As premiums increase on Texas home insurance policies, people begin looking for more cost effective solutions to protect their investments. Unfortunately, we speak with many Texas homeowners that are considering buying policies that fit their budget that have been put together by insurance agents who are not properly protecting the homeowner's best interests. When that happens, we see things like the worst Texas homeowners insurance policy ever written. That experience led us to determine the five questions you should before buying a home insurance policy.
Five Key Questions To Ask Your Insurance Agent
1. Are Wind and Hail Claims Settled Using Replacement Cost Or Actual Cash Value?
One of quickest ways to lower premium costs on a Texas home insurance policy is to flip the hail claims on your roof from replacement cost to actual cash value. Actual cash value functionally means that if your payout on a hail claim will be reduced by a depreciation factor based on the age of the roof. If that is put in place and your roof is close to ten years old or older, your claim will likely be 50% of the replacement cost. That's a nasty surprise to find after an attempt to save a little bit on premium.
The other thing that Texas homeowners have to worry about is that home insurance companies have been changing policies from replacement cost to actual cash value when the age of the roof is 15 years old. Many homeowners are unaware of this change and suddenly they are left with a giant hole in their coverage. Since this is the number one type of claim made on homeowners insurance, it is vital to have this question answered.
2. How Was The Dwelling Value Calculated?
Homeowners are always curious about the dwelling value calculation because it can swing a bit between different insurance companies. As independent insurance agents, we work with a dozen companies that insure Texas homes. And the dwelling value is typically within a fairly narrow range among those different companies. When we see a homeowner with a quote that has a dwelling value is off by more than 30% of our average range we become very skeptical of the quote. Construction prices are just don't vary that much for a home build.
The reason this matters to you is that if your home is involved in a major claim and is deemed a total loss, shortchanging that dwelling value means that you cannot put your home back together. These agents have never worked a fire claim to understand that a home is not going to be built back at $65 a square foot no matter how hard you try. Always make sure that you have enough dwelling value to rebuild your home.
3. What Is My Deductible Amount?
Hail is a major pricing factor for Texas home insurance policies. If you live in McKinney or Frisco on the North End of Dallas-Ft Worth you will likely have to replace your roof multiple times inside five years. As a result, home insurance agents realize that raising a deductible can lower that premium to save you some money. It sounds great at first. Who doesn't love to save some money?
But just like with using actual cash value to settle your hail claim, raising that deductible to 2% rather than 1% can leave a giant hole in your pocket later. If your home dwelling value is $300,000 and your deductible is 2%, you will be responsible for the first $6,000 of that roof replacement which will cost about $13,000. Doesn't sound like a great trade-off to us.
4. Is There A Sub-limit On Water Damage?
Water damage is the second most claimed event for Texas homeowners. As a result, Texas home insurance companies will sometimes put a sub-limit on how much water damage that they will cover. Especially on homes that are older. What's worse than a limit is when water damage is excluded altogether. We've seen both of these situations occur. It can be devastating to a homeowner when they realize that they are on the hook for half or more of a $50,000 water claim. Make sure that this line item is clearly spelled out so that you are not surprised by a sudden leak.
5. Does This Policy Include Sewer and Drain Backup
A hotly debated claim denial is when the sewer line backs up into your home. Base home policies do not cover this nasty damage if it is determined that the origin of the problem is outside your foundation. It smells, and it's not your imagination.
Sewer and Drain Back-up is an optional coverage that is usually available in $5,000 increments up to a maximum of $25,000. Though some companies will go higher. This extends coverage to the street to help clean up the mess in your bathroom while you pay to have that pipe repaired outside your home since it's considered a maintenance issue.
Why Didn't The Other Agent Tell Me This Stuff?
The insurance agent business is very competitive in Texas. It seems like there is almost as many insurance agents as there are attorneys willing to sue. Because of this competition, many of those agents are willing to cut corners to make a sale knowing that simply having your signature on an application is enough to get by. Insurance For Texans simply does not work this way. Even though you are bombarded by many ads tempting you to save money, our goal is to make sure that you have the coverage you need to protect what is typically your largest asset. It's just worth that time and effort.
As independent insurance agents, we work with you to make sure that you have the right coverage by scanning the marketplace. We understand that some companies have different risk appetites and use that information to your advantage. Our goal is to match up your needs with the right carrier. When we spot the combination, we present that to you. If you would like to discover a better way to do home insurance in the great state of Texas, hit that blue button to get started.