Our New Home (Insurance Policy)

 

My husband and I recently purchased our first home!  It’s an adorable little home (see above!) in the comfort of a suburb of Chicago and we were beyond excited to move in!  But as any homeowner knows, there are a million things to do before you move in to that new home.  Obviously, being a good “insurance nerd”, after the loan was approved and all the paperwork was transferred, my first reaction was, “We need good insurance.”  But what does that mean?  Ask 100 people to define “good insurance” and you will get almost 100 different answers.

Here are some of the things I considered when choosing insurance:

·         Agent/Broker: This is probably the most important decision when it comes to insurance.  This person is representing you to the insurance company.  If you have a less than great agent or broker, the insurance company may question things more often, may receive claims that likely should not have been turned in because they are under your deductible, and not to mention you may not get the service you expect or deserve year after year.  Don’t discount how important this decision is.

·         Replacement Cost:  Replacement cost IS different than market value.  This is one of the hardest things for individuals I speak with to comprehend.  Sometimes replacement cost is more and sometimes it is less than market value.  I have seen both situations, but more often than not, it is more.  Make sure your agent or broker is utilizing some sort of tool to help them put together this number.  Some insurance companies will come out to your home to do an appraisal, which will confirm that the number you are placing on the policy is the most accurate. 

·         Insurance Contract: Make sure your insurance contract is the broadest you have.  Some companies offer earthquake, flood, back up of sump and sewer, etc. all right on the homeowners policy.  Consider the risks you have in your area and look to protect those.  And, if you’re new to the area, why not ask your broker or agent what they see and what their clients are concerned about?  Also, make sure you have at least replacement cost coverage!  (See my post “Valuation Battle: ACV vs. RC vs. ERC” from 12/30/13 for more details.)

·         Pricing: Price is always a consideration when choosing coverage.  While looking for coverage, remember that every insurance company has a different target market.  Some companies want homes over $1M in replacement cost, some companies are looking for clients with no claims, some companies only want homes with alarms that are monitored.  Brokers typically have access to more than one company and can help you make a decision about which carriers are best, so this is likely an easy way to explore the market.

·         Company: There is something to be said about branding and customer experience of insurance companies.  You want to be sure that if there is a claim, your insurance company is going to work with you to get your claim resolved, not against you.

·         Ownership of the Home: Did you title your home in a trust or an LLC?  It’s EXTREMELY important to make sure that your company adds this entity as an additional insured.  This provides liability coverage for this entity should it be sued in the event of a liability claim.  Not all companies can do this, so make sure to check while going through the placement process.

There are so many other things to consider, but these are what I found to be most important.   Happy home hunting!