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June 28, 2006
DISB Offers Tips for Consumers Considering Flood Insurance Because of Recent Rainfall (cont'd.)
- Shop Around: Premiums charged for insurance vary widely from company to company so it pays to take the time and effort to shop around to get the best value for your insurance dollar.
- Stick with the company offering the best deal: Once you have considered the alternatives and chosen the company that fits your needs, consider multiple policies with that company. Some companies offer a multi-policy discount, so you can purchase your homeowner and automobile policies from the same insurer and you may receive a small discount.
- Change your deductible: If the policy contains a standard “all peril” deductible of $250, for example, you would collect the amount of any covered property loss minus the $250. With a deductible, the premium cost of the policy is lower than if there were no deductible. In choosing the deductible amount, you bear the burden of loss up to the amount you feel you can afford. Contact the insurance company to see if it offers higher deductibles.
- Pick your form: The five homeowners package forms offered to owners of single-family, owner-occupied homes are HO-1, HO-2, HO-3, HO-3 with HO-15 and HO-8. These policy forms insure your home and belongings against at least 11 perils. The more perils your policy covers, the more you pay for the policy.
- Actual cash value versus replacement cost: One important factor to consider when shopping for homeowners’ insurance is actual cash value versus replacement cost coverage. While it may not affect your short-term premiums, it may make a large difference in your claim submission. Actual cash-value coverage will reimburse you for the cost of the property at the time of the claim, minus your deductible. It is important to account for depreciation when considering this option. For example, if you lose an audio system you purchased five years before the claim, you will be reimbursed for its current value. Replacement cost coverage, on the other hand, will reimburse the full value of the new system and submit your receipts. While up-front costs are greater, you are more likely to receive accurate compensation for your possessions.
- Discount opportunities: Check with your insurance company to see if it offers premium discounts for the use of dead-bolt locks, smoke alarms, fire extinguishers, sprinkler systems and security systems. Also, check to see if you will receive premium discounts for hurricane or storm shutters and hurricane-resistant laminated glass windows and doors.
“We’re only in the first month of the 2006 hurricane season, and we cannot anticipate with certainty what else will happen but it is very important to plan ahead,” Hampton added. “Even though flood insurance may be purchased throughout the year, the policy will not go into effect until 30 days after you buy it.”
Consumers can buy NFIP flood insurance directly from their property and casualty insurance agent or insurance company if their community participates in the NFIP. To find out if your community participates, visit the NFIP website.
