Home Insurance

Homeowners Insurance – A Guide to Dwelling, Personal Property, Liability, and Additional Living Expenses

Posted on by McGriff Williams in Home Insurance, Tips |

Navigating home insurance can sometimes feel overwhelming, but understanding it is essential for protecting one of your most significant investments—your home. Many homeowners often find themselves confused by the specifics of coverage, which can lead to costly gaps if not addressed. Home insurance typically includes four key areas: dwelling coverage, personal property protection, liability, and additional living expenses. Homeowners must understand what each type covers and assess whether they need these protections in their home insurance policy.

Dwelling Coverage

At the heart of your home insurance policy is dwelling coverage. This is the part that protects the physical structure of your home—everything from the walls and roof to the floors and built-in appliances. If disaster strikes—think fire, lightning, vandalism, or severe weather—this coverage helps you repair or rebuild your home.

How Much Dwelling Coverage Do You Really Need?

Finding the right amount of dwelling coverage is essential. You want to ensure you have enough to completely rebuild your home if needed. This isn’t necessarily the same as your home’s market value; it’s based on how much it would cost to rebuild. The following tips may help you with making this decision.

Get a Professional Appraisal: A professional can give you an accurate estimate of your home’s rebuilding cost.

Understand Local Building Costs: Research what it costs to build a home in your area, as this can vary widely.

Factor in Upgrades: If you’ve made any renovations or have unique features, make sure those are accounted for in your coverage.

Review Regularly: Life changes, and so do your home’s needs. Regularly check your coverage to ensure it matches your home’s value.

What’s Not Covered?

While dwelling coverage is pretty comprehensive, there are some things it typically doesn’t cover.  Understanding this in advance is essential, as it allows you to decide whether to consider adding coverage for these events.

Flood Damage: You’ll need separate flood insurance for that.

Earthquake Damage: Like floods, earthquakes often require additional coverage.

Maintenance Issues: Damage due to lack of upkeep, like mold or pest infestations, usually won’t be covered.

Personal Property Coverage

Personal property coverage protects your belongings. This includes furniture, electronics, clothing, and more. If something happens—like theft or fire—this coverage helps you replace those items.

How Much Personal Property Coverage Do You Need?

The following steps will assist you with determining what personal property you own and its approximate value. Once you have this figured out you can decide how much it would cost you to replace if something happens to it.

Inventory Your Belongings: Keep a list of your possessions and their estimated value. This could be a spreadsheet or a handy app designed for home inventory.

Replacement Costs vs. Actual Cash Value: Make sure you know if your policy offers actual cash value or replacement cost coverage. Actual cash value takes into consideration the depreciation of your goods meaning you could receive less than the amount you spent when you purchased the items.  Replacement costs coverage pays the amount you spent on the items at the time of purchase.

High-Value Items: If you have expensive items like jewelry or collectibles, consider getting valuable items insurance.  These items are typically not covered by standard personal property insurance.

Business Property: If you run a business from home, your business equipment may not be covered under standard personal property insurance. You may need to consider extra coverage for these items.

Liability Coverage

Liability coverage is a critical safety net that protects you financially if someone is injured on your property or if you accidentally damage someone else’s property. This coverage helps with legal fees, medical expenses, and any settlements that may arise.

Liability coverage is essential for several reasons

Accidents Happen: Even the most cautious homeowners can face lawsuits due to unexpected events.

Protection Against Legal Fees: Legal expenses can add up quickly, and liability coverage can help cover those costs.

Sense of Security: Knowing you have this coverage allows you to enjoy your home without constant worry.

How Much Liability Coverage Do You Need?

Most home insurance policies offer liability coverage ranging from $100,000 to $500,000. Depending on your situation, you may want to consider higher limits. Here’s how to decide:

Your Assets: If you have significant assets, higher liability limits can help protect them.

Risk Factors: If you frequently host gatherings or have a pool, you may want to increase your coverage.

Umbrella Policies: For extra protection, consider an umbrella policy that provides additional liability coverage beyond your home insurance limits.

Additional Living Expenses Coverage

Additional living expenses (ALE) coverage, also known as loss of use coverage, helps cover the costs of living elsewhere while your home is being repaired or rebuilt after a covered loss. This includes hotel bills, restaurant meals, and other necessary expenses that go beyond your normal living costs.

Why is ALE Coverage Important?

ALE coverage is a lifesaver for several reasons:

Avoids Financial Strain: If your home becomes uninhabitable, this coverage helps you maintain a similar standard of living without breaking the bank.

Temporary Housing Solutions: ALE can cover costs associated with staying in a hotel or renting a place while your home is being fixed.

Essential Expenses: It can also help with essential expenses like transportation and laundry while you’re displaced.

How Much ALE Coverage Do You Need?

The amount of ALE coverage you need will depend on a few factors:

Duration of Repairs: Consider how long it might take to repair your home based on its size and the extent of the damage.

Local Cost of Living: The cost of living in your area can greatly affect how much ALE coverage is necessary.

Policy Limits: Review your insurance policy to understand the limits of ALE coverage, as some policies have specific timeframes or dollar amounts.

What’s Not Covered?

While ALE coverage is helpful, there are limitations:

Non-Covered Events: If your home is damaged due to an event not covered by your policy, ALE won’t apply.

Normal Living Expenses: ALE is intended for expenses that exceed your normal living costs, so regular bills like your mortgage typically won’t be covered.

Understanding home insurance coverage is vital for protecting your home and belongings. By getting familiar with dwelling coverage, personal property coverage, liability coverage, and additional living expenses coverage, you can make informed choices and ensure you have the right protection in place.

With this knowledge in hand, you can approach your home insurance policy with confidence, knowing you’re well-prepared for any unexpected challenges that might come your way. Protect your investment, safeguard your belongings, and enjoy the security that comes with comprehensive homeowners insurance coverage.

5 Ways to Save Money on Home Insurance

Posted on by McGriff Williams in Home Insurance |

Home insurance is a critical component of protecting your most significant investment—your home. While it provides valuable coverage for unforeseen events, you may be looking for ways to reduce your home insurance premiums without compromising the protection it offers. Fortunately, there are several strategies you can employ to save money on your home insurance. Here are five effective ways:

Shop Around and Compare Quotes

Just like any other purchase, it’s essential to shop around for home insurance. Don’t settle for the first quote you receive. Different insurance companies offer varying rates and coverage options. By obtaining multiple quotes and comparing them, you can identify the most competitive and cost-effective policy for your needs.

Increase Your Deductible

One of the most straightforward ways to lower your home insurance premium is to increase your deductible—the amount you pay out of pocket before your insurance coverage kicks in. A higher deductible means you’ll assume more financial responsibility in the event of a claim, but it can significantly reduce your annual premium. Ensure you have enough savings to cover the deductible comfortably.

Bundle Your Insurance Policies

Many insurance companies offer discounts when you bundle multiple policies, such as home and auto insurance, with them. Bundling can lead to significant savings, making it a cost-effective option for homeowners who need both types of coverage. It also simplifies the insurance process by having all your policies with one provider.

Improve Home Security

Enhancing your home’s security can not only provide peace of mind but also lead to lower insurance premiums. Installing security systems, deadbolt locks, smoke detectors, and a sprinkler system can reduce the risk of theft, fire, and water damage. Many insurers offer discounts for these safety measures, as they lower the likelihood of a claim.

Maintain a Good Credit Score

Your credit history can impact your home insurance rates. Insurance companies often use credit scores to assess risk. A higher credit score suggests financial responsibility, which can lead to lower premiums. Pay your bills on time, reduce outstanding debts, and monitor your credit report to ensure accuracy.

Remember that while these strategies can help you save money on your home insurance, it’s crucial to strike a balance between cost savings and adequate coverage. Cutting corners on coverage to lower your premium may leave you underinsured when you need it most. Consult with your insurance agent to find the right balance for your specific situation.

In conclusion, home insurance is a valuable investment in protecting your home and belongings. By implementing these five money-saving strategies, you can enjoy the peace of mind that comes with proper coverage while keeping your insurance costs manageable.

Saving on home insurance doesn’t mean sacrificing protection; it means making informed choices and leveraging discounts and strategies available to you. So, take the time to review your policy, explore cost-saving options, and ensure your home and finances are well-protected.

Happy Hurricane Season! Said no one ever.

Posted on by McGriff Williams in Home Insurance, McGriff-Williams News |

According to the NOAA (National Oceanic and Atmospheric Administration), there are twelve to seventeen anticipated named storms during the 2023 Hurricane Season, which runs from June 1st through November 30th. Five to nine of those are expected to be hurricanes, with one to four being major hurricanes (Category 3 or higher). Once a storm is named, insurance companies can and will suspend binding coverage as the storm approaches and will continue to suspend coverage following a storm hitting land.

The suspension of coverage can affect home buyers who don’t get coverage early. Without adequate home insurance, closing dates can be pushed back until companies end the suspension. Use these tips throughout storm season to prevent delays for you and your home buyers:

  1. Encourage buyers to purchase their coverage early. There is no reason to not start the insurance process as soon as possible. This is important any time of year with the current state of property insurance in Florida but especially during hurricane season.
  2. Connect the mortgage company and insurance agent early in the process. Most buyers rely heavily on whatever their mortgage company requires and what their insurance advisor recommends so making the connection between those two parts of the transaction early on is sure to help things run smoothly.
  3. If a storm is approaching and insurance is not in place, encourage your buyer to call an insurance advisor as soon as possible. The policy must be bound with an effective date to avoid being held up by the binding suspension. Just because they’ve received a quote, does not mean it can’t be suspended.

We can’t stress enough, more so than ever before with the state of our insurance and reinsurance markets, to start the process early. Please share this information with your clients and let us know if we can help in any way. Let’s all hope for an uneventful season but were here if you need us.

Are Airbnb’s insurable? What should you consider before investing in one?

Posted on by McGriff Williams in Home Insurance, McGriff-Williams News |

Up until just a few years ago, traveling meant making plans well in advance, booking through travel agents, and lots of planning ahead for hotels or other accommodations to explore desired locations. But with the internet at our fingertips and services like Airbnb, VRBO, etc now¦ it’s easier than ever to find a place to crash. Some, especially in the real estate industry, may even explore purchasing a property as an Airbnb as a long-term investment or for supplemental income. There are a few important things to consider though.

Regular home insurance policies are intended to protect you and your family from everyday risks, not from commercial renting. If a renter occupies your home for even a short amount of time, you and your family will be exposed to significantly different risks that weren’t considered when your policy was initially obtained. As a result, most homeowners and renters policies wont cover property damage that’s caused by Airbnb guests.

There are also issues that come with rentals being vacant from time to time, in which insurance carriers are not comfortable taking on. For example: If you have a property that doesn’t get rented for two weeks and a toilet overflows, no one is aware before the damage is much worse and couldve been prevented or mitigated sooner.

There are also liability concerns with different short-term renters coming in and out.

If you’re considering renting through Airbnb, your first step should be to contact your insurance advisor to review your current homeowners or renters insurance policy. While that policy may allow you to rent your property to a guest, it’s important to keep in mind that each insurer has its own restrictions and requirements. Some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to expand your coverage appropriately.

If you plan to rent your property out on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be adequately insured. However, a growing number of insurance companies are now offering home-sharing liability insurance policies that can be purchased on a month-to-month basis, so this is also something to consider.

Lastly, there are Host Guarantee and Host Protection policies offered by Airbnb in particular but we would advise you to beware of coverage gaps and exclusions with these options. You can look into the details of these offerings on their website here. As always, we are happy to help navigate through this process anytime you or your clients are considering it.

 

Will the property insurance crisis in Florida really get worse before it gets better?

Posted on by McGriff Williams in Home Insurance |

The cost of reinsurance for Florida property insurers has increased over 100% in the past 4 years. It is projected that reinsurance will go up another 50% at the time of renewal on June 1st.

If you’re wondering what reinsurance is It’s essentially insurance for insurers. It transfers risk to another company to reduce the likelihood of large payouts for a claim. It’s an extra layer of protection that allows insurers to remain solvent by recovering all or part of a payout.

This system worked great for a while, but now those reinsurance companies are much less interested in the potential risk that Florida property brings. Just in the past 6 years, over $807 billion (with a B) has been paid out in weather related disasters. So, as you can imagine, those reinsurers’ risk appetite for our beautiful state has diminished. The impact of that fallout will be different for each carrier, but significant rate increases are still expected.

From an insurance perspective, we had a rough year in 2022. Rates were at an all-time high, underwriting guidelines were more strict than ever, carriers were going out of business, and our home state was hit with some strong storms causing lots of damage.

Unfortunately for all of us, the reality is that yes it may get worse before it gets better. We expect this summer, typically the busiest time of year for real estate, to be tough when it comes to home insurance being attainable and affordable. We’ve weathered some major storms, quite literally, in the insurance industry before and well… this too shall pass. We also had two different reform bills passed last year giving us hope for change that will benefit all Florida residents moving forward. And it isn’t like we have a choice to avoid it since it’s still likely a required piece of home buying/selling transactions.

The good news is that we are in this together. We want to help get to closing and for all homeowners to feel confident that they’re adequately protected. Our biggest piece of advice to anyone looking to purchase a home is to START THE PROCESS EARLY when it comes to insurance!