When it comes to home insurance, Tom Ayres, senior vice president of Cross Private Client Insurance, stands by the rule: There’s no such thing as a silly question when it comes to insuring your assets.
“Your home represents the biggest, most expensive investment most of us make,” he says. “Our due diligence involves asking a lot of questions, and our clients should ask questions of us as well.”
Providing relevant home insurance options for your situation means understanding your lifestyle, property, its contents and how you use them. For instance, aside from your main dwelling, do you have detached buildings on your land? Is your living room graced with fine art? Do you use your home as a short-term rental property?
These factors can figure into the kind and level of insurance you may want to consider. Since detailed insurance know-how isn’t something taught in school, most homeowners can benefit from an experienced, knowledgeable agent to help them navigate their own unique path, should an emergency arise.
In the event of a covered claim, a home insurance policy will provide funds to help with the cost to rebuild your home, replace its contents and certain costs for your family to live elsewhere while repairs are being made. The typical policy also provides certain liability coverage; for example, if someone slips and falls on your stairs.
The “cost to rebuild” can be confusing for clients, Tom says. Most homes in Westport are well built and maintained and that should be reflected in this figure. It does not mean market value, but the cost the insurance company pays to rebuild the home you own following a loss. Some insurance carriers offer the option to purchase policies with “guaranteed replacement cost,” which means the insurance company agrees to cover the actual costs to rebuild, regardless of the policy limit, he says.
Tom also notes that some policies that are available in the market offer a “cash-out option.” Homeowners who suffer devastating losses, such as those in the recent California fires, can opt to take a lump sum payment in a total loss instead of attempting to rebuild their home. This option in a mass catastrophic loss area can greatly unburden a homeowner by providing real options at the time of loss. “You’ll have the option to rebuild the same home on the same property or take the cash payment, sell the land and relocate.”
“An average home insurance policy provides replacement cost coverage for your personal property with a limit ranging from approximately 50 to 70 percent of the dwelling limit. Some carriers allow you to modify that limit, but most do not,” he says. Do you own a 1952 Mickey Mantle baseball card, valuable jewelry, or a wine collection? You need to share this information with your agent, who can provide you with options for adding a rider or separate “valuable articles policy” to your insurance plan.
Climate is a consideration, and Westport is no stranger to major weather events. While wind damage is usually straightforward, Tom says, water – in the form of burst pipes, leaky roofs, and ice dams – is a whole different animal. Water damage is now the largest contributor to homeowners’ claims, and it can get tricky when it involves seepage, mudflow, tidal surges, or a sudden inundation like Fairfield County coast received during Superstorm Sandy.
Tom notes that homeowners may want to consider erring on the side of caution. “Even if you’re not in a flood zone,” he explains, “if it rains hard and water pools on your lawn, you might want to [have] flood insurance.”
Homeowners should be careful to discuss all structures on their property with their insurance agent. Anything attached to the main house is considered part of the dwelling, but outbuildings, barns, or detached garages might need separate consideration on a policy, says Tom.
Clients should call their agents when considering a new use for a space as well, he said. Turning a walk-out basement into an in-law apartment, opening a home business, or listing your home as a way station for travelers may require insurance adjustments, he explains.
Major improvements to the house – such as a new roof or alarm or valve shut-off system – could signal a rate reduction. And be sure to call if you’ve made changes in the property ownership, including creating an LLC or trust.
“There’s only so much we can glean from people,” Tom says. “Communication with your insurance agent is really critical. We recommend calling your agent and asking questions.”
To learn more, visit crossprivateclient.com