Ask any real estate agent who has been in business before the Great Recession to describe today’s home buyer, and the chances are good that you’ll hear these descriptive terms:
“Down to earth. Doesn’t need to have the fanciest house on the block. Not stretching themselves as much financially as we saw in the early 2000s. Does not see a home so much as an investment, instead as a place for families to live within their means.”
And if you next ask, “Is there any one aspect of home ownership that today’s first-time buyer does not adequately understand?” You’ll probably hear: “Because as renters they likely did not have renters insurance, they can find homeowners insurance to be confusing and may wind up not having buying adequate limits of protection.”
Required by lending institutions but be careful!
“Most lending institutions which make home loans require some form of property insurance,” La Jolla-California based Attorney Evan Walker tells You and the Law.
After law school he spent close to a decade as an insurance defense attorney, handling personal injury and property damage lawsuits. That experience served him well, as, now in private practice, “I learned how insurance companies bully people, deny valid claims, and getting your claim paid begins by having purchased the proper coverage and have prepared for a loss before one occurs.”
Walker advises shopping for homeowners insurance and to “Be aware that several options are available, so always do careful research in order to make the best decision for your family." You may get a better deal if you have your auto insurance and homeowners insurance from the same company.
“Read through your policy at least once. Search online for advice on what to look for. At a minimum, you should know the type of policy and coverage provided.”
Of course, the reason lenders require the property to be covered under a Homeowner’s policy is to have their interest in your home protected. So, for example, in the event a fire destroys the house, their loan will be paid by insurance proceeds.
Walker advises, “Never let your policy lapse for non-payment because if that happens, the lender will buy its own insurance and add the cost to your loan. What they obtain could easily cost much more than what you would pay.”
Document a loss before one occurs
Before a loss, Walker recommends “Documenting your possessions and the condition of your home. Save receipts, invoices for repairs or upgrades to the property, and take a video of the home’s exterior, and interior, room-by-room."
“Dennis, we can all imagine the shock that families who lost their homes in California’s wildfires experienced. Then, claims adjusters asked them to list all the items of personal property that were destroyed. From memory, no one can do that. But some homeowners had no trouble because they had videoed their entire house.”
Walker felt that a great way of doing this is “For one person to hold a Smartphone, another describes the contents of each room, opening every drawer and being detailed. Don’t just say, ‘Here are we have bathroom towels and sheets.’ Instead, ‘Here you see 10 bath towels and 6 sets of sheets,’ and so on. If items are a luxury brand, state that as well.”
One tactic claims adjusters use to reduce what they will pay is to ask for receipts on the items claimed. “As claims are paid according to proof of the loss, not having a receipt can be costly. And here is where your Smartphone once again can save the day. Just take a picture of receipts on all the things you buy for your house and store it someplace in the Cloud like Google Documents.”
Most Homes are underinsured and need higher limits of liability
Are you underinsured? In a recently released survey conducted by Nationwide Insurance, “About two-thirds of American homes are underinsured, some by up to 60 percent, with the average being 22 percent.”
Walker puts this into dollars and sense:
“Being underinsured means that you don't have adequate coverage to protect you if your home is damaged or destroyed by fire or another disaster. Without replacement or rebuilding coverage, you might have to pay a large part of the repair costs out of your own pocket.”
But being underinsured has another dimension apart from the physical house itself, and that’s liability. Walker provides these cautionary words:
“One day a claim or lawsuit is filed against you by someone injured on your property. A family member or pet is responsible for hurting someone or causing damage to property. Are your liability limits high enough? Having low limits of homeowners insurance coverage is a false economy.”