What do I Need-to-Know About Home Insurance?

You’ve got home insurance to protect your property; you’re all set for whatever comes along. But you still have questions about your insurance; and some are about situations that often occur in Arizona homes. These answers may help. However, every case is different, and some advice may not apply to everyone:

1 – What do you do first when a calamity occurs – like wind damage on the roof or a major leak in the laundry room? Call your insurance agent, of course. But don’t wait for the situation to get worse; you have to stop the crisis from growing. Don’t wait for an assessment of the damage by an insurance adjuster or mold might start to sprout in your damaged drywall. Have a tarp put over the roof as a temporary fix or get someone to pump out the water from the flood. You may have to spend money immediately, but it’s not worth guessing what the claim will be. Most reputable contractors will be ready to work with your insurance company, and they don’t expect you to immediately pull your credit card out before they start helping.

2 – Is flood or water damage always covered by my policy? Even though Arizona is a desert state, claims involving floods and water damage are common here, according to Clayton Janson of Phocus Insurance in Phoenix. So it’s important for you to understand what your policy says about floods. If you have a leak in pipes under your sink that you didn’t find for six months, the damage will probably be covered, but if it’s damage caused by a person – like a child splashing water on the walls – it probably will not be covered.

Just about any flooding involving pipes will be covered, Janson says. “If you live in a house built in the 1950s and it has galvanized plumbing lines, there’s a good possibility that someday, they may break and cause leaks or flooding. And when that happens, you will probably be covered,” he says. “However, if you ignore leaks and breakage, you might have trouble getting a company to pay the full value of the damage.”

Sewage backups are usually not covered. If a tree’s roots invade your plumbing, you probably have to pay to clean up the mess. You need special coverage to insure for mishaps with sewage.

Another type of flooding requires special coverage. If there’s a flash flood in your neighborhood, any water or mud damage in your home will not be covered unless you bought flood insurance. If you’re in a possible flood plain, you’re eligible for federal flood insurance and your mortgage company will require you to buy it. The price varies depending on the kind of risk your home has.

Before buying a home, check with your Realtor. You might also want to check the National Flood Insurance Program Web site (www.floodsmart.gov ) to see what the risk is in your area.

Even if flood risks seem small, you can pay to broaden your policy to all kinds of perils.

3 – Is that 300-year-old saguaro in my backyard covered by my insurance? And will insurance pay for the damage if it falls on my house? On your lot, your house, your deck, your patio, your fences, and your outdoor kitchen are all covered, but your vegetation is not. So if a prized saguaro or a big tree falls on the house or other structures on your property and causes damage, what they break will be covered by insurance, but the saguaro or big tree will not be covered. That generally means you pay for chopping up the tree or saguaro and carrying it away. And you pay, if you want to replace that precious plant or fix your lawn or vegetable garden. One exception: If your big tree falls on a neighbor’s yard and wrecks their plants, your insurance will pay for those plants.

4 – Should I ensure my diamond engagement ring on my home policy? Most policies have clauses that say insurance will pay a limited amount for jewelry or artwork or a gun collection or similar items. The total coverage might be $1,500 for all your jewelry, for example. So if you have valuable jewelry, you may want to insure it separately with a floater or a rider. The typical annual bill for $1,000 of coverage for a special ring would be an extra $50-$70 a year for coverage against loss by theft or fire.

To get the policy, you need a recent bill of sale for the ring or a written appraisal. One of the key benefits of such a rider, says Janson, is that if the diamond in the covered ring simply pops out and gets lost, the insurance company will likely cover you for “mysterious disappearance,” allowing you to replace the diamond up to the coverage limit you secured on the rider.

5 – Will there be a long negotiation about how much the insurance company will pay after a disaster at my home? Can I fight for more money? Yes, you can negotiate with the company, Janson says. Filing a claim on your insurance is a process, and you need to take it one step at a time. In any situation, even after a minor crisis, you need to give insurers a few days to respond with a full proposal of what they will pay. In some cases, you might want to call in a reputable contractor to have your own appraisal done of what the repairs will cost. You may have to pay for having that cost estimate done.

6 – Will my insurance company drop me for making too many claims? It’s possible that can happen, although many companies advertise and say they have “one-claim forgiveness” or “one claim for free.” But nothing is really “for free”; companies build charges into their rates to cover those situations.

Generally, if you have two claims in three years or if you have a claim that totals above $40,000 or $50,000, you do run the risk of being cancelled. After paying an expensive claim, your company may send you a notice of non-renewal.

But that doesn’t mean that you won’t be able to find a new policy. Generally, you will have plenty of notice when you have to find a new insurer.

Published in Arizona Republic

9/5/2015