Read Your Homeowners Insurance Policy So You’re Not Left Out in the Cold

Last week, I shared information about some of the important coverage homeowners insurance provides, from structural damage to personal property replacement to liability insurance. I also mentioned why it is critical to read your policy’s fine print: so you understand what’s covered and what isn’t.

Most of us don’t think a disaster will befall us, and most of us are correct (that’s how insurance companies make their money); however, just ask the folks who’ve lived through recent fires in Lake County and they’ll tell you, it’s best to be prepared.

If your home is damaged to the point that it is no longer habitable, your insurance company will usually pay for temporary lodging, whether in a hotel or a rental. Be aware that flood and earthquake insurance are almost always separate from the general homeowners policy and damage from these events may not be covered unless you pay for additional coverage. If you live in a flood zone (in a low lying area near a river or large creek), your lender will require flood insurance. If you live on the sole hill in a flood zone and can prove your house is no more likely to be flooded than homes outside the flood zone, you may be able to get the requirement for additional insurance waived.

Earthquake insurance has always been hard for me to recommend. It’s expensive and typically comes with a 15 percent deductible, making it rather useless unless your home sustains major earthquake damage. If your house is directly above a fault line, Speaking of not being able to get insurance, with the recent fires in Lake County, insurance companies are taking a hard look at rural Northern California. According to Rob McAsey at Mark Davis Insurance, certain areas in Ukiah and the surrounding areas have “brush hazard scores” above 80 (on a 100-point scale). Anyone with property with a score in the mid-80s or higher is going to have a hard time finding affordable insurance. The scores are a bit arbitrary and unfair, according to some local insurance agents. For example, houses on one side of the street in Vichy Springs have lower brush scores than houses on the other side of the street, even though fires are rarely polite enough to stay on their side of the street.

Talk to your Realtor about what coverage you may need and whether there’s a process to acquire reasonably priced insurance. Be aware that the number of claims you’ve reported can impact the cost and availability of insurance, as can factors such as whether you own an aggressive dog or a trampoline. In some cases, it is virtually impossible to get homeowners insurance. For example, if you’re a mile from a raging wildfire, chances are the insurance company will wait to see which way the winds blow before offering coverage.

When it comes time to buy insurance, I strongly urge you to go with a local agent who can walk you through the various options. When you buy an online policy, no one explains the details. The “deal” you think you’re getting may include a recent exception called a brush warranty, which means your house is not covered in the event of a wildfire if there is brush within 100 or 200 feet of your house (regardless of where the property line is).

If its time to renew your policy, please read it carefully because policies change and you don’t want to be in the middle of a disaster when you discover you aren’t covered the way you thought you were. Remember, the large print giveth and the small print taketh away.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.