Navigating Home Owners Insurance

Navigating Home Owners Insurance

Current Insurance Climate ~ All homeowners have been feeling the heat of the ever-changing insurance markets. Insurance companies have been raising rates at a faster pace the last few years due to many factors. Many companies were below market value for their policies and decided to increase rates to catch up but did so at a faster pace. Industry wide, rates have increased due to more weather severe weather events such as fires, hail and flooding. The frequency and scope of these events have caused many insurance companies to increase rates, fully remove themselves from some segments and reduce coverages. Insurance companies have also been dealing with increased prices in labor due to inflation. When a homeowner has a loss the cost to fix that loss has increased rapidly over the last few years. So how do we navigate the rocky future of home owners insurance? I interviewed a few industry experts and would like to share some information that may help us be prepared for what is to come. 

High Risk Policies and Mitigating Risks ~ All homes have ratings and homes that have more risk such as proximity to wild land interface, are located in a flood zone or have a high hurricane risk likely will be seeing more restrictions and less access to insurance. Some companies will accept you if you have completed fire mitigation. You can call your company and see what they would require, such as a large clearance of fuels away from your home or less combustible materials like steel or concrete roofs and stucco. There are private companies that can evaluate your fire risk too. If you choose to update/ upgrade your home having roofs that are class 4 rated, concrete tiles, stone coated steel and sometimes metal roofs are preferred. In Colorado, California and Florida for example some homes cannot get coverage with the big insurance companies and either have had to self insure or use off market companies like Lemonade. The most affected areas that are seeing insurance companies not being willing to insure are high hurricane areas and high wild land interface and lack of good water sources if there was a fire. 

How To Handle A Claim ~ If you have a loss to your home that is a smaller claim and you can pay out of pocket to fix it you may want to do so. Filing a claim both costs you the deductible and may cause your rates to go up for all future policies or even remove your ability to get coverage for a future water loss. If its a large enough claim of course that is the point of homeowners insurance and it is probably worth filing the claim to get the needed repairs/ mitigation done. Insurance companies love to pay the least they need to so often you will need to negotiate the work so it is done properly.

Hail Claims ~ If you have experienced a hail storm it is important that you find a quality roofing contractor to evaluate your roof. As well all know Colorado got hit hard last year. You have up to 1 year to file the hail claim. You do not want to miss that window or they may not cover you. I have qualified people I trust I can refer you if needed. There are lots of predatory companies that come out of the wood work when these big losses happen. Many insurance polices may not cover cosmetic damage from a hail storm or coverage for your metal like (gutters and garage doors.) Make sure you understand what your policy covers. Annually check the policy when it renews to make sure they did not drop any coverage. 

Condos and HOA’s ~ As insurance becomes more expensive for single family homes it too is becoming more expensive for multifamily homes. Most HOA’s for condos cover the insurance for the building and sometimes the buildings roof. Buyers and condo owners need to make sure they understand their coverage. Many HOA’s are having to increase dues by larger than expected amounts to cover their insurance for the buildings. If there is a major hail or wind loss the HOA often makes all owners pay a special assessment to cover the insurance’s deductible. I recommend owners of condos carry a loss gap coverage insurance that helps elevate some of any special assessment requirements.

Insurance Tips ~ 1)To reduce your annual home owners fees you can pay it in full or increase your deductible. Bundling with auto insurance helps as well to reduce costs. 2)Inventory your home in case you have a fire or water loss. Videos and photos are the best way to do that. Document expensive items with receipts or appraisals. 3)If you are buying a home get an insurance quote early in the process so there are no surprises. 4)Know the age of the roof some companies will not cover roofs over 10 years old. 

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