You never know when something unexpected can happen, so it is important to make sure that you have enough homeowner’s insurance and the right coverage depending on where you home is located.

It’s important to choose the right insurance company, coverage, and price.  Make sure you compare apples to apples not just price.  There are different types of policies and riders such as fire, theft, liability, windstorm damage, backup drain and sewer, and flood to name the more common ones. 

If you are new homeowner, it’s important to review the insurance policy and understand what is and isn’t covered, the deductible, etc. If you have owned your home for a while and made upgrades or renovations, its important to make sure your current policy covers what you need.

Market value vs replacement value?

Your coverage should be based on the square footage of your home and should consider the cost of replacing or rebuilding your home.  

Market value means the amount a buyer is willing to spend to purchase your home. Replacement value is what it would cost to rebuild your home.  Depending on where you live, the replacement value could be much higher than the market value.

Here in Westchester cost of labor and materials is higher than in other parts of the country so your insurance should be based on costs for this area.  Remember, replacing your home could be significantly more than the current market value.

 Your insurance company will most likely require you to purchase coverage that insures 80% of the replacement value of the home.  When calculating replacement value, the cost of the land itself is normally not included.

Do You Have Enough Coverage?

You want to find out how much your home is worth and what it would cost to replace based on construction costs per square foot in your area.

Consider getting an inflation guard added to your policy. This protects you against inflation if prices outstrip your policy replacement value.  

Do an inventory of your home, keep receipts, do a video recording as well, the more documentation you have the easier the claims process will go should you ever need to file one.

Balance the annual policy costs against different deductible levels and pick the deductible and annual policy cost so you are comfortable with your choices.

Special Riders

If you’ve got a special art collection or a home office with equipment and supplies above what would normally be covered, you may need to add a rider for the art or the office equipment.  

There is a limit to jewelry coverage so if you have expensive pieces, you may need get the pieces appraised and add a separate rider.

The same goes for expensive collections such as coin, stamp, sneakers, and any other valuable collectable items.

You should document and video your collections and expensive personal items and keep them separate, perhaps in a safe deposit box.

All of this should be discussed with your insurance agent.

Flood insurance vs back up sewer or drain

If you have a sump pump, or French drain, or even if you don’t you may need backup drain and sewer coverage or a similar rider, without it you may not be covered if your basement floods due to an issue with one of these. You should ask your insurance representative about this and if you are currently covered, and if so, what is covered.

Flood insurance is a separate policy that is required if you are located near a stream, river, body of water, or are in a particular area noted for flooding. If your home is in a flood zone it is currently required that you be informed, however, you should do your due diligence and verify.  Depending on the location and the risk of flooding these policies can get expensive. Ask you insurance agent about an elevation certificate, sometimes if your house is located at a higher elevation, it may reduce the flood insurance costs.

Do You Need to Upgrade?

For current homeowners, you should review your policy annually and have a conversation with your agent, discuss any improvements and renovations with them. New roofs and decks should be part of the conversation.

Snowbirds beware the Vacancy, Unoccupied, uninhabited exclusions

If you go south for the winter or spend extended periods away at a vacation home, you should review your policies exclusion clauses. Your insurance company can use this clause to deny your claim if the property meets their definition of vacant, unoccupied, or uninhabited when the damage occurred.  

Read carefully for a vacant, unoccupied, or uninhabited exclusion.  Find out how long you can be away before the home is considered vacant, unoccupied, or uninhabited under the policy terms.

A simple fix could be to add a vacancy endorsement to your policy. There is nothing worse that coming home after being away to a damage or theft and then finding out you are not covered.