Filling in home insurance gaps

DATE | 07/27/20
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What to consider when evaluating your home insurance policy and your insurance provider.

Your home is probably your biggest investment, so having the proper insurance coverage is paramount. Unfortunately, it’s all too common for people to purchase a home insurance policy and unknowingly leave important gaps in their coverage, putting them at unnecessary risk. Many people also have low expectations about the service they should expect from their insurance provider. That’s why it’s important to become an informed insurance consumer so you can ensure you have the right protection for yourself and your family—and so you feel comfortable with the level of service delivered. Here are some tips for getting the most out of your home insurance policy.

Have adequate coverage

According to Marshal and Swift/Boeckh, 64% of homes are underinsured. That could make it very difficult to fully repair your home if it’s ever needed, so it’s important to consider your coverage limits. Most standard policies include coverage for:

1. The structure of your home. This pays to repair or rebuild your home if it is damaged or destroyed by disasters listed in your policy. It will not pay for damage caused by a flood, earthquake, or routine wear and tear.

Be clear about whether your insurance offers actual cash value (the cost of replacing damaged or destroyed property while factoring in depreciation) or replacement cost (the cost to replace damaged or destroyed property with an item of similar quality without considering depreciation). Replacement cost reflects how much it would cost to rebuild your house in the same spot, with materials of like-kind and quality. Purchase enough coverage to rebuild your home.

For homes built during or after 1950, Member Benefits’ home policy pays the full cost to repair or replace your home with materials of like-kind and quality without the limits imposed by most other insurers. For homes built prior to 1950, this coverage provides up to 125% of the dwelling limit on your policy.

2. Personal belongings. Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by an insured disaster, generally 50% to 70% of the insurance you have on the structure of the house. At Member Benefits, if your personal property is destroyed or damaged, our policy provides coverage equal to 75% of your residence coverage limit. So for example, if your home is insured for $200,000 and there is a fire, you would have up to $150,000 coverage for your personal property.

Trees, plants, and shrubs are also covered under standard home insurance; however, they are not covered for disease or poor maintenance.

A scheduled property endorsement on your home policy can protect valuable items minus any deductible. Most of our coverage options have no deductible, and others offer small deductibles. This is one of the benefits of scheduling, as many members tend to carry larger deductibles on their home policy.

3. Liability protection. This coverage protects you from claims filed against you for injuries and damage you cause to other people—up to the limit stated in your policy documents. Liability limits on home policies aren’t usually high enough to realistically cover these types of claims, so you may want to consider umbrella insurance, which provides broader coverage and higher liability limits.

4. Additional living expenses. This pays the additional costs of living away from home if you cannot live there due to damage from a covered disaster. Keep in mind that this coverage has limits—and some policies include a time limitation. However, these limits are separate from the amount available to rebuild or repair your home.

Cost considerations

Unfortunately, a lot of people jump at price without looking deeper. It’s becoming more of an issue as insurance is marketed as a commodity. However, at Member Benefits we strongly believe it should not be bought that way. Your insurance needs are not the same throughout your life, nor are they the same as your neighbors’.

Buy insurance based on value, not price. And when comparing insurance options, be sure you’re getting quotes for the same (or better) coverage than you currently have. Cheaper doesn’t always mean better, just like expensive doesn’t mean more value.

For more guidance on this issue, contact one of our personal insurance consultants who can help you attain a better understanding of your insurance needs and give you confidence to make the right decisions for you and your family—whether you choose our insurance or not.

Ask about discounts

Often there are a number of discount options available from your insurance provider. For example, simply bundling policies and staying with the same company for several years may provide some discounts. Not all providers will volunteer their discount options, so don’t be afraid to ask about all the discounts you qualify for.

Quality of service

If you’ve ever filed an insurance claim, think back…how was that experience? Was their response timely? Were they empathetic? Price and adequate coverage are important, but you also want to be satisfied with customer service when you need it. Ask family and friends about their experiences when checking out insurance companies.

It’s a relationship

Do you feel comfortable with your insurer? Do they offer you helpful information and resources? Are they easy to reach? While some companies have switched to bots, many people still appreciate the relationship and open communication they have with real people. And those people should help educate you on how to evaluate home insurance as well as keep you well informed when you have a claim.

Keep it on your radar

Your insurance needs can change over time. Too little insurance can leave you financially exposed, but too much may mean you’re paying more than you need to. Not only should you review your insurance annually, but also when you have a significant life change or major home improvement. Periodic insurance reviews will help ensure your coverage is still appropriate, which can mean eliminating coverages you no longer need or adding new ones you do.

If you have a home policy with us and haven’t reviewed it for a while, give us a call—what may have made sense a year ago may not make sense now.

Source: Insurance Information Institute.

Insurance advantages with Member Benefits

Guaranteed Replacement Cost. For homes built in 1950 or later, we pay the full cost to repair or replace your home with materials of like-kind and quality, even if the cost of the repairs exceeds your policy limits. Extended Replacement Cost provides up to 125% of the dwelling limit for homes built prior to 1950.

Educator Benefits. For those with owner occupied homes, we offer increased coverage for personal property losses on school premises—regardless of the cause of loss—to $2,000. No deductible.

Identity Theft Coverage. Covers up to $10,000 of costs associated with services you may need to help straighten out credit records and reclaim your identity.
We can help you compare policies and give you an unbiased insurance evaluation.

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> Call us with questions: 1-800-279-4030