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Homeowners' Insurance Questions for Your Agent

The following are good questions to ask your insurance agent when shopping for homeowners' insurance:

How do I determine whether I have enough insurance coverage on my home?

If you think the cost to replace or rebuild your home may have increased because of upgrades, new additions, or increased labor and material costs, ask your agent if you have enough insurance coverage. The insurance coverage you need is based on replacement cost, not market value. Market value is an indicator that the cost to replace your home may have increased, but if the market has dropped, your replacement costs may still be more than market value. Even if your market value remains steady or if market value drops, your cost of labor and materials to replace your home may increase and you would need more insurance to cover your rebuilding costs. And if you have added onto your home, you have more that may need to be replaced. If you do not have enough insurance coverage, you may not be able to receive enough from an insurance claim to pay for all of your loss.

How do I determine whether I have enough insurance coverage on my home’s “contents”?

When you receive an inheritance or valuable gifts, or if you buy a new electronic device or replace large appliances, this is a great time to talk to your insurance agent to make sure those items are covered by your home policy.  You may also want to talk to your agent if you sell or give away some of your personal property, such as artwork, valuable personal items, or expensive electronics.
 

If I raise my insurance deductible will I save money on my insurance premium payments?

Talk to your insurance agent to get help understanding whether a change in an insurance deductible will save you money. Policyholders may significantly reduce their premium payments by raising their deductible for a claim. This option may not be ideal for everyone and asking your agent to explain your insurance policy to you will help you determine what deductible and premium payment will suit your needs and fit in your budget.

How do I know what kind of insurance coverage I have on my residence or on the contents of the residence?

There are two ways to look at the value of a residence and the contents of the residence, known as personal property. 

• The first is “replacement cost”, which is what it would cost to completely replace your house, or the damaged part of a house. In reference to private property, it is the cost to replace the contents of the house or your personal property with new items of “like kind and quality”, and the amount paid may be affected by depreciation. The market value of your house or personal property is not relevant in determining the replacement cost. Insurance policies often restrict the circumstances for paying a claim under replacement cost.
• Actual cash value (ACV) is the cost to repair or replace the damaged property with materials of like kind and quality. Similar to replacement cost, depreciation is also considered in determining the payment in an ACV policy.  ACV is usually offered for the contents of a household, or personal property, but there are some insurance policies for ACV that cover residences.

What is meant by resident insurance coverage for “Increased Cost to Changes in Building Ordinances”?

Increased Cost to Changes in Building Ordinances insurance generally applies for a residence in an area where building code changes require additional and usually expensive additions.  Examples include sprinkling systems, new standards for plumbing or wiring and other construction standards. The changes in the ordinance require additional costs to rebuild the residence if damaged. This is a matter you may want to discuss with your insurance agent or company when determining whether you have adequate coverage on your residence.

Do I have or need “Inflation Guard” protection in my residence insurance coverage?

Many homeowners insurance policies provide for inflation in determining the replacement cost of a residential property. You should ask your agent whether your policy includes this coverage. This coverage automatically increases the amount of dwelling insurance to help prevent your home from being underinsured.

Do I have or need special coverage for adjacent structures or personal property like jewelry, firearms, furs, artwork, or electronic devices?

Most homeowner policies provide some basic, very limited coverage for adjacent structures on your residential property and personal property. However, if you are a collector or have a question about the value of your personal property, you should discuss additional insurance coverage with your insurance company.

Do I need to have an appraisal for any of my household items or personal property?

Household items and personal property such as jewelry, firearms, furs, artwork or electronic devices are hard to track after a loss.  An appraisal by a licensed, qualified appraiser helps provide a record of the personal property’s existence and its replacement cost. Some items, such as antiques, jewelry, coins and artwork cannot be replaced. An appraisal will help your agent determine whether your household contents or personal property have enough insurance. At the least, you should maintain a list of your household items and personal property, along with a brief description to help you if you have to submit a claim.

Do I have an “all risk” or “named peril” policy?

Be sure you know which type of policy you have and the kinds of loss that the policy covers.

• An “all risk” policy is a common homeowner insurance policy and will cover general damages to a home due to weather or fire, for example. The homeowner policy will have some exceptions for insurance coverage called exclusions, such as damage caused by flood, war, neglect, and power failure.
• A “named peril” homeowner insurance policy limits are specific as to the kind of loss that may happen to a residence. Usually, the policy will cover the residence only when a specific kind of loss occurs, as in what is named in the policy. 

Has the insurance company changed my coverage recently?

As a homeowner insurance policy owner, you are entitled to notice of any change in the terms of your homeowner insurance policy coverage. You have the responsibility to read all notices and information you receive from your homeowner insurance company. If you are not sure whether your policy has changed, ask your agent or the company for copies of any notices or changes that may have occurred since you purchased your homeowner policy.