April showers bring … questions about homeowners’ coverage?

“Well, yes,” replied Robin Price, president of Allen Tate Insurance, when I caught up with her this week. With all the storms and downpours the season brings, I had some questions and concerns, just like any homeowner who has watched a Carolina blue sky suddenly turn dark and ominous.

Does regular homeowners insurance cover floods?

The first question was easy.

“The short answer is no,” Robin said, adding “but some homeowners are at a greater risk than others.”

Your insurance agent can help you determine if you are in a flood plain and need flood insurance. Robin says you can purchase up to $250,000 coverage on your dwelling and $100,000 on contents for less than $500 a year IF you are in a low-risk zone. For homes over $250,000, excess policies are also available.

What if there’s a leak?

Perhaps the wind blew off your shingles, or worse, an entire section of the roof, and rain poured in for an hour. Or maybe last winter, your pipes froze and burst, while you were away. And it was water, water, everywhere.

What then? I asked and of course, Robin was happy to answer my questions about potential leak scenarios.

“There always seems to be confusion about when a leak is covered and when it is not. Mostly, it depends on where it was started and what caused it,” she said.

In short, if the water damage was caused by rain when the wind blew shingles off your roof, or a tree branch broke a window, it’s probably covered. Water damage from frozen pipes bursting is likely to be covered, but keep in mind, faulty workmanship is not. Damage caused by a leak over a long period of time is most often considered a maintenance issue—not sudden damage—and is probably not covered.

“You have to pay attention to the policy language,“ Robin said. “And again, the best bet is to make sure you understand your coverage before you need it. The best way to do that is review with your insurer at the time your policy is issued, when your policy renews, or now. Any time you think about it before it happens is the best time.”

What about sewer or pipe-related issues?

Under most regular homeowners’ coverage, if a sewer or drain back-up causes water damage in your home, it may not be covered or coverage may be limited. This exclusion is about “overflows” of water from sewers (like toilet bowls) and “backups” from drains (like floor drains and sinks). The good news is you can probably add a Back Up of Sewer or Drains endorsement to your policy.

“Okay, you had me at sewer,’” I tell Robin. “But how much extra is this going to cost me?”

As with anything, it depends on how much you want to buy, but in general, you can endorse for $5,000 to $20,000 in damage coverage. The endorsement provides coverage for damage due to back up through a sewer or drain or overflow or discharge of a sump pump. The coverage is also for water or waterborne material, providing coverage for damage caused by items floating in the water.

So where do I sign?

Seriously, check your homeowner’s policy ASAP and if you don’t have this endorsement or are unsure, immediately call your insurer. Well, that’s what I’m doing. Nope. Not risking that.

How quickly can I get my claim paid?

The last thing you need when it’s claim time is for your insurer to do a disappearing act.

“We advise everyone to insure with a financially sound company that will be able to pay your claim when the time comes. If you can’t be sure about that, you can’t be sure about any type of homeowner claim,” Robin reminded me.

“A good insurance company will work quickly to get you back to your previous, livable situation.”

If you have questions about what you’ve read here or about your homeowners coverage, Robin says to ask your trusted insurance advisor, or contact Allen Tate Insurance Services . They’ll be happy to point you in the right direction.

I was recently asked this question by one of our Allen Tate Insurance clients, and thought I would share the answer here for our readers.

There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.

Some people have absolutely no idea that it’s used in the rate at all.

At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.

By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit as a result of an insurance company looking at it.

When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).

When does credit play a role in insurance rates?
It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a quote and/or sign up with them in the very beginning.

This means that if your credit score increases (or decreases) your insurance company does not automatically know about it.

So, to my customers question of whether or not his increased credit score will lower his rates, the answer is not automatically.

What has to be done on our side as the agent is contact the carrier the insurance and ask them to do what’s commonly referred to as a “re-score”. This is when the insurance company can re-run the person’s credit (soft inquiry) to see if there is any positive bearing on the rate.

This isn’t something that the insurance company is going to let the agency do every single year, so it’s not worth even asking unless there has been a significant change in your credit score, and only you as the customer would know if that was the case.

If you’d like to get a better handle on your credit rating, it could be helpful to setup credit monitoring. We hope this was helpful! As always, leave us comment below if you have any questions.

Why do my auto insurance rates keep going up even though my car is getting older?  At Allen Tate Insurance, many of our clients ask this question so I would like to address it from a couple of angles.

First things first, even though it’s called car/auto insurance, it covers more than just your car. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “home owners insurance”.

It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.

The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. A car is a material possession which can be replaced.

A human life is not.

When is the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.

Bodily injury
Property damage
Un-insured motorist
Under-insured motorist
Medical Payments
Loss of Income
Funeral Expense
Loss of use
Rental Reimbursement

These are all things that you are covered for on your auto policy. How many of them have to do with your car?

None.

How many of them have a price next to them on your policy?

All of them.

Your car isn’t the only thing you’re being charged for on your policy
That’s because auto insurance covers far more important things than your car as mentioned above.

Let me re-phrase that: your car insurance rate isn’t just based on your car.

You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one fish in an ocean of other fish, sharks, and sea creatures, all who have different characteristics and risk profiles.

Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. That risk pool is constantly changing, and is impacted by a ton of different things, including the overall economic climate.

This means that you are sharing in the cost of millions of other people, many of whom may have poor loss history and/or credit.

That’s what insurance is though — sharing in the cost.

The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverages, and corresponding rates.

Hope this helps!  If you would like to know more about Car Insurance be sure to visit our page dedicated to it.