All About Homeowners Insurance

According to Zurich North America’s chief claims officer, natural hazards are more common and more damaging than in the past. The time to act and reduce future risk is now, particularly when it comes to nationwide infrastructure. For example, U.S. roads and bridges were simply not built for the severity and frequency of storms and flooding we are experiencing today. The roads are not high enough and do not have enough space for water to flow around and under them.1

While national infrastructure is a bigger problem than the average citizen can manage, it does beg the question of whether we have the proper insurance to help protect our long-term financial future. A lot of people wait to retire until after they’ve paid off their mortgage. But what if at some point during retirement your home is damaged beyond repair and you’re forced to rebuild only to find you don’t have enough insurance to cover the expense? Would you need to use retirement assets to make up the cost, and would that impact your ongoing retirement income?

These are the types of questions homeowners should ask themselves, particularly those engaged in planning for retirement or who are already retired. We’re happy to help weigh your options and recommend versatile insurance solutions. As Zurich’s chief claims officer cautioned, now is the time, so give us a call to get started.

How do you know if you have enough insurance to cover today’s unpredictable weather patterns? According to analytics firm CoreLogic, three out of every five homes in the U.S. are underinsured by an average of 20 percent less than full value. In contrast, perhaps you’re overpaying for too much coverage. One study of South Florida residents found that many high-value homes on the coast are overinsured because homeowners bought coverage to meet the property’s market value, not replacement value.2

This is a common mistake. Recognize that even if your home is demolished in a storm, you still own the land, so you need coverage only for the cost to rebuild. That amount is inevitably less than the overall real estate value — particularly in coastal areas where the market value of property is often pegged to its proximity to the ocean.3

When you purchase coverage termed “actual cash value,” you are reimbursed for the value of your home based on its current condition. However, if you have an older home that hasn’t been renovated with new windows, cabinets, appliances and so on, your payout may not cover the cost of buying new components — and no one wants to stick old windows and cabinets in a newly built house.4

That’s why it is usually best to purchase comprehensive replacement cost coverage. This payout is based on the actual cost to rebuild with all new materials; the former structure’s depreciation status is not a factor.5

It’s also important to adequately insure your belongings inside the home, preferably by creating a home inventory to both estimate their total value and to help you file claims. The easiest way is to simply go around your house with your cell phone and take pictures of every nook and cranny, even closets, the garage, the attic and outdoor storage units. Save these photos on the cloud, ensuring they’re always available and easily accessible even if your home is damaged. A typical home insurance policy covers possessions at about a 70 percent ratio to the value of the structure. For example, a home insured for $200,000 would pay out about $140,000 for possessions.6

If you’re considering making renovations on your home, experts recommend that you pay extra now to procure high-quality materials and professional installers. For example, depending on where you live, install a new roof rated for winds up to 130 mph and siding made of a hardy material, such as engineered wood or fiber-cement. Note, too, that higher-rated materials could trigger a discount on your homeowners insurance premium.7

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm.. Insurance products and services offered through B.O.S.S. Retirement Solutions. Marketing materials provided by Infinity Marketing Services.

1 Insurance News Net. April 29, 2019. “North Carolina Not Doing Enough To Mitigate Hurricane Risks, Report Finds.” https://insurancenewsnet.com/oarticle/north-carolina-not-doing-enough-to-mitigate-hurricane-risks-report-finds#.XMcpqS-ZNAY. Accessed April 29, 2019.

2 Ron Hurtibise. South Florida Sun Sentinel. July 13, 2018. “Do you have enough homeowner insurance? Here’s how to find out.” https://www.sun-sentinel.com/business/fl-bz-do-you-have-enough-property-insurance-20180711-story.html. Accessed April 29, 2019.

3 Ibid.

4 G.M. Filisko. Houselogic. “Homeowners Insurance: Are You Over- or Underinsured?” https://www.houselogic.com/finances-taxes/home-insurance/homeowners-insurance-are-you-over-or-underinsured/. Accessed April 29, 2019.

5 Ibid.

6 Emmet Pierce. NetQuote. “Home and auto insurance: Are you overinsured or underinsured?” https://www.netquote.com/home-insurance/overinsured-or-underinsured. Accessed April 29, 2019.

7 KWCH12. April 23, 2019. “Choosing siding and roofing for storm protection.” https://www.kwch.com/content/news/Choosing-siding-and-roofing-for-storm-protection-508937871.html. Accessed April 29, 2019.