Focus on Your Homeowners Insurance Policy

Mary Beth H.:                    Hi, this is Mary Beth Harrison with Dallas Native Voice. Today, we’re talking about homeowners insurance. I’m sitting here with Rani Alfers with Farmers Insurance. Rani, insurance is just confusing. We all know we need it. Matter of fact, we can’t get a loan without it.

Rani Alfers:                         That’s right.

Mary Beth H.:                    Yet we go pay for something that I know nothing about. It’s kind of like they say don’t ever sign your name to stuff.

Rani Alfers:                         Absolutely.

Mary Beth H.:                    Yet we just go, “I need insurance,” and you go, “Okay,” and you send it and we all like, “I have no idea of what I have.” Talk me through this. What are some of the more important things to look for when we come to you? What should we be asking? I hate not knowing the questions to ask.

Rani Alfers:                         Right.

Mary Beth H.:                    You know?

Rani Alfers:                         I completely understand. There are five key areas that I think everyone should focus on when shopping for insurance.

Mary Beth H.:                    Okay. Perfect.

Rani Alfers:                         Either during an annual review for yourself or you’re buying a new home.

Mary Beth H.:                    Annual review. That’s an interesting topic.

Rani Alfers:                         That’s right.

Mary Beth H.:                    All right. We’re going to come back to that, but keep going. I want to hear this.

Rani Alfers:                         The five areas of your policy and your quote that you should be looking at are first the dwelling amount. How much is your home insured for? Okay? That’s an important number. The second is going to be your contents and your personal property. How much stuff is inside your home and is it enough? The third area is going to be the loss of use. That’s making sure we have enough money to live somewhere else for awhile.

Mary Beth H.:                    Like when a crane falls on your apartment building.

Rani Alfers:                         Yes, that’s exactly right.

Mary Beth H.:                    Yeah. Okay.

Rani Alfers:                         That’s exactly right. The fourth area is going to be liability. Liability is an important component. It’s there to protect you, and you want to make sure there is liability and enough on your policy.

Mary Beth H.:                    Liability meaning someone falls coming up my steps and breaks their leg.

Rani Alfers:                         Exactly right.

Mary Beth H.:                    Is that what we’re talking about?

Rani Alfers:                         Yes.

Mary Beth H.:                    Okay. All right. Got it.

Rani Alfers:                         Your adorable little dog bites someone and you’ve got to take care of some damages. Anything you could be held personally liable for in your property.

Mary Beth H.:                    Okay. All right. Go ahead.

Rani Alfers:                         The last is going to be endorsements. I say that blankly, but it’s an area to look at. How has the policy been modified? Is there water coverage? Is there sewer coverage? Is there replacement costs? Ask about the endorsements to the policy because they are very separate and different from limitations. Limitations put us back in the how much is my home insured for? 500,000, right? That is a limitation. The actual endorsement describes how your policy is going to work to pay out that 500,000.

Mary Beth H.:                    Okay. For example, if I didn’t have say water damage wasn’t on there. I don’t know if that’s an endorsement.

Rani Alfers:                         It is an endorsement.

Mary Beth H.:                    Okay. If I didn’t specifically have water damage and my pipe broke on my washing machine and flooded my house-

Rani Alfers:                         You are out of pocket.

Mary Beth H.:                    …I have no coverage.

Rani Alfers:                         You don’t have any coverage.

Mary Beth H.:                    Wow. Okay. Okay. What are some key endorsements? Let’s talk about that for a second.

Rani Alfers:                         Sure.

Mary Beth H.:                    What would be like maybe three or five key things we’d want to look for?

Rani Alfers:                         Water is number one.

Mary Beth H.:                    Yeah. I was going to say check. Okay. Got that one.

Rani Alfers:                         Check. We have water. Ask about the water endorsement, how it works, how much coverage you have. Because as you know, when water pours in, hardwood floors and walls and all sorts of things-

Mary Beth H.:                    People don’t realize, water’s probably sometimes I think more damaging than fire.

Rani Alfers:                         Sometimes, absolutely.

Mary Beth H.:                    Because of it’s… Yeah.

Rani Alfers:                         Enough water puts out the fire.

Mary Beth H.:                    Yeah, there’s that too. Right, right.

Rani Alfers:                         Well, the second endorsement is also going to be, it sounds very simple, but it’s in making sure that you have replacement cost on all areas of your policy. Because if you have a roof for instance-

Mary Beth H.:                    Yes.

Rani Alfers:                         …right, and the roof might be way too old to have replacement cost on it, you want to know what endorsement do you have either have replacement cost or actual cash value, which is the depreciation.

Mary Beth H.:                    Say the roof’s been on there for 15 years, they’re not going to give me full value because it’s a 15 year old, so it’s basically halfway through its life.

Rani Alfers:                         Absolutely.

Mary Beth H.:                    They’re only going to give me a percentage of that total. Okay. Got it. All right.

Rani Alfers:                         It’s important to know that going into it. How much money do I need to pay out of my own pocket?

Mary Beth H.:                    Right. Okay.

Rani Alfers:                         I think if you’re living in an older area of the Dallas or of our metroplex, looking at sewer coverage is very important.

Mary Beth H.:                    See, I didn’t know that was even available.

Rani Alfers:                         It is available because when those sewer lines that are not your property back up into your home and create damage that you don’t want to look at and you don’t want to know anything about, that sewer endorsement is very helpful especially in older neighborhoods.

Mary Beth H.:                    Without a doubt. Our pipes are old. Some of our home are over a hundred years old now. Certainly a large population in Dallas is certainly 50 plus years old., 60-70 years old.

Rani Alfers:                         Absolutely.

Mary Beth H.:                    Those pipes were cast iron and they are old. As the soil has moved and as trees have grown, it’s just… You’ll never know there’s a sewer line leak. You’ll know fresh water because it’s showing up on your meter, right?

Rani Alfers:                         Yes, that’s right.

Mary Beth H.:                    But sewer line… Enough water under your house will make your house rise up. While people think, “Oh my gosh. I’ve got a foundation problem,” no, the reality is this is okay. This is where the problem is.

Rani Alfers:                         That’s right.

Mary Beth H.:                    The house is rising up. One other question, this is such incredible information. I think I learned more just in these two seconds than I’ve known my entire life on…

Rani Alfers:                         Good.

Mary Beth H.:                    When you say about replacement costs on a house, so I’ve paid $300,000 for my house. All right? Part of that is land.

Rani Alfers:                         That’s right.

Mary Beth H.:                    And part of that is the structure, but the lender makes me get insurance for the whole 300,000. Is that what you find?

Rani Alfers:                         I find that the lender would like you to have insurance for the whole 300,000.

Mary Beth H.:                    Right.

Rani Alfers:                         However, they will request from your insurance agent the cost estimator to rebuild your home. If we can supply to them our estimated reconstruction cost on your property, that suffices. They also want to see that we have 100% replacement cost on the property as well. We run into this every day especially in areas where land is more expensive.

Mary Beth H.:                    Right.

Rani Alfers:                         Banks understand they don’t insure the land.

Mary Beth H.:                    Yes.

Rani Alfers:                         Okay? We just need to make sure we’re properly ensuring that dwelling for how much it’ll cost to rebuild. It may not be what you bought it for, it may not be with the loan is four, but it’s going to be how much it is to rebuild that property, Mary Beth.

Mary Beth H.:                    Okay. Good to know. Wow. Such great information. If you need any more information, you can find us at DallasNative.Com, and Rani would be glad to go any further and answer some questions here. We go where you go, so you can find us on all social media. Thanks for listening.


Leave a Reply