Your Daily Real
Estate Blog
From
Supreme Manor
Real Estate Services
Homeowner's
Insurance: Do You Have Enough?
When
buying homeowner's insurance, just how much is enough? When hurricanes or wild fires rage, gaps in basic homeowner
policies become more evident. Most policies cover a limited amount in damages
caused to personal possessions and some even have caps on the amount they'll
pay if the home is destroyed --and they're typically far less than the cost to
rebuild or buy new. There are caveats. Here are six situations that might warrant additional coverage:
1. If you're
a high-income earner:
A basic homeowner's policy typically provides
around $100,000 of liability coverage per year should someone get injured on
your property. But that might not be sufficient for homeowners with an
expensive home, a pool or even for those who entertain often. If you fall into
this category or are concerned, an umbrella liability policy might be right for
you. On average, umbrella premiums cost about $200 to $300 per year for $1
million of additional liability protection. Plus, other items, like a
policyholder's cars and boat, would be covered.
2. If you
live in a fault zone:
Earthquakes are not covered by traditional home
insurance policies. Homebuyers should ask their mortgage lender whether their
home is in a fault zone or close to one. Another option is to check out the
U.S. Geological Survey's Earthquake Hazard Program, which includes historical and
present-day maps of earthquakes that have occurred in the country. The cost of
an earthquake policy will vary based on the construction of the home, its age,
how close it is to a fault line, and the stability of the soil in the area.
3. If you
live in a flood zone:
In most cases, a traditional homeowner policy won't
cover damages caused by floods. Insurance companies define floods as any water
that comes across the ground, like an overflow from a lake, river or the ocean,
mudslides and rapid snow melts. By contrast, damage from water that's coming
down like torrential rain is typically covered by homeowners insurance -- even
if it's a hurricane, tornado or tree caused damage to the house that allows
rain to enter. To determine whether you need flood insurance, find out if you
live in a high-risk flood zone, which is defined as having a 1% chance of
flooding per year. FEMA's FloodSmart.gov site provides flooding maps. On
average a flood policy costs $600 per year, a spokesman for FEMA says.
Homeowners in low-risk areas will pay $355 in premiums for maximum coverage of
$250,000 for the home and $100,000 for its contents. Homes in high-risk areas
will pay $1,489, on average.
4. If you
have a basement:
Neither homeowner's insurance nor flood insurance
covers flooding from sewer backups. Sewer back-up coverage cost about $40 per
year and can be tacked on to your standard home policy. If you have a basement
or crawl space, this coverage makes sense. If you live in an area prone to
heavy rains and basement floods, expect to pay more in premiums. But, you might
need to shop for a policy. Not every company offers this coverage for sewer
backup or sump-pump failure, and state laws don't require that an insurer offer.
5. If you
have expensive jewelry or valuable family mementos:
Homeowners insurance policies usually provide
around 50% to 70% of their value for the contents of your home, like
electronics, furniture and appliances, that are stolen or destroyed by a fire,
hurricane or other insured disaster. But some personal possessions, like
jewelry, fur and silverware, are covered at a value of up to only $1,000 to
$2,000 each for losses by theft. Even a simple engagement ring is likely to
pass that limit. If your valuables are worth more than the cap, consider
purchasing a floater. On average, premiums for a floater cost $7.50 per $1,000
worth of jewelry. So, a homeowner who wants $15,000 worth of jewelry coverage
would pay $113 on average.
6. If you
employ people in your home:
If you depend on a nanny, a housekeeper or other
individual who you employ within your home, chances are you'll need to sign up
for workers' compensation insurance. If a domestic worker is injured in your
home, the policy will pay for their medical bills and lost wages. Without it,
most states require homeowners to pay for employee injuries out of pocket. On
average, the policy's premium costs $200 to $300 per domestic employee per year
and covers medical bills and wages lost from the injury.
I hope this information is useful.
Should you need assistance with any of your real estate needs,
please contact Supreme Manor Real Estate Services 773-881-9224. Feel free to visit us on our website or any
of our social media sites.
Have a Supreme Day!
Sheila M. Wilkinson-Sanders
Managing Broker/Owner - CPA, GRI, CNC
Supreme Manor Real Estate Services
1840 West 95th Street
Chicago, IL 60643
(773) 785-0127 Direct
(773) 797-9640 (fax)
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