5 Common Issues Faced By Home Insurance Customers
Home insurance customers enjoy the security of knowing they are protected in case damage or destruction occurs to their homes. There are issues to be aware of that can alter or jeopardize house insurance protection. Education in these areas can save time, money, and preserve financial security.
- The coverage amount of homeowners insurance is not enough:
Ensure that the amount of home insurance is enough to rebuild a home in case of a catastrophic event. It is a common problem that home insurance customers find — after their home has been irreparably damaged, there is not enough coverage to rebuild their home. Research the cost of replacement of the home to avoid this issue by talking with local contractors and real estate agents in the area. The cost of replacing a home could reach amounts double the original purchase price. Being informed about this ever-changing amount is critical to ensuring that the replacement value coverage on the home is adequate. Since the housing and construction market changes frequently, it is important to do this on a regular basis every two years on average. It is safer to pay a bit of a higher premium before anything happens than to find the coverage is not enough to replace a home.
- The deductible has added conditions:
Many homeowners feel comfortable in knowing their deductibles for claims is something they can afford. It is important to check the conditions of these standard deductibles to see what they specifically cover. In some cases, an added deductible exists for damage for particular conditions. For example, if there is damage from wind, such as a hurricane or a windstorm, there typically are added deductibles in addition to the standard deductible. Homeowners would be wise to check this out beforehand and know the terms and conditions of deductibles before a roof or wall is damaged by wind. It is best to read the homeowners insurance policy to make sure.
- When to file a home insurance claim or make an inquiry:
A common issue facing home insurance customers is when to file a claim for minor damage. Before calling an insurer or an agent to ask about filing a claim, consider a few factors first. If a claim is filed for minor damage, it is likely homeowners insurance premiums will increase. If a claim is filed in the next few years for more serious damages, the insurance company may deem the policyholder a risk, and premiums can increase dramatically. It is recommended to thoroughly weigh the options and check the policy before submitting a claim for minor damage.
What may seem as a harmless claim can trigger an interior inspection request by the insurance company. Previous claims, including those by previous owners, can add up, and one minor claim, that seems isolated, will bring about this type of inspection. If problems are found during the inspection, premiums could rise dramatically or the insurance company will choose not to renew the policy. Tread lightly when filing seemingly minor claims — it could turn into a major issue.
It is important to emphasize that even calling an agent to make an inquiry can negatively impact insurance down the road. Insurance companies use a database called the Comprehensive Loss Underwriting Exchange (CLUE), which records past histories of properties and policy holders. CLUE tracks five years-worth of property claims and property inquiries. Even if the homeowner called to ask if the property was covered for floods, that would be recorded in the CLUE database. Rather than calling an agent to ask a question, it is much better to read the policy to get the answers needed.
Call a contractor and get an estimate of what it costs to fix the damage. If it is affordable and especially if it does not exceed the deductible, it’s best homeowners fix it themselves.
- Luxury items coverage:
A typical issue facing homeowners concerning their luxury items is coverage under normal house insurance policies. Most house insurance policies do not cover expensive jewelry, art, and fur coats. Sometimes a homeowner has to buy a separate rider or policy to cover very expensive goods. Checking with the agent in this case, to see what is needed in this situation, is a wise course of action.
- Cancellation of a homeowners policy:
Typically, if premiums are paid on time and no fraud or misrepresentation occurs on the part of the policyholder, an insurance company will renew a policy regularly. Insurance policies carry a set term, commonly six months to a year. In most states, laws are in place to regulate why an insurance company can cancel a policy during the term. An insurance company can decide at the end of the term of the policy to not renew. The decision to not renew can be for any reason as long as it is not illegal, and the company will send a letter before the end of the term to notify the homeowner of the decision not to renew.
A common issue for house insurance customers is when to switch companies. The homeowner should get a new policy before canceling any old ones. Once in place, the homeowner would notify the current insurer they are not going to renew. This is best done in writing, with an effective date which coordinates with the start of the new insurance policy. Before making this decision, see if there are any penalties for what the insurance company may consider an early cancellation. It is best to cancel an insurance policy after new coverage has been secured as close to the end of the term as possible.