Whether you just bought your home, or you’ve owned it for many years, there are three things you should be aware of with your homeowner’s insurance policy.
I’ll skip right past the part where you are supposed to photograph and document the contents of your house in case you need to file a claim. Everyone knows you should – kind of like flossing your teeth. Some do it, some don’t. Everyone knows they should. Anyway…
BACKGROUND
As fires are becoming more common in California, many insurers are pulling out of our market because the risk of a sizable payout is too high. Those companies that are still writing California policies are being more careful with what properties they will insure.
#1 CONSIDER A HIGH DEDUCTIBLE
People tend to have different risk tolerances for deductibles. Some like the peace of mind of knowing their deductible is low, others want to optimize for a lower premium and choose a higher deductible. A higher deductible increases the odds that you will pay out of pocket for a loss. The thing that many homeowners are not aware of is that when you go to sell your house, there is a mandatory disclosure question asking if you have ever filed a homeowners insurance claim on the property. If you have, it may make it harder for your buyer to get insurance when they buy, and that may later become your problem. It may also impact your lender’s willingness to write a new policy for your next home. Even if you have a low deductible, you should think twice about whether you want to file a claim for a relatively small loss. Talk with your insurer before you do, and ask them what future impact that claim will have on your rates, and your insurability going forward.
#2 PERIODICALLY REASSESS WHAT YOUR REPLACEMENT COSTS ARE
This is more of an issue if you’ve owned your home for a while. When you get insurance, the insurer will look at your home and make a guess about what it will cost to rebuild your home in the event of a total loss. They calculate this based on the build cost per square foot. Over time, this number naturally goes up. If you haven’t revisited that number, and you’ve owned your house for a while, you should speak with your insurer to make sure that your policy will pay your for what it will actually cost to rebuild your home. We have insurance agents we work with who would be happy to do a complimentary insurance audit to let you know if you are under-insured.
#3 CUT BACK TREES AROUND YOUR HOME
Many homes I see with clients are surrounded by beautiful trees – it’s a hallmark of the Bay Area. However, particularly given our dry summers and fire risk, these trees are a real threat to the safety of your home. Make sure that you tree limbs are cut back away from your home so if a flying spark ignites your tree, it’s less likely your house will be burned. Something to be aware of – how you prune a tree matters, for some species more than others. Particularly if you have heritage trees on your property, it’s best to work with a certified arborist who can recommend the best approach to keep your home safe and your trees healthy. We have some great tree people our clients have used – let us know if you need some names.
