Author Topic: Homeowners Insurance....what to exclude?  (Read 6510 times)

JuniAda

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Homeowners Insurance....what to exclude?
« on: June 30, 2014, 07:25:01 PM »
Hello:
I'm currently in escrow and am currently shopping around for homeowners insurance. Any tips on how to save? Do I really need guest medical insurance?

Any info would be appreciated!

Thanks!

AH013

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Re: Homeowners Insurance....what to exclude?
« Reply #1 on: July 02, 2014, 02:14:11 PM »
Determine your limits and shop around with those check points in mind.  The usual levers for policies costing more/less are:
  • Deductible -- How much can you afford to lose?  Realize a low deductible is generally a fool's errand -- so you switch from a $500 deductible to a $250 deductible and it only costs $50/yr more.  You have a $500 loss, so instead of having to eat the whole loss you get $250 back, so you are ahead $200, smart move right?  Wrong, because you file the claim and your rates are jacked up $200/yr for the next 5 years, so you screwed yourself, whereas if you had just eaten the loss you would have had the lower premium and your rates would also not be going up (because you wouldn't have filed the claim)
  • Mold remediation -- Be careful -- mold can be anywhere, and it's difficult to check for until you tear down the walls and find a $100,000 job on your hands.  Make sure you are getting good coverage, as it's something often ignored or insurers slip in a lower $5k coverage to beat a quote without you realizing, and then you basically have a useless home and still have a mortgage on it
  • Wind/hail:  Usually quoted as a % deductible or a fixed amount (same as general deductible).  If you know basic preventative steps depending on your location (i.e. moving in / tying down yard objects, plywood sheets over the windows, keeping tarps on hand in case you have a roof leak, etc) it is better to go with a % deductible which will lower the premium a lot, but realize that you will have a much larger out of pocket expense in wind damage if you're a clown and let a hurricane rain through your open windows and flood your entire house
  • Realize you will still be screwed by the bank/insurer scam.  You will be required to buy coverage to completely offset the mortgage principal, even though in many parts of the country the rebuild cost is much less than 80% of the value of the home (because land, which has value, is seldom "damaged" by any type of event, but because of the coverage>=mortgage principal rule, you are basically forced to insure your land).  So you are forced to buy and pay for coverage which will have no use/value (if you have a $400k policy and it only costs $300k to rebuild, you will not get an extra $100k check for being overly cautious)
  • Additional coverages beyond repair & liability -- I generally find these unnecessary, just like in auto insurance.  Medical coverage is generally a means for house guests to recover medical costs, but these can also be recovered by suing your ass (which will be covered under your liability) if it is your fault.  And if it wasn't your fault? -- Then WTF do you expect me to pick up your medical tab just because you were in my house when you had a heart attack?
  • Collect every discount available.  Personally, I get a $75 discount on my policy for having an alarm/CCTV system.  Am I paranoid and/or think it will prevent a burglary?  No.  But it cost me $225 to buy & install, so it pays for itself in 3 years, and I can make sure the plow guy came as many times as he's charging me for, and if I when I go on vacation I know I won't return to a flooded place because of a pipe that broke a week ago.  Deadbolts on every exterior, combining home & auto, employer/shareholder discounts like Geico offers, installing large font numbering on your house (responders can identify your house easier...it lowers premiums usually), measuring the distance to the nearest fire hydrant and if it's more than 250 feet or whatever gets you a discount, see how much it might cost to get one added closer to your home (again, it may cost you $300 now, but if it saves you $50/year on your policy it pays off in 6 years and provides you savings ever after).  Again, anything and everything, get the discount.

gforce1124

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Re: Homeowners Insurance....what to exclude?
« Reply #2 on: July 02, 2014, 03:11:58 PM »
I'm an insurance agent in MD so perhaps I can shed some light.  There are always ways to cut costs on any insurance policy.  You need to be careful though, because whenever you lower a limit or remove an optional coverage you expose yourself to financial risk down the line if you have a claim.  It's important to understand what protection each option will provide, then weigh the cost vs the benefit.  Which coverages do you need, and where can you afford to cut back?  I don't know....it's a function of the features of the home, your current financial situation, the area you live in, etc.  I recommend calling a local agent that you can work with on the individual coverage questions.

IN GENERAL:
I will recommend a $2500 home deductible, but it depends on the base premium and what you can afford. 
I agree with AH013's stance on maximizing discounts, mold coverage and guest medical coverage.  Using 1 insurance company for all policies is a good way to max out multi-line discounts.
I disagree with AH013's stance on mortgage requirements and some optional home coverages.  In the states that I'm licensed, a mortgage company cannot force you to overinsure your property.  They may claim that you need a coverage limit equal to the purchase price or loan amount, but this is typically just what the loan officer or underwriter prefers in order to make their job easier.  Presenting a home policy with a coverage amount equal to a "reconstruction cost estimate" should allow you to get around this, and you can get an estimate from your agent.  Condo (or HO6) policies don't always fit this rule though. 

jedichikin

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Re: Homeowners Insurance....what to exclude?
« Reply #3 on: August 01, 2014, 01:55:28 PM »
gforce1124, do you write insurance in Tennessee? Thanks.

siouxzq

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Re: Homeowners Insurance....what to exclude?
« Reply #4 on: September 17, 2014, 08:07:25 PM »
My story:
We rent in MA, but own property (17 acres, house, barn, garage)  in NH (our only property).  The mortgage is paid off and we are there nearly every other weekend and holidays.  We keep it heated and use it year round. It is a 100+ year old farmhouse and has seen better days, but we like it.

After over 15 years with never a claim, our insurance company will not renew because they came out and did an inspection (without our knowledge)  and don't like the fact that the paint on the house is peeling and we haven't done something about it.

Checking with other insurance companies locally, it seems everyone won't insure us due to the paint issues.   We have one quote for a 40% increase over what we had and it excludes  collapse, weight of ice and snow, ice damning, freeze-ups and theft. Anyone who is from the Mt Washington area knows that snow damage is a somewhat critical coverage.

So -- should we forget about house insurance all together and just get some sort of liability insurance? Pay for the insurance that doesn't really cover snow damage, but does cover fire (which is also a biggie)?  What about just "Building" insurance? Evidently, there are a lot of places around us that aren't covered for the same kinds of reasons and we are exploring our options.

Thanks for any advice

windypig

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Re: Homeowners Insurance....what to exclude?
« Reply #5 on: September 17, 2014, 08:52:45 PM »
My story:
We rent in MA, but own property (17 acres, house, barn, garage)  in NH (our only property).  The mortgage is paid off and we are there nearly every other weekend and holidays.  We keep it heated and use it year round. It is a 100+ year old farmhouse and has seen better days, but we like it.

After over 15 years with never a claim, our insurance company will not renew because they came out and did an inspection (without our knowledge)  and don't like the fact that the paint on the house is peeling and we haven't done something about it.

Checking with other insurance companies locally, it seems everyone won't insure us due to the paint issues.   We have one quote for a 40% increase over what we had and it excludes  collapse, weight of ice and snow, ice damning, freeze-ups and theft. Anyone who is from the Mt Washington area knows that snow damage is a somewhat critical coverage.

So -- should we forget about house insurance all together and just get some sort of liability insurance? Pay for the insurance that doesn't really cover snow damage, but does cover fire (which is also a biggie)?  What about just "Building" insurance? Evidently, there are a lot of places around us that aren't covered for the same kinds of reasons and we are exploring our options.

Thanks for any advice

Why not paint the house?

siouxzq

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Re: Homeowners Insurance....what to exclude?
« Reply #6 on: September 18, 2014, 05:59:24 AM »
:)  Too late now -- winter is coming and the policy has officially not been renewed as of late October -- we could perhaps do something next summer (with quotes of 20-30k - ugh) but we are afraid we are now considered bad apples, as every insurance company in town knows about it.  At any rate, we have at least a year before anything is feasible and we would have to take out a loan to do it. So what to do for now.  The answer is probably, Take the insurance you can get and paint or replace the siding next summer.   But wanted opinions on -- "building insurance" that isn't exactly "home owners" insurance.

clarkfan1979

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Re: Homeowners Insurance....what to exclude?
« Reply #7 on: September 19, 2014, 05:40:39 AM »
From a theoretical perspective humans are loss averse. We hate losing things and are naturally drawn to the idea of insurance because it make us feel better. We are not always rational about these decisions and tend to buy too much insurance.

I was offered the opportunity to buy insurance for my garbage can. My new garbage company told me that their cans cost $100, so if I lose it, it will cost me $100. I was like, really? $100? Then they said, "Oh, if you are worried about it, you can buy insurance for $7/month."

I increased my deductible on my rental property from 1,000 to 5,000 and got a rate decrease from 1097 to 675. If you can afford the 5000 deductible, it is worth it. If you can't afford it, then it probably isn't worth it.

MikeBear

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Re: Homeowners Insurance....what to exclude?
« Reply #8 on: September 20, 2014, 07:10:02 PM »
My story:
We rent in MA, but own property (17 acres, house, barn, garage)  in NH (our only property).  The mortgage is paid off and we are there nearly every other weekend and holidays.  We keep it heated and use it year round. It is a 100+ year old farmhouse and has seen better days, but we like it.

After over 15 years with never a claim, our insurance company will not renew because they came out and did an inspection (without our knowledge)  and don't like the fact that the paint on the house is peeling and we haven't done something about it.

Checking with other insurance companies locally, it seems everyone won't insure us due to the paint issues.   We have one quote for a 40% increase over what we had and it excludes  collapse, weight of ice and snow, ice damning, freeze-ups and theft. Anyone who is from the Mt Washington area knows that snow damage is a somewhat critical coverage.

So -- should we forget about house insurance all together and just get some sort of liability insurance? Pay for the insurance that doesn't really cover snow damage, but does cover fire (which is also a biggie)?  What about just "Building" insurance? Evidently, there are a lot of places around us that aren't covered for the same kinds of reasons and we are exploring our options.

Thanks for any advice

You could always burn it down now, while it's still insured... Or you could ask the insurance company to write a policy and specifically EXCLUDE coverage for the paint, or any damage that may be caused due to not having good paint on it.
« Last Edit: September 20, 2014, 07:12:26 PM by MikeBear »

siouxzq

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Re: Homeowners Insurance....what to exclude?
« Reply #9 on: September 23, 2014, 05:46:47 PM »
Thanks for the advice.  Burning down was an idea, but it would look way too suspicious -- and we love the things inside, so removing them all before the fire would be a way crazy idea. 

I tried the exclusion idea right from the start -- they refused.   

Think we will go with the lowest insurance for a year (or risk it and go with none at all) and see what we can get done next summer.

If anyone thinks going without for a year is REALLY, REALLY stupid, let me know.

Daisy

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Re: Homeowners Insurance....what to exclude?
« Reply #10 on: September 23, 2014, 08:39:37 PM »
I'm having a similar issue now. I recently moved to a condo and am mortgage free. I hadn't gotten around to looking for insurance yet. I wanted to get a HELOC on the place and they are asking for insurance. My building is insured for the externals and windstorm/flood/hazard (I am in South Florida). But the bank for the HELOC wanted internal insurance as well.

I got two quotes. One from my previous home's insurer and one from a friend who is an agent and was pushing me to get insurance.

Although I have hurricane impact windows, my front door is not impact proof so I may not qualify for the hurricane impact discount. I would need to pay about $125 to get a wind mitigation inspection which I may fail because of the door and also the previous owner never changed the kitchen window to impact. My front door is actually quite protected by a large front balcony with an iron fence (I'm on the third floor) and an external staircase and also has a wrought iron gate in front of it. I have better odds of winning the lottery than having something make it to my front door.

Brace yourself for the South Florida exhorbitant insurance rates. I got quoted almost $700 for about $30,000 dwelling/$30,000 contents/$300,000 liability - with the minimal deductibles. I save about $80 a year to go with the max deductibles. But the policy has a $900 credit for the windstorm protection. If I fail the windstorm inspection, the policy might go up by $900!!! That would be $1600. I'd have to get the exact quote. May I remind you that this is just for the internals of the condo as the building has the exterior covered. I'm paying that through my HOA fees.

This is just for fire coverage in my view. I have impact windows so the odds of a hurricane causing major damage are very low. Also, I'm on the third floor so the chance of a flood is very low (even admitted to by the agent).

What would you do? I'm mortgage free so I can choose whatever coverage I want. I could continue on uninsured. Is it worth the risk?

Additionally, if I did want the HELOC for an emergency fund I would need to get this coverage. Is the HELOC worth it?

I'm pretty close to FIRE so I think I should be able to cover a $30,000 damage. The only risk I see is fire (not to be confused with FIRE).
« Last Edit: September 23, 2014, 09:04:29 PM by Daisy »