Because I constantly see the suffering after people file claims, I put together a few basic homeowners insurance policy questions to ask your agent when shopping for a homeowners insurance policy.
This is so you don’t end up buying a policy thinking you are covered, only to find out that it may not be true.
Questions to ask your Agent!
1.Does this policy have a water cap? Many policies have a $10,000 limit on water damage, no matter how much damage you have. Don’t find out after you have water damage to your beautiful kitchen, that you will only be entitled to a $10,000 check. Insurance policies are meant to make you whole. How does this make you whole, I ask?
2. Does this policy have a mandatory contractor endorsement or managed repair program? Another way to ask this question is, am I required to use YOUR contractors for repairs in the event of a covered loss? These policies are designed so that the insurance company controls the claim. So what’s so bad about that? Well since their contractors are being hired to SAVE the insurance company money, do you think that they are working in YOUR best interest or the INSURANCE COMPANY’S BEST INTEREST?
3. Does this policy have a roof schedule endorsement? Please see my page on the roof schedule. If you have a roof schedule on your policy, your roof will be depreciated based on age with no chance to recover any of the depreciation when you replace the roof. In other words, you get screwed. The insurance company wins. You lose.
4. Does this policy have a matching endorsement? Unfortunately, many policies have this now. It basically says that undamaged asreas of the property, although part of a matching item, like flooring or paint, will be limited to 1% of coverage A. So, if you have a $300,000 policy (Cov A), and you have undamaged items that must match damaged items an be replaced, they will only give you $3000 in coverage even if you need 10x more that amount to replace it. There may not be much you can do about this endorsement, because I see it on most policies now, but at least it will show the agent that your not an idiot and you are paying attention.
5. Does this policy have an anti-public adjuster endorsement? Now why would they add this? I wonder. Is it because public adjusters increase the value of claims? Is it because they want to pay as little as possible, and a public adjuster might mean they have to pay the claim properly?
Key take away...
Having just some basic knowledge can save you potentially thousands and thousands of dollars in the event of a loss. However, if you buy a policy with these terrible provisions and you are ok with it, then that’s fine. You should be informed is all I am saying.
