Insurance - Homeowners and Beyond
Typically Hurricane season peaks in late August through October and with the news of fires in the West as well as flooding events nationwide, we thought it timely and important to understand where you are and are not protected by home owners insurance insurance. Here is a guide to insurance, beyond basic homeowners. If you are looking to purchase a home on The Triangle, please reach out to us. Not only can we make the home buying (or selling) process easier for you; but we can refer you to the best insurance providers for your needs, as a landlord, or homeowner as well as personally vetted trade people who can help you with any repairs or improvements you may be considering.
Inside your Homeowners Policy
According to Bank Rate, the average homeowner's policy in North Carolina is about $1295 per year, depending on the age and condition of your home and your credit. Most basic policies are only dwelling, which is the structure of the home. It covers repairs and costs to rebuild a home in the event of a covered loss. Most important here is what constitutes a covered loss. Covered are the walls, floors, roof, frame, foundation, and usually built-ins including cabinets, appliances, heater, and the coverage is against common disasters including fire, smoke, falling objects, theft, vandalism, hail, explosions, wind damage, lightning strikes, frozen damage, and water damage from appliances. At first glance, a basic policy seems like it covers a lot, but here are some very important events that it does not cover. Basic Homeowners do not cover flooding, earthquake, maintenance damage, sewer, or service line damage. Depending on the home you choose and its' geography and history, you may want to consider additional insurance. Below is our supplemental insurance guide.
If you live in a flood plain, or near a body of water that is prone to flooding, you should have flood insurance. Even if you do not live in flood-prone areas, if you are in an area that retains water after storms, you should consider it, especially with tropical storms and hurricanes bringing large amounts of rainfall. 20% of current flood claims are from areas that are not prone to flooding. The average price for flood insurance in North Carolina is under $1000 annually. Sadly FEMA flood maps are not a great source of accurate information. As this article in the NY Times points out there may be almost twice as many homes that should be indicated as flood risks than FEMA maps indicate. The good news is that if your property is not within the FEMA designated flood plains; then flood insurance is very reasonable.
Extended Personal Property for Collectibles
While a basic policy includes protection against theft, collectors of art, jewelry, wine, guns and other valuables should consider an extended personal property policy. A weakness in the basic policy is realized through the replacement value of items, which takes into account depreciation for getting an item new. If you have collectibles that actually appreciate in value with age, you need a separate policy. The cost of insuring collectibles and collections depends on the value of the collection and several other factors determined by the provider.
Umbrella Liability Policy
Basic Policies include liability insurance, but if someone is damaged on your property and is awarded a large settlement, you face financial ruin. Umbrella insurance is extra liability coverage.This type of insurance protects you (plus your family and any other members of your household) from large claims or lawsuits that go above your other insurance policies, such as homeowner’s or auto policies. Umbrella policies cover everything from legal fees to any attached liability. Depending on your circumstances, it can be a very smart decision to have an umbrella liability policy attached. Costs vary depending on the provider. but typically a million dollars of coverage is only $200- $300 a year.
There is no such policy as a hurricane insurance policy, but there is a combination of additional coverage that protects your home against damage resulting from hurricanes, and other severe weather-related to hurricanes. We are coming into the height of hurricane season and this is something, as Realtors, we get asked a lot. One way to protect assets is to get a basic policy and add flood insurance and an extended policy for valuables. In this way, your assets are protected in the event of a hurricane-related loss. The average extra cost is $700 per year on top of dwelling.
Are you on a sewer line? Are you protected against a water backup? While a very unpleasant thought, for many it is a necessary ad on to dwelling insurance. If you are on city lines it is wise to purchase this type of insurance. There are policies that cover all service lines, including gas and wiring as well that cover these bases. Cost depends on the number of lines, but consider one repair from a faulty service line is around 3K to 4K per damage, it is better to be safe than sorry. This type of coverage is a simple rider on top of your basic homeowners policy and typically cost under $75 a year.
Title insurance protects both the lenders and the buyers from defects in a title for the property. If you are borrowing to purchase a home, it is a good idea to get title insurance. What are some instances where you would need title insurance? For back taxes, liens on property, or conflicting wills, you would be at risk without title insurance. Lenders require title insurance and it is up to the borrower to purchase this. If you are not borrowing, it is still a really good decision to purchase this.
We hope you found this information useful. If you need more information, please reach out to a member of our team. Buying and selling on The Triangle? Contact us today!Posted by Larry Tollen on