Estimated reading time: 7 minutes, 1 second
Back in the ’30’s and 40’s the insurance world was referred to as the “insurance racket” It was likened to and most likely connected to the mafia which collected money very well but was reluctant to pay out. There were no rules or oversite, nowadays there is strict oversite and the State of Idaho governs all companies doing business here.
As a contractor that rushes to rebuild homes after all sorts of disasters, I began wondering whether there is another perspective a client should think about before they file a claim. This leads me to ask my friendly Farmers Insurance agent Kurt Pfleger for some answers.
Turns out there is a lot of information he has that is very helpful but is not common knowledge. It just so happens that Farmers is doing a media campaign at the moment with a similar sentiment regarding learning about subtle coverage quirks that you might not be aware of.
In Idaho, there is a governing board that oversees the insurance industry that determines what is and isn’t covered as a baseline then individual companies have some latitude to be creative with additional coverages.
Most insurance companies are happy to write you a homeowners insurance policy because home disasters rarely occur. Often the policy is written before the home is even looked at by the insuring company. You may think the policy is covering you and your stuff, but it is primarily protecting the mortgage companies’ assets that they are selling to you over a 30+ year period.
Here are some common situations that often baffle the insured and cause all sorts of confusion. There are so many of these things that I will address in part 2 of this multi-part series. At the time of this publication, there are many homes that are underinsured because rebuild costs have gone through the roof. Check to make sure your coverage will replace your home. That means tearing it down and rebuilding it. As a general rule for the current conditions, my agent is suggesting $250.00/SF for full coverage. (September 2022)
8. My Neighbor’s House Caught Fire & Damaged Mine!
The Neighbors house caught fire and damaged my home, You are responsible for paying your own deductible and filing a claim on your insurance to have your home fixed. If you’re lucky, the neighbor has insurance too and you will be reimbursed.
9. You Need To Get 3 Bids
This is a big fat myth. You can select the company you want to do the work for you. The insurance company works with any contractor. You must explain to the contractor that this is all the money I have been given to fix the problem. This keeps everyone on a level playing field for determining what they will pay to do the work of getting home back together. This process prevents insurance companies from being overcharged.
10. Having A Claim Is An Opportunity to Cash In
You need to get your home back to pre-disaster shape for the insurance company to pay for the work. They withhold an amount of money (the depreciation) until they can verify the work was done satisfactorily. They also do not pay overhead or profit for you to fix your own home. If you hire a contractor you have to pay them to fix the problem. A Contractor should be clear about the cost. Typically there is not enough provided to fix it correctly. You are responsible to cover the gap. A contractor like Levco will examine the estimate and work with the insurance company to negotiate a larger settlement for you to pay Levco to fix your home. This is uncommon and sets us apart. A friend said they had to fix their flood themselves because the insurance claim was not enough. This is not an uncommon story sadly. We typically work through that issue quickly. Hire a professional.
11. Is Renters Insurance Worth It?
Yes! as a landlord you should insist upon it. As a resident, there is no better way to protect your personal belongings. It is cheap and one of the best values you can get.
12. How Do I Get A Claim Started?
Once triggered to do so by a phone call the insurance company representatives or contracted mitigation firm rushes to your home to start demo and nd or board up and protect your home, In larger losses your lender may be notified, What sets insurance agencies apart is how they help you through the process.
13. Why Not Save A Buck And Get Online Insurance Quotes?
Insurance companies and their agents are customer service experts, they live in the same town and get to know you so that when heaven forbid something happens, they assist you in solving your problem, they often contact you at renewal time to review your coverages and make recommendations that make sense.
14. What If I Don’t Want Homeowners Insurance But I Still Have A Mortgage?
The lending institution can provide you with “Forced Placed Coverage” this is an extreme case and only provides the state-mandated minimum coverage, in other words, it is to protect the structure only, no frills. It is more expensive than what you can get on the open market and is never a good arrangement to get into.
15. I Heard Your Homeowners Insurance Covers Weird Things When You Are Away From Home
yes, this is true, here are some examples of things you might not know. If you are on a human-powered bicycle then you are covered by your homeowner’s policy for liability. If you are traveling, the possessions that you are traveling with are covered by your homeowner’s policy. If you have a storage area that you are renting then a portion of your personal property is covered. Look into your policy with your agent to verify these things, Chances are that there are even more cool deals that you are entitled to, Each company naturally has its own coverages.
16. A Guy Came to My Door Offering a New Roof Because of Wind or Hale Damage, is This a Scam?
In my opinion, yes. There are situations where wind damage and hale damage can cause damage to roofs, however, it is usually minimal damage and repairable. the door to door salesmen is usually taking advantage of the system and using up one of your claim opportunities. Get a second opinion from a reputable roofer before you agree to move forward with insurance-related roof work.
17. Do I Have to Pay My Deductible?
Yes, that being said, that is all you should have to pay unless you need to pay for the cause of loss (IE the water heater blew up) or if you are making improvements beyond what you had. In some cases, you can get credit to say if you don’t want to replace a fireplace that was there and use the credit towards something else, like covering your deductible as an example. At Levco we also ask for 1% of your estimate to do 360 Photography and work on the estimate to negotiate with the insurance company to cover the real cost for Levco to rebuild.
18. Can I Have Additional Work Done At The Same Time You Fix My Place?
A loss is often seen as an opportunity to improve things, “why put things back together the way they were if you didn’t like them in the first place?” When there are lots of changes, it can be confusing and complicated. Typical flood and fire companies are not set up to do this work. Be certain to have a clear description of work and an exact same understanding of the work that will be done that is above and beyond the scope of the loss. At Levco, a Design Agreement will be necessary. Pricing will be done during estimating after all things are decided much like a typical remodeling project.
Your comments are welcome. To ask questions or get more information about remodeling, click here to email me directly, or call 208-947-7261
If you or someone you know is considering remodeling or just wants to speak to a trustworthy remodeling contractor, please contact me. You’ll be glad you did.