We all know homeowners insurance is a big part of your insurance portfolio, be it your first home or your retirement home. Homeowners insurance protects potentially your biggest investment, and getting your coverage right can save you should the worst happen. On the other hand, getting your insurance coverage wrong can cost you – and we’re talking big time. The best way to protect yourself now and years to come is to identify your homeowners coverage gaps. Doing so before you actually need to file a claim is the only way to ensure you’re covered from the worst. Let’s learn more about homeowners coverage gaps and how to close the ones most important to you.
Homeowners Coverage Gaps – The Basics
A standard homeowners policy covers many of the common issues you’ll encounter as a homeowner. We’re talking damage from storms, theft, liability, and fires. It is important to work with your insurance broker and carefully read your policy to ensure all key issues for your home is covered. We recommend working with an insurance broker, or an independent broker, over a captive agent. This allows an insurance broker to present you coverage packages from several different insurers. In fact, you may not know that some companies have standard coverage options in their policies that other companies exclude. Coverage limits and standard payouts for damages often differ between insurers as well. It’s best to work with your broker to discover the best policy for your distinct needs.
One of the biggest homeowners coverage gaps comes with expensive valuables, antiques, paintings, heirlooms and other objects. We tend to think that theft is covered under a standard policy, and it is, but only up to a point. An insurance company wants to know about especially valuable items you own, otherwise the standard policy they issue won’t be enough to cover everything. If you own one or more items of extreme value, say over $2000 or more, it is worth discussing extra coverage with your broker. For a more detailed analysis, we recommend Insuring Jewelry Tips. In a nutshell, you will need to get the items in question appraised and add a rider to your homeowners policy. This will increase monthly premium costs marginally, but we can all agree the piece of mind is worth the added cost.
A lot of homeowners become confused around flooding and their homeowners coverage gaps. While most homeowners understand a catastrophic flood is not covered by a standard policy, sometimes they think small scale flooding from rain is covered. In most cases this is not true. Even if a large rainstorm floods your basement, this is still considered flooding by an insurance company and is typically not covered. The best way to protect your basement or area prone to flooding is to invest in a sump pump. Should the pump fail for any reason, this would be covered by a standard policy, and it is the only flooding damage that will be covered. (Failure of appliances like a washer or dishwasher that causes water damage could also be covered).
If you live in an area prone to extensive flooding, we recommend adding flood insurance to your homeowners policy. This will ensure you’re covered should the big flood hit your home and cause extensive damage.
Similar to flooding, earthquakes are another natural event that is not covered by a standard homeowners policy. We can also include mudslides into this category. If the earth moves and creates sinkholes or earthquake damage, you can’t count on your homeowners policy to cover it without earthquake or mudslide insurance. If you think Colorado is immune to earthquakes, you’d be wrong. In fact an earthquake just occurred in June 2019 north of Aspen, CO. While the vast majority of earthquakes in Colorado cause little to no damage, this is something to pay attention to should the state become more geologically active in this regard.
Your Boat / Watercraft
We all love spending a warm Colorado weekend on our boats or watercraft, but did you know that these items are not covered by a standard policy? That’s right, one of the biggest homeowners insurance gaps that people forget about is boat and watercraft coverage. Since this type of insurance has it’s own unique issues, you’ll need to pick up additional boat insurance to make sure you’re protected. Boat insurance will also protect your valued watercraft when it is in storage or in transit to a lake or body of water.
Intentional Acts / Damage
Finally, another big area of homeowners coverage gaps comes from things people intentionally do. For example, you can’t intentionally damage your home and expect it to be covered by your policy. We sincerely hope insurance customers aren’t thinking about doing this, but it has happened before. This also includes any intentional damage to others or their property like assault, vandalism and sexual harassment. As we should all expect, if it is against the law, your insurance policy is not going to cover any financial damages you sustain.
The good news is the majority of these common homeowners insurance gaps can be protected by adding additional coverage to your insurance portfolio. We recommend working with an insurance broker to determine which gaps you need to close and which don’t apply to your situation. In many cases, you’ll be able to get a bundling discount by adding the gap coverage to your standard homeowners policy. Contact Square State Insurance today to learn more about how to close these insurance gaps.