The Seriousness of Homeowners

A recent report cited that only 2% of Italians purchase Homeowners.  That makes those recent earthquakes in Italy seem so much more real and disturbing, doesn’t it?


To me, Homeowners is serious business.  I remember a quote hanging on the wall at an agency I worked at, “A house is made of walls and beams; a home is built with love and dreams.”  What happens if it burns down?  Washes away in a flood?  Or the roof blows off?

In fact, only 37% of renters actually have renters insurance; whereas 95% of homeowners have Homeowners policies.  I am certain that number is so high due to a mortgage requiring it.  I have sat through numerous calls and visits where the insured wanted to cancel the policy since the home was paid off.   This coupled with the snarky attitude that somehow this is hurting me, not them.

Unless there is an earthquake in their area, most insured’s do not think about earthquake coverage.  According to the California Earthquake Authority only 10% of Californians have earthquake insurance.  That number goes way down in places like Oklahoma – where there are earthquakes weekly.

Think about the most contentious spot of the Homeowners policy – inflation guard.  The majority of policy holders believe strongly that coverage A is based on market value.  It’s not.  Coverage A is how much the carrier is going to have to have on hand to rebuild the house.

Ten years ago, carriers were increasing the limit by eight to ten percent.  Now, it is a mere 4%.  According to the National Association of Home Builders sales for supplies rose two percent in April 2016. Further, softwood lumber prices rose 2.7% – their highest since February 2015.

Hey, remember that Alberta wildfire in Canada earlier this year?  That is where a lot of our lumber comes from – think those prices are going down after that disaster?    Something to keep in your back pocket during those inflation guard calls!

Any experienced claims adjuster will tell you it is not easy to manipulate programs like Simsol to make the figures work.  No one wants to explain how there is no coverage because either the coverage was reduced, removed, or cancelled.

Another piece – sewer backup coverage.  I have seen many carriers place this as part of a larger package – often at limits of $5000 or $10,000.  For some insureds, this seems like duplicate coverage to flood insurance or they feel the policy will cover this with or without it.

Additionally, they may think this covers them through the set back and into the street.  It generally does not.  Ever try to explain they might need to purchase a policy from the local sewer company to cover that extra piece?  What if they can’t?

So many parts of everyday life fall back on that Homeowner’s policy.  It could be items stored off premises, like children’s belongings away from school; items in the car; items in off-site storage.

Now that we have discussed the problem spots, you know what to address with the insured when they come in or call up to complain about that policy.   Let them know, Homeowners is not something to take lightly.

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