reading through the fine print of your insurance policy is important. Many things that new homeowners assume are covered turn out to be extra or not even available in the first place.
- Sewer Backup: As a sewer system ages it becomes more prone to blockages and bursting pipes which can leave you in the lurch. Sewage issues are rarely covered in homeowners’ insurance and usually require an extra specific endorsement. If you don’t have that additional coverage, all those repair and replacement costs will come out of your own pocket.
- Termites: Termites love wood. When they move into your home, they eat away at walls, support beams and any other wooden parts of your home. Termites cause over $5 billion in damage across the united states each year. It’s next to impossible to get a policy that covers termites, so keep an eye out for the signs and practice preventative pest control.
- Mold: Underneath the paint, behind the tub, around the floorboards – there are many places that mold likes to make its home. Over a thousand varieties, with some causing significant health risks like black mold, everyone is susceptible to a mold infestation. Most policies that include mold coverage have severe restrictions on its possible sources and max out at around $10,000 or so in coverage. That may sound like a lot, but mold damage can easily be more than that. Just think about replacing half the walls in your home in addition to the expensive treatment that prevents it from coming back.
- Flooding: A variety of water-related issues can cause flooding in your home. Some of them are covered, but flooding from hurricanes, heavy rain or tropical storms is usually not included. If you live in a storm-prone area, check to see if your community participates in NFIP, the National Flood Insurance Program. NFIP municipalities are required to meet FEMA preparedness requirements by putting resources into flood prevention. If your community participates, you are eligible for the NFIP coverage.
- Earthquakes and Sinkholes: Earthquakes and other ground movement such as sinkholes are not covered by the majority of policies. If you live near a water table, or on top of certain kinds of rock, your property may be prone to sinkholes. If one opens up beneath your home, the damage can be incredible. Check with your policyholder to see if additional earthquake and ground movement coverage is available for your property.
Make sure to talk to your insurance agent about all your needs and questions to get the right policy for your situation. Not sure what questions to ask? Your real estate agent will know what dangers your property is prone to.
You may know that when you buy a home, you should purchase homeowner’s insurance. You may have never wondered if the coverage is required. Usually, insurance will be taken out of escrow and a part of our monthly mortgage payment. You may pay a yearly premium separate from your mortgage payment. Home insurance is a nuisance so if you could find a way around it should you forego it?
You can legally buy a home without a home insurance policy, but if the house is financed with a lender, the mortgage company usually requires that you have insurance on the property. A lender can also request that your home carry additional policies such as earthquake or flood insurance. There are minimums you must meet based on the value of your home and the lender you do business with. These standards exist so that you as the homeowner will have enough coverage to replace the property should it be a total loss in some type of natural disaster or fire.
The amount of coverage you need depends on how big the mortgage is that you have taken out. There are certain supplemental coverages that may not be required yet are sensible to carry. These extra coverages include:
Personal liability coverage
Personal property coverage
The good news is that as a homeowner you have a choice. You can shop around and see which insurance companies will give you the best coverage for the lowest price.
The bottom line is that you shouldn’t risk going without home insurance. Even if your loan company allows you to cancel your home insurance after a certain point, the risk is really not worth saving money. Without coverage or permission to cancel coverage, there is a chance your mortgage company could put your loan into default.
High deductible, basic insurance policies are better than nothing. If you’re going to pay a premium for home insurance, you should look into getting the coverage that makes the most sense for you and your family. You don’t need over the top coverage amounts, but you should aim for comprehensive protection for your property. The key is to balance the cost of your insurance with the value of the property. If your house burned down, you’d want to know that you could replace your property without worry. If you didn’t have insurance, you could really face some issues. You may not want to pay for home insurance, but you genuinely need it. Make sure you understand your coverages.
Homeowner’s insurance allows you to have financial protection if your home or the contents of your home have been damaged. If you or your family member are held legally responsible for injuries that have occurred on your property, you are also protected. Insurance is generally required by most mortgage lenders in order to secure a loan.
There are many different types of insurance policies that you can use to cover your home. You can get anything ranging from a basic insurance policy that just covers your home overall or you can go for broader protection for your home. The types of coverage that you can get will vary from state to state.
Most insurance policies will cover damage caused by fire, wind, lightning, theft, or vandalism. Floods and earthquakes typically require additional coverage, so if you live in an area that is susceptible to these issues, then you should inquire about additional coverage.
The Standard Policy
Most insurance policies include certain basic coverages like dwelling coverage which is the allowance for you to either repair or rebuild your home. This includes the electrical systems, the plumbing systems, and the HVAC systems. You need enough coverage for your home in order to rebuild in the event that such an event would cause a need for it. Your insurance agent can help you to find a comfortable number that will allow you enough coverage for rebuilding.
Standard coverage also may include “other structures” which can include fences, garages, cottages, and sheds. You’ll also be covered for your personal property which includes clothing, furniture, and electronics that may be damaged in your home due to theft or disaster.
Loss Of Use Coverage
This type of coverage will pay for your living expenses if you need to move out of your home while it’s being rebuilt or restored. This would allow you to find alternative arrangements when you need it most, so it’s an important aspect of home insurance coverage.
This coverage is one of the most important aspects of purchasing home insurance. Having liability will help to protect your assets and cover defense costs in the event that you have been held liable for causing and injury to other people or property.
Additional Coverage Options
There are many different types of additional coverages that you can add to your homeowners insurance policy to help you get the right umbrella of coverage for you.