Home is most likely the biggest investment that one makes, and Homeowners insurance helps protect this investment. Homeowners insurance has evolved over a period of time and is now comprehensive enough to cover most of the common risks that you might encounter as a homeowner. However, we, at Texas P&C Insurance, often come across coverage gaps when we are analyzing insurance needs of our clients. Getting your coverage right can save you from financial disaster should the worst happen. Here are a few blind spots that policyholders commonly overlook.
1. Water Damage from Sewer Backups or sump pump failure: Water damage representing the second most common cause of insurance claims after Fire. Many homeowners assume that damage caused by water backing up in a drain or caused by the breakdown of a sump pump is covered by a standard homeowners' policy. This is not always true. The educated consumer will ask their agent if this coverage is in their policy.
2. Expensive Personal Items: Standard homeowners policy cover valuable items only to a certain limit and only under limited conditions. This includes expensive jewelry, silverware, antiques, heirlooms, paintings and other similar items. And not every policy form provides the same level of coverage for these items. It’s important to check with your agent to see if these should be itemized under the policy declarations along with the associated value for each item.
3. Home sharing: Applications such as Airbnb and HomeAway are on the rise and increasingly getting popular. This also increases the risk of physical damage, theft and injury. It is crucial homeowners review their current insurance policy and ensure proper coverage is obtained.
4. Dog Bites: Dog bites and dog related injuries are increasing in terms of claim frequency. However, you might be subject to a lower coverage limit for Dog bites. In fact, your policy might even exclude certain dog breeds. If you own a dog or planning to add one, its important to get your policy reviewed.
5. Flood: Flooding occurs for many reasons including the water main break down the street. If the water enters your home through the outside walls or doors, your carrier will most likely declare it flooding. Many homeowners are not aware that Flood damage is not covered under a standard Homeowners policy, and do not worry about it, especially if they live outside high-risk flood zones. However, according to FEMA, 25% of all National Flood Insurance Program (NFIP) flood insurance claims are filed by homeowners that live outside of high-risk flood zones.
6. Insurance to Value: A common coverage gap is not having enough coverage. Insurers follow ‘Insurance to Value’ principle. If your coverage is less than 80 percent of the home’s replacement value, insurers may only reimburse you for a portion of damages. Your home should be insured up to the cost to rebuild it. Note that this isn’t the same as its market value.
The good news is that most of these common Homeowners insurance blind spots can be protected by endorsements or additions to your insurance portfolio. Contact us to review your existing Homeowners insurance policy for any such gaps and for advice on how it can be addressed. You can call us on 972-293-2139 or 800-903-8690 or contact us online here.