|
 
September 2007
Index of all
past
Affiliate Corner columns
Understanding your homeowners’ insurance
By J.P. Gudka,
Gudka Financial Services Allstate Agency
Choosing a homeowners’ policy is an important decision – but it doesn’t have to be a hard one. Your clients’ home is probably their biggest financial investment so they want to protect it, just as you’d want to protect your life savings.
Home insurance is not a one-size-fits-all type of product. Just as finding the right home for your clients is important, so is finding the right insurance coverage. I recommend that your clients visit their insurance agent face to face. This allows a more in-depth conversation about coverages, deductibles, and options.
Here are some of the most commonly-asked questions from new homeowners...
How do I determine how much coverage I need?
Start with the basics. Then consider any special insurance needs – your wedding ring or mountain bikes. Your policy can cover these items too, but you may need more than basic coverage for them.
What is “optional coverage”?
You can buy extra coverage to help protect your jewelry, tools, sports equipment, rental income and more.
Do I get a homeowners’ discount if I have auto coverage from the same carrier?
Some insurance companies’ rate plans offer a multi-policy discount.
I know with auto insurance, good driver discounts are available. Are there similar rewards for homeowner policies?
Customers should contact their agency to determine whether they qualify for any discounts or can increase their deductibles.
Will raising my deductible lower my rate?
Typically, raising the deductible on your policy will lower your rate. It’s important to keep in mind that customers should carefully evaluate any changes to their deductible since it can affect loss settlement, meaning the customer may have to absorb more of the loss. In certain parts of the country, the only way people can afford to insure their homes is via high deductibles. Sometimes folks do not have a choice. Though a deductible saves people money up front, a responsible agent must disclose and explain how a deductible may financially affect them. In other words, can you afford to fix damage to your home for levels below the deductible? In my agency alone, we have paid out several six-figure checks in the last twelve months to help families after their homes were severely damaged. This goes to show you that even though you personally may have never made an insurance claim, it happens more often than you might think! So having an affordable deductible is paramount.
Many people do not realize that unlike an auto policy, with homes, there is no such thing as at-fault or not-at-fault. With a home, most insurance claims can affect the rates the next time the home owner renews. Sometimes that can hardly seem fair considering that the customer didn’t drive their home and put it under a lightning strike!
The other thing that can happen is that a family can be “non-renewed” by their carrier if they make several claims in one year. Again, through no fault of their own, they might find themselves shopping for insurance against their choice.
Policy holders should always consult with their agent prior to making a claim. Insurance companies use a service called “Common Carrier Database,” which is a report of a person’s claims history or the claim history on a particular home. It also shows a person’s tenure with their current and/or previous carriers. The more claims one makes, the less favorable the rates will be.
Lastly, shopping for insurance is not just about premiums (or rates and fees). Just like your business, you get what you pay for. If your clients value service and good advice over cost, you owe it to them to refer them to an insurance partner that will take the same care and time with them that you would as their trusted REALTOR®. An agent who schedules annual reviews with their clients is one who truly has their best interests at heart. As one’s needs change, so should their coverage.
|
