CCM: Are homeowners insurance policies all the same?
Robb Nelson: No, they can be very different, and you want to be sure your insurance professional has access to the most comprehensive coverage available.
Homeowners will sometimes assume they only need “fire insurance,” which is also referred to as “hazard insurance,” the minimum insurance you need to satisfy the mortgage company. It doesn’t cover water damage, theft, vandalism, lightning, weight of snow, etc.
Homeowners insurance covers a lot more. In my 29 years of experience I’ve only lost maybe one home a year due to fire. But about 95 percent of my clients’ claims are for water damage. A good homeowners package covers everything you’d normally expect in your home, with the exception of floods and earthquakes.
Water damage, which is separate from flood damage, includes such problems as damage from broken pipes from within the house. Homeowners insurance doesn’t cover true flooding, which is what flood insurance covers. Flooding involves rising water from an outside source, such as rain coming down too fast, where storm drains can’t handle it.
A homeowners package policy, not just fire insurance, covers the estimated value to rebuild a house. Land is not included. Coverage A is your dwelling. Coverage B is separate structure, such as fences, walls, jacuzzi, shed or barn. Coverage C is personal property, which is easily thought of as anything you’d take with you if you moved. Coverage D is loss of use, which pays for reasonable additional costs you incur because you are not able to occupy your house due to a covered loss. Coverage E is liability, which includes someone getting hurt on your property. Coverage F is medical, for guests at your property who may hurt themselves where you aren’t necessarily liable for it.
If your agent says you only qualify for California Fair Plan, it is only the bare minimum. Make sure the agent you choose represents a company offering a policy with the widest parameters at the best price. There have been many times that I have had homeowners come to me stating that they can only be covered by California Fair Plan mostly due to brush. Nine times out of 10, I am able to place them with a more complete homeowners policy for a much more competitive price. It is one of the advantages of representing several different companies.