Homeowners Insurance

Homeowners insurance is sometimes neglected or even forgotten about, especially if you have an impound account.  An impound account or escrow account is an account set up by your mortgage lender to pay property taxes and/or your fire or homeowners insurance on your behalf when they are due.  If you have an impound account, a portion of your mortgage payment that you pay gets applied to the impound account to pay for the taxes and/or insurance.  You will still get a renewal notice from your insurance company about 45 to 60 days prior to your renewal, but your mortgage lender is sent the actual billing statement.  They will pay from the statement on your behalf.  This convenient process doesn’t bring much attention to the fact that you could be paying too much for your insurance.  The mortgage lender is assuming that you are reviewing your renewal notices and are content with what you have unless you notify them otherwise.  If you have an impound account, shop early for insurance.  Notify your mortgage company of any change in insurance company, preferably before they remit an insurance payment.  If you’re shopping mid-term and not on renewal, be aware of any short rate or cancellation penalty that could apply that could reduce any potential savings.  If you decide to change insurance companies, be sure to request cancellation of your old insurance policy only after you know you have been approved for a new policy by receiving a certificate or evidence of insurance or a policy declarations page.    

If you have a loan on your house, you are required to maintain homeowners or hazard insurance.  If you do not have insurance, the lender will put on what they call “forced placed insurance.”  This insurance is added to your loan and can also increase your mortgage payment.  This insurance does little to protect you as a homeowner.  This type of policy is secured by the lender and protects their interests.  This insurance is very costly.  It can be 3 times as much as a traditional homeowner insurance policy so make sure you secure your own policy so your mortgage lender doesn’t!    

When shopping for homeowners insurance, keep in mind that most insurance companies today offer discounts for insuring your auto and your home together.  The discounts would apply to both your auto and your homeowner insurance policies.  So if you have your auto insured through one company and your home insured through another, you could be paying more than you should.  The savings to combine your auto and home could be substantial, so try to always keep your auto and your home insured through the same insurance company.  Ask about the various discounts that you could also be eligible for.  There are discounts for having a monitored fire and burglar alarm, certain roof types or construction materials, no prior claims, certain professions, loyalty discounts as well as age related discounts.

If you are looking to lower your insurance costs, you may want to consider increasing your deductible.  The deductible is an amount that you would be responsible for before the insurance company will pay their portion for your covered loss.  This could be $250, $500, $1,000, $2,500 or more depending upon what is being offered.   As a general guideline, the higher the policy deductible, the lower your insurance premium will be.  Many insurance companies today increase your premiums upon renewal if you have had any prior losses.  This ramification has caused many consumers to only report those larger claims that are financially devastating in order to protect their rates.  For this reason, many consumers tend to select a higher deductible in exchange for those lower premiums with the mindset that they will pay for the smaller incidences on their own that are less than the policy deductible. 

Many consumers are led to believe that the amount that they purchased their home for is the amount that they should insure for.  This is not the case.  Remember that the dwelling coverage on the policy covers the structure, not the land itself.  Ask your insurance professional to determine the replacement cost value of your home.   They have access to various software programs to determine this information for an accurate assessment.  This will insure that you are not over insuring or underinsuring your property.

If you remodeled your home or completed any upgrades to your property, be sure to discuss those upgrades with your insurance professional.  They will need to know about any additional square footage that you have added as well as the materials used to ensure you are adequately insured.

Keep in mind that flood insurance and earthquake insurance are not always included in the traditional homeowner insurance policy.  If you want this protection, you will need to either purchase a separate policy or have the coverage added by endorsement if available.     

Review the amount you have for your personal property to make sure it is current.  Your personal property consists of things like furniture, clothing, computers for home use etc. Certain items such as art, jewelry or other collectibles may require additional endorsements or separate policies to ensure their coverage.  Most homeowner policies today limit coverage on these collectibles so you’ll want to make sure you have them adequately protected.  You may even be asked to furnish a copy of an appraisal of the collectible item(s) you wish to insure.    

For more information or a no obligation quotation or review of your insurance, contact us today.

Zenker Insurance Agency, Inc
3868 W Carson St., Suite 206
Torrance, CA 90503