Buying Homeowners Insurance Online? Are you covered?

Would you trust a banker to fix your car? No. So why do you trust [insert your profession] to ensure your most valuable assets are adequately covered? People do this every day by buying insurance online or with a call center. Blindly selecting or deselecting crucial endorsements, leaving substantial gaps in their insurance. I know, those prices look too good to be true…that is because they are!

Here are a few of the most common gaps in homeowners I have seen in my years in insurance when people shop online or via a call center:

• Coverage A – Dwelling Coverage: This is not the market value of your home, this is how much your home costs to rebuild. Most commonly, your replacement cost is higher than your market value. This is where I see gaps. It is not uncommon to see $50,000 underinsured on a home.
• Coverage B – Other Structures: Not quite as common, but I have seen often enough that outbuildings are not added to the policy. If you have a home that is worth $300,000, you normally get coverage for $30,000 in other structures. What happens when you have a $50,000 pole building and a gazebo on your property? You only get $30,000 to replace those, not a dollar more.
• Coverage C – Personal Property: I normally do not see “underinsured value” on personal property, but I commonly do not see “replacement cost contents” included. Let’s just bring up one item: your bed. You paid $3,500 for your Purple mattress 6 months ago and have a loss that included your bed. You will get paid actual cash value (ACV) on that…I just found that same mattress, barely used, for $800. Replacement cost contents will cover the cost to replace with a new mattress, no matter the original cost (can be less, can be more).
• Coverage D – Loss of Use: Not as common, but this coverage can be excluded to save you a few dollars a year. Do not do this. If you have a loss on your home where you no longer can live there, this is the coverage you will need. It will cover temporary housing, additional fuel/food/laundry/moving costs along with pet boarding, storage, utilities.
• Coverage E – Personal Liability: This covers medical costs if you are held liable for causing an injury. Normally, I just see low ($100,000) limits. It’s usually less than $20 a year to have $500,000 instead.
• Coverage F – Medical Payments: This covers medical costs regardless of fault. Again, this is minimal cost to increase: average cost from $1,000 to $5,000 is usually $10-15 a year.
• ACV Value on Roof: Actual Cash Value on your roof is the cost to replace minus depreciation. On average, depreciation is approximately $1,000 per year. So if your roof is ten years old and costs $15,000 to replace, you will get ACV ($15,000 – $10,000) minus your $1,000 deductible = $4,000. If you have replacement cost (again, this will cost a little more depending on age of roof), you will get paid out $15,000 – deductible = $14,000.
• Matching of Undamaged Roof, siding, and (limited carriers) windows: This will match any undamaged roof or siding in the event of a partial loss and the insurance company. This is not included in a typical homeowners policy and typically starts at $40 per year.
• Extended Dwelling Cost: Have you looked at the cost of lumber lately? The prices for material and labor fluctuate considerably and normally not in the consumer’s favor. Even though normally your home will cost a specific amount, there is a chance it costs more. Adding 25% extended dwelling cost is practically pennies a year. This can also be increased to 50% extended dwellings cost and some carriers allow “Guaranteed Replacement Cost”.
• Water/Sewer Backup: This does not come standard on a homeowners policy. This is going to be on the higher end of the price scale for endorsements I have mentioned, typically starting at $70 per year and going up from there depending on coverage. In the event of an uncovered loss, will you have the immediate funds to pay for emergency repair services to ensure no additional damage is done to your home? If not, maybe that $70 a year is not a bad trade.
• Service/Utility Line: This typically covers your water/sewer/sprinkler pipes and cable/fiber lines from the street to your home. The cost of this coverage varies from $12-25 a year, but the claims are typically over $7,000 depending on the extent of the damage.
• ID Fraud Protection: This seems to be the talk nowadays: everybody trying to get your information. What if they did? How would you recoup the expenses to clean up the mess? Typical ID Theft endorsements cost $12-20 for $25,000 in coverage.
• Building Ordinance or Law: This is going to be for people in older homes (yes, even 30 years is old). Laws and ordinances change all the time, meaning if you are the rebuild your home, you would have to follow those laws. Your insurance policy rebuilds your home as it was, usually including 10% additional costs for building ordinance or law. Many older homes will need substantially more than the 10% of the replacement cost to get “up to code”. This will be another minimal cost endorsement but will depend on the age of the home.
• New endorsements/benefits/discounts: I can’t have this list without including the fact that having an agent, you will have the accessibility to new endorsements as they come out.

Did I just teach you how to buy insurance online or through a call center? Maybe. But the changing market is monitored by licensed agents, like us, don’t make it your job. The right insurance agent will get you the coverage you need at the best price.

If you haven’t already, give Infinity Insurance agency a call or text at (763) 497-0722 or email at info@infinityinsmn.com. We will do a review of your existing policies and compare with the coverage we offer.