MAKING THE MOST OF YOUR HOMEOWNERS’ INSURANCE

How your actions can impact your policy costs & coverage
You might think that homeowners’ insurance is homeowners’ insurance. Pretty much all the same and not that different now from when your grandparents got their first policy.
But that’s not true. As with most things related to your home, insurance changes with the times. And your actions can make an impact on your policy, too.
Chip Harvey and Kim Z. Gardner of State Farm Insurance in Lynchburg help us understand how what we do with our homes can affect costs and coverage.
Can homeowners do anything to lower their insurance costs?
New homes can influence insurance costs because all of their systems and materials are, well, new. Some insurance carriers offer a new home/ construction credit, which often has a step-down discount over a few years as the house ages.
But homeowners – of any age home – can also lower their costs by making a few intentional choices, such as:
- Installing alarm systems that report to and are monitored by a central station
- Replacing whole HVAC, plumbing and electrical systems – not just faucets and outlets, but rewiring and replumbing your entire house
- Having a new roof or gutter guards, which may impact costs by reducing claims
Can homeowners do anything that will raise their insurance costs?
Just like new homes can reduce costs, older homes with older systems can raise costs.
Insurance carriers also consider what they call “attractive nuisances” when determining coverage and premium costs. Homeowners usually call these same items “fun.” These include:
- swimming pools (above ground or in-ground) and hot tubs
- trampolines
- bodies of water – lakes and ponds
- specific dog breeds
These items increase a homeowner’s risk and leave them exposed should someone get injured or harmed. Even if precautions are taken with fencing or covers, homeowners can still be held liable – whether they are home or not, or whether the person is an invited guest or not.
We generally suggest homeowners raise their liability coverage if they have one or more of these higher-risk items in or around their home. Typical liability coverage is around $100,000, but we suggest a minimum of $500,000 under these conditions. We want homeowners to be well covered in cases of dog bites, slips and falls or water accidents.
Do energy-efficient appliances, doors or windows have any impact on insurance? What about solar panels?
Energy-efficient appliances, doors or windows don’t directly impact insurance costs. And solar panels won’t lower your rates. But any time a homeowner makes significant improvements, they need to check with their agent to ensure they still have proper coverage. For example, if you put $15,000 worth of solar panels on your home, you’ll want to increase your home insurance policy to cover the new value of the home. In the event of severe damage or destruction to your home, you’ll want your policy to cover the full amount of restoring your home.
Do you need any special insurance while your house is undergoing renovations?
Always let your insurance company know when your home is undergoing a major renovation. We aren’t talking about a closet upgrade or new light fixtures. We need to know if homeowners are moving walls, adding to their home’s footprint, enclosing a patio or carport, or doing a major value upgrade like a new kitchen.
Your liability coverage should handle any issues that might arise with workers on your property. In addition, homeowners should only hire those who are licensed, bonded and insured. If you choose a non-covered contractor because their quote came in at a lower cost, know that you are absorbing that risk.
Do I need to tell my insurance company about renovations?
You should tell your agent about any major renovation you are doing, especially if it is changing the constructional value of your home. Projects such as finishing a basement or attic, adding a deck or enclosing a room raise a homeowner’s risk during renovation and raise a home’s value. Agents will talk homeowners through their options and help ensure they have the coverage that’s needed.
What kind of documentation do I need to provide my insurance company?
For any major renovation, your insurance agent might request copies of invoices, scope of work or pictures that document the type of work completed.
It’s also important to document the personal property contents of your home – whether you are in the middle of a renovation or not. In times of crisis – fires, flooding or natural disasters – it can be easier to remember the big items in your home like furniture and electronics. But it is often much harder to remember the contents of closets, drawers, garages and attics. Take pictures, preferably videos, of each room. You should open all closets, cabinets and storage areas. You should include attics, garages and laundry rooms.
If you have collectibles, antiques or higher-end clothing and accessories, you need to carefully capture these. For sterling silver or fine china, you should take pictures of how you store the items and then lay them out and take pictures of that, too. Be sure to get pictures of any labels or manufacturing markings.
Pictures and video help you substantiate ownership and help you remember what you have. You want to have enough coverage if you ever have to rebuild and refill a home after a loss. Once you’ve taken these videos, store the files in a safe place that you can still access even if your computers are damaged, or your home is a complete loss.
If you are ever unfortunate enough to have a friend or relative who suffered a major home loss, pick their brains. Ask them what kinds of questions their insurance agent asked them. Ask them what they wish they had known or what they wished they had done differently.
What other tips are helpful?
It’s more common now for people to work from home or to rent out spaces to short-term guests. If you are operating a business out of your home, your agent should know. We often have homeowners who teach music lessons, operate a salon, operate an Airbnb or have an office. These businesses might have specialized equipment or need additional coverage to give you extra protection.
Insurance carriers also provide “rider policies” to cover special, personal items. A separate rider policy is recommended if homeowners have high-value articles such as:
- Jewelry
- Guns
- Collectibles
- Artwork
- Antiques
You can get appraisals to determine value, especially if you think items are worth over $10,000.
Always remember that your insurance agent is there to help you. You can ask your agent if your policy covers a particular item, if your policy can cover something, or if an item needs to be covered. By speaking with your agent and making careful decisions, you will be able to make the most of your homeowners’ insurance – ensuring you have the coverage you need and are making the right choices for the biggest impact. ✦
alarm systems, documentation, homeowners’ insurance, liability coverage, new home/ construction credit, renovations, replumbing, rewiring