by Ryan Delp, CIC
As you consider your insurance needs, check out this Top 5 list of things that people should have on their insurance policy. Sadly, many people think they already have this coverage, or wish they had this coverage in their insurance policy, when a claim comes along. Call this an homage to former talk show host David Letterman. Call this a cautionary tale. Let’s start with number 5.
- A Flat Deductible on Your Homeowner Policy — Catastrophic storms, tornadoes, and hurricanes have caused hundreds of billions of dollars to insurance carriers over the last few years, and the industry has responded. Many carriers are converting their homeowner deductibles from a flat amount—$500 or $1,000, for example, to a percentage—generally 1 percent or 2 percent. This could apply to all claims or specifically to wind or hail damage, as they are the most common claims out there. While these look like small numbers, they reflect 1 percent or 2 percent of your Dwelling Amount, which could be substantial. For example, if your home is insured for $350,000, your deductible would be $3,500 or $7,000, at the 1 percent and 2 percent levels, respectively. While changing to a plan with a flat deductible may cost a little more, it will allow you to avoid being on the hook for the first $7,000 of your claim.
- An Umbrella Policy — If I told you that I would give you $1 million if you gave me $200, you would think I was pulling some kind of a scam. However, for a married couple with one house and two cars, that is about what it would cost to get $1 million of additional liability coverage. If you have young drivers and/or additional properties (vacation homes, rental properties, etc.), the cost of an umbrella is a little more, but the peace of mind is well worth it.
- Towing Coverage on Your Auto Policy — While it does not provide the same list of services as AAA, your auto policy can provide towing coverage if your car is damaged in an accident, but also if your car has a flat tire or simply dies. You get to select how much coverage you want (generally from $25 to $250 per tow) and the coverage generally costs less than $10 a year per car.
- A Jewelry Rider on Your Homeowner Policy — A lot of people already have this, but if you don’t, you should. The coverage is so ridiculously broad and cheap: Drop a ring down the sink or simply can’t find it? No problem. It costs generally around $10 per $1,000 of coverage, with no deductible. It would be silly not to cover your jewelry.
And the No. 1 thing you wish you had on your insurance policy is…
- Water Backup Coverage on Your Homeowner Policy — Let me make this very clear: when the rain falls and water comes up through your sump pit or basement drain or shower head, or all three, unless you have this coverage, it is not covered. People with finished basements should get this coverage right now. It is one of the most common claims we see and is easily the one most people think they have, or think they have enough coverage for and don’t. Many of the national carriers only offer $5,000 of this coverage which, with a lot of water in your basement, will basically pay for the remediation company to clean up the mess but little else. So if you have anything of value in the basement, get this coverage and get it now, before the next storm comes through.