Introduction
When I First Bought My House I Wish That Someone Would Have Taught Me The Different Types Of Insurance That They Offer In What I Was Looking For Because When I Purchased The Home Insurance I Just Followed The Natural Flow Someone Referred Another Person I Bought Insurance From Them And Then I Just Kind Of Crossed My Fingers And Hoped It Worked Out Today’s Article We’re Gonna Go Through The Top Five Things You Need To Know About House Insurance.
Hey Guys This Is Mark Flockhart If You’re New Here This Channel Is All About Home Auto All Types Of Insurance And How You Guys Can Learn The Tips And Tricks Of How To Get You The Best Rates On Your Insurance So If That’s Interesting To You It Might Be A Good Idea To Subscribe.
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Cost Of Home Insurance
According To The National Association Of Insurance Commissioners The Average Cost And House Insurance Is Eleven Hundred And Ninety Two Dollars Per Year.
Keep In Mind The Prices Do Vary From State To State Because If You’re In Kansas Or Florida Or Texas Or Louisiana You Guys Are The Highest In The Nation So Your Averages Are Gonna Be About Three To Five Hundred Dollars Per Year More Than The National Average.
So You’re Looking At Anywhere From Fifteen Hundred Dollars Per Year Up To About To Almost Two Thousand Dollars Per Year For House Insurance.
Now Those States Even Though The High You Will Find Some People There That Are Only Paying Six Or Seven Hundred Dollars A Year It Really Just Depends On The Location.
For Example I Am Living In Michigan And My Average Is About Twelve Hundred Dollars Per Year We’re Pretty Normal As Far As The Home Insurance Goes Not So Much On The Auto But As Far As That Goes We’re Great.
But I Have People I Ensure That Our Six Hundred Dollars Four Hundred Dollars Eight Hundred Dollars It’s Not Uncommon To Be Around That Nine Hundred Dollar Range Even Though The Typical Home Is Right Around That Eleven To Twelve Hundred Dollar Range.
Location Plays Huge Factor Being In The City Versus Being In The Country You Would Think That The City Is More Expensive And There Are Some Factors If You’re In A High-Risk Area So The Zip Code Has Like A Lot Of Theft And Stuff Like That You’re Gonna Have Some Stuff There But That’s Kind Of A Separate Piece.
Theft And All Those Claims Are More So Not Really The Amount Of Activity But It’s More Whether You’ve Cleaned That Stuff Right.
If You’re In The Country You’re Likely Gonna Pay A Little Bit Higher Of A Premium Reason That Is Is Because You Guys Are Gonna Have Less Of A Response Time For Any Fire Claims And That’s A Huge Thing.
So If The Fire Station Is Over Here Near The City You’re Off In The Country House Starts On Fire You Call Them Help Me Help Me Help Me By The Time They Get There Half Of Your House Or All Of Your House Has Already Burnt Down.
We’re In The City They’re Near Everybody Within Ten Minutes There At Your House They’ve Put The Fire Out And Maybe The Kitchen Burnt Up A Little Bit You’re Talking About A Ten Thousand Dollar Claim Versus A Hundred And Fifty Thousand Dollar Claim There’s A Huge Difference.
So That Is Gonna Play A Very Large Factor.
The Age Of The Home Makes A Big Difference The Older The House Is The Riskier It Is Because The Updates No One’s Gonna Dig Up The Plumbing And Change It.
Some People Do There Is A Discount For That But That’s Not Common Right.
If You Have A House That’s Built In 1968 That’s Gonna Naturally Pull In A Higher Cost Than A House Built In 1998.
Your Deductible Plays A Very Very Large Piece.
Now I Prefer To Stay With The Common Which The Most Common Deductible That You’re Gonna See Is A Thousand Dollars.
So If You Have A House Claim You Out-Of-Pocket A Thousand Your Insurance Will Pick Up The Rest If That’s A Covered Peril As They Call It.
There’s Two Pieces Of The Deductible You Have They’re All Perils Which Covers Pretty Much Everything Except For Wind And Hail So It’s Like Fire Vandalism Theft Any Of Those Typical Things That’s Gonna Happen.
You Know Your House Burns Down Tomorrow That’s An All Peril Deductible.
And Then You Have Wind And Hail Deductible Which Is Usually Wind And Hail That’s The Roof Basically It Covers The Siding But It’s Very Rare That The Siding Is Really The Part That Got Damaged.
So If There’s A Huge Thunderstorm That Comes Through Hail Dropping Everywhere You Can Actually Pick A Large Deductible On Either Or.
Most Commonly You’re Not Going To Be Able To Pick A Larger Deductible All Perils Unless You’re Wind And Hail Deductible Matches That Or Is Higher.
So You’re Not Gonna Be Able To Do Like A Five Thousand All Peril Deductible And A 1000 Wind And Hail It’s Not Common.
Most Companies Will Actually Deny That Type Of A Deductible.
If You Did One Thousand Dollar Deductible On Your All Peril Deductible Then You Can Probably Put Your Wind And Hail At Twenty Five Hundred Five Thousand Even Ten Thousand A Lot Of Companies Offer.
Should You Do It Probably Not.
Most Of The Time That $1200 Average Range If You’re Comfortable With That That’s Gonna Be A Thousand Dollar Deductible On Average That’s The Most Common Thing That People Do.
But Just Know If You’re Trying To Close On A House And They’re Just Saying We Need To Get The Insurance Down Because We Need To Show That Your Mortgage Needs To Show That You Have More Debt To Income Your Mortgage Person Is Gonna Come To Me And Say How Do We Get This Insurance Down Then That’s Our First Option.
I Would Rather Not Lower Your Coverages Because I Don’t Want To Under Insure You I’d Rather Just Have A Larger Deductible.
So I’m Not Gonna Lower The House From A $200,000 House Down To 150 Because If It Burns It Down Tomorrow I Want It Covered.
I’d Rather Have You Out-Of-Pocket Ten Thousand Dollars Versus Losing A Hundred Thousand Dollars There’s A Big Difference.
Same Thing With Liability I Know They’re Not Have Eeeh Add A Three Hundred Thousand Liability When You Were Five Hundred Because We Needed To Get The Price Down Rather Raise That Deductible So That The Price Lowers.
And Then If It’s For Closing Yeah Sure If You Need To Close It And You Choose To Put It Back Up The Next Day The Next Month Whenever You Can Change Those Coverages Like You Do On Car Insurance.
So You Could Get That Price Close On The House And Then If You Change Your Mind And Decide You Know What I Really Am Not Comfortable With That I’d Rather Have That Larger Deductible You Can Raise That Typically Your Mortgage Will Pay The Difference But Just Keep In Mind They May Ask You To Pay The Difference.
Your Credit History Pays A Factor In This So If You Have Good Credit Just Like Your Mortgage Loan You’re Gonna Get A Better Or Lower Interest Rate.
Same Thing With Insurance In Most States They Allow Credit To Be A Factor So If You Have Really Bad Credit You’re Gonna Have A Higher Cost And Your Insurance Good Credit Lower Cost.
Now This It Doesn’t Really Play As Big Of A Factor As People Think.
We’re Auto Insurance It’s Different In Auto Insurance Because It’s So Risky Your Credit You’re More Likely To Walk Away From Your Car Then You Will Walk Away From Your House.
Understanding The Values Or The Coverages
That Brings Us To Our Second Point Which Is Understanding The Values Or The Coverages So To Speak.
There’s Really Only A Few Different Coverages That Our Primary Coverages In Your Home Policy You Have Coverage A B C D E And F.
What Are Those.
You’ve Got Coverage A That’s Your Dwelling That’s The Physical House The Cost To Rebuild That House To Rip It Down Take All The Stuff Away That’s That’s Removing Everything And Then To Build That Same Exact House How Much That Gonna Cost.
Keep In Mind It’s Not The Value Of The House The Value Of The House Includes The Land The Location All The Features That They Put Into It.
Sure You’re Gonna Get Those Rebuilt But The Cost To Rebuild Them Is Sometimes More Expensive Than The Cost To Buy Them Today So That’s One Thing To Be Mindful Of.
Coverage B Is Going To Be Other Structures So That’s Gonna Be If You Have A Shed In The Backyard If You Have A Fence Around The House If There’s A Pool Not Attached To The House Anything That’s Disconnected From The House That’s Gonna Be Your Coverage B.
Coverage C Is Going To Be Your Actual Property Damage So The Actual Stuff You Own My Shoes My Couch My TV.
The One Thing That You Always Always Always Want To Make Sure That You Get With That Is Something Called Replacement Cost.
And What That Is Is It Basically Means That No Matter How Old The TV Is How Old The Couch Is How Old Anything Is You’re Gonna Get Full Value.
That Doesn’t Mean You’re Gonna Get The Full Value That You Paid For It It Means You’re Gonna Get What Today’s Value Is.
So You May Bought A TV For A Thousand Dollars Five Years Ago That TV’s Probably Worth $200 Today.
So If You Don’t Get Full Replacement Cost You’re Only Gonna Get $200 Back.
If You Have A Fire Imagine That Times Your Whole House Take 80% Of What You Own And You’re Only Getting 20 To 30% Back That’s Crazy.
It’s Not Worth It And It’s Not Expensive To Do Full Replacement Cost.