what to look for in your insurance docs + How to protect yourself
**According to our Safeco insurance docs, 58% of homes are underinsured by 21%.**
It's really important to us that you protect yourself, so we're just going to put the high level tips here. This is what you should be looking for in your insurance docs:
What kind of insurance do I need? As a homeowner, you need Dwelling Insurance. This is usually the first line item on your insurance and it covers the cost of your actual house. It does not cover the land beneath the house, as ostensibly, that land will still be there despite what happens to your house. For example, people lost their house in the Marshall Fire are likely insured to rebuild the house on the land where it existed before. In addition to Dwelling Insurance, it's important to have Personal Property Insurance. Personal Property in real estate contracts is described as anything that would fall if you turned the house upside down (beds, refrigerators, desks, clothes, television sets, etc. Anything that's not fixed to the house.) Personal Property insurance should be 50-70% of your dwelling coverage. TIP: Take 5 minutes today to walk around your house and film each room and then upload the video to the cloud. If you need to file a claim in the future, you'll have an easy reference for what was lost or damaged.
What Other Types of Insurance are common? There are two other types of insurance that come up when it comes to home insurance. The first is Extended Coverage and the second is Other Structures.
What is Extended Coverage Insurance? Extended coverage insurance is an add on that some insurance companies offer. It costs more and usually allows you to insure your property for 10-25% more than your dwelling insurance.
What is Other Structures Insurance? Other Structures insurance covers other structures on your property. Examples of other structures are sheds, green houses, decks, pools, etc. It is usually 10% of your dwelling coverage.
Is your coverage amount enough? Having enough insurance coverage in Colorado is really important given how fast our market has appreciated and the increasing costs of labor and supplies. We know that the market appreciated 27% in 18 months, so if you bought your house two years ago (or even 18 months ago), you might not have appropriate coverage. Things to note: a.) insurance only covers the cost of rebuilding the dwelling; it does not cover the market value. b.) The current cost to rebuild is $150/sq foot for a basic new build and $400/sq ft for a luxury home. Our house is approximately 1800 square feet, so we have $449,000 in coverage.
What sort of things will my insurance reimburse?
Will my insurance pay for loss of trees, plants, etc.? Yes.
Will my insurance pay for pet boarding costs? Yes.
Will my insurance pay for expired food? Yes.
Will my insurance pay for hotel expenses? Yes.
Will my insurance pay for restaurants and meals? Yes.
Will my insurance pay for my clothes? Yes.
What is landlord insurance?
Landlord insurance will help protect your rental and cover loss of income and use.
Should I make my tenants get rental insurance?
Yes. It protects their personal property and costs for finding new accommodations if your property is no longer habitable.