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Home Insurance and a First-Time Home Buyer’s Mistake

Home Insurance and a First-Time Home Buyer’s Mistake

A friend of mine who’s in the water, fire, and smoke damage servicing business asked me to talk with one of his client’s last week. The client was a first-time home buyer and needed some advice on how to deal with a home insurance claim for 6 leaks beneath his slab foundation. His homeowner’s insurance policy was woefully inadequate to deal with the claim as it didn’t have the right coverage added to it. He shared his story with me. As a first-time home buyer, he reviewed the home insurance quote from the carrier he has his car insurance with and determined it was too expensive. He talked with another home insurance agent and stated he wanted the “cheapest policy” available. He got that, but as it turns out, he wished he’d paid more to purchase a couple of options which would have helped him. All home insurance policies have a variety of options available, but it’s up to the buyer to confirm they are included and avoid the fate of this home buyer. Here are 4 options I believe all homeowners should have. Water Damage: Most policies provide some level of coverage for damage caused by a water leak. The coverage is usually limited to “sudden and accidental” leaks such as a pipe bursting, an appliance leak, a ruptured water heater, etc. There may be a dollar limit, so I recommend at least $25,000 in coverage and more if it’s available. It takes more than most people realize to replace wood flooring, sheetrock, etc. that’s damaged by a significant water leak. Slow Leak: A few home insurance companies provide optional coverage for damage caused by a slow leak. This type of leak usually occurs under appliances or sinks, behind walls, or around pipe joints and often go undetected until hardwoods warp, tiles pop, or mold grows on sheetrock because they are hidden from sight. If the option is available, I highly recommend it. Sewage Backup: Having sewage back up into your home is a nightmare, and most home insurance policies don’t include coverage for it. Clean up requires a hazmat team which is why I recommend this coverage which is expressed in a dollar amount. Foundation Coverage: Texas soil has a high clay content which expands when we have rain and contracts when we don’t. While damage to the foundation due to soil movement isn’t covered by any home insurance policy, damage caused by leaks under a foundation from water supply lines is covered. This option provides coverage to access (cutting through the slab to get to the leak) and egress (filling it back in and tying it into the existing slab). Anyone with...

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Is a Car That’s Been Broken into a Car Insurance Claim?

Is a Car That’s Been Broken into a Car Insurance Claim?

A client texted me early Monday morning letting me know his car was broken into overnight. The good news was his car wasn’t stolen. What was stolen, though, was his wallet, watch, possibly his passport, a ring, and a few other items. His question was, did his car insurance policy cover this? He has “full” coverage policy on his car which results in a yes and no answer. Let’s look at the reasoning behind the two answers. Yes: If the car were damaged during the break-in, such as a window being broken or the door bent from the use of a crowbar, then yes, his car insurance policy would have covered repairs for the damage less the deductible. Comprehensive coverage, which he has, covers vandalism to a car, as well as a broken window or windshield. In his case, the driver’s window was left cracked open allowing the thief to easily unlock the car and enter it. Since no damage was done to his car, there is no need to file a car insurance claim. Filing one would result in a $0 paid claim which may make it difficult to move him to another carrier who may provide a better rate. No: The contents which were stolen from his car are not covered by his car insurance policy. They are covered under a home or renter’s insurance claim. Surprised? Most people are very surprised when I share that with them. The majority of insurance companies who write home, renter’s, and condo insurance, provide some coverage for personal property, or contents, off premises from the home. Usually it’s about 10% of the amount of contents coverage on the policy and it covers personal property in your car, while traveling, and even in a storage unit or facility. The items taken from my client’s car, are considered personal property or contents off premises. The issue is whether such a loss exceeds the home / renter’s insurance policy deductible? In most cases, it doesn’t. Further complicating the issue is my client doesn’t have renter’s or home insurance since he’s living with his fiancé. Her policy probably doesn’t cover it either as she does not have an insurable interest, or ownership, in the stolen property. What happened to my client is unfortunate. He appreciated our discussion even if he didn’t like the answers. It serves as a great reminder for all of us to not leave a purse or wallet with our driver’s license, credit and debit cards in it. Never leave your social security card or passport in your car as these two documents can lead to a stolen identity more quickly than just your driver’s license....

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