Tragedy Highlights the Need to Re-Assess Homeowners Policy

By Tina Eichner

The loss of a home is unfathomable on its own. Imagine finding out in the days after a catastrophic loss that your homeowners insurance was not adequate for replacement. Adding insult to injury, this is the difficult news that some Marshall fire victims have received from their insurance company.

As many of us contemplate the tragedy of a home lost to fire and review safety checklists as a result, a homeowner’s insurance review should definitely be part of the assessment.

We talked with Linda DeLano of Country Financial who had some suggestions. “An insurance review should happen at least once a year. Consider it a check-up just like a dentist or doctor appointment,” she said. Linda explained that insurance is one of those things that we buy once and then may not think about again, but conditions change and updates may be necessary.

“People always want to know how to reduce their premium, but when a tragedy happens, a low premium is not the top priority. People want to know that they are covered,” Linda said.

Standard homeowner’s insurance required by mortgage companies covers the repair and replacement of homes lost or damaged but that doesn’t mean the entire cost is covered. Different policies will have different levels of payout.

When reviewing your homeowner’s insurance, there are several things that are important to understand. First of all, since Covid, the cost of building materials has increased dramatically, and how people are using their homes has also changed. This has affected values and replacement costs. As you assess your policy, there are some important elements to ask about.

Linda said to first consider dwelling coverage. Is the coverage enough to rebuild? This is different from the market value of the home. Homeowner’s insurance valuation system formulas

calculate the cost to rebuild the dwelling. Ask if you have unlimited replacement coverage or coverage for an additional percentage over the dwelling coverage?

The second part of the policy is personal property which accounts for the contents of the home. This will be a standard amount, such as 75% of the value of the dwelling coverage. This is where documentation such as receipts, photos, or videos are critical, to show what you owned.

Third, consider the part of the policy for additional living expenses. This covers things like hotel bills or restaurant meals during the time period when you are displaced from your home. Also rental costs while your home is repaired.

While insurance may not be something we like to think about, we all want to know it is there and right for our situation when we need it. Linda said it is critical to have a local insurance representative who knows you and your needs and can ensure that you are properly covered.

To learn more and discuss your homeowner’s insurance needs, contact Linda at linda.delano@countryfinancial.com