The night David and Sara’s house burnt down was the worst night of their lives, or so they thought. When David and Sara arrived on the scene amidst flashing lights and water hoses to find their house virtually destroyed by fire, they found few things to provide comfort. Knowing they had purchased homeowners insurance from a reputable insurance carrier was one of them. To their dismay, when they went to settle the claim with the insurance carrier, they were offered much less than expected; so much so that it wasn’t enough to completely rebuild the house. Now they truly would lose everything they had worked so hard for.
To quote a lower premium, David and Sara’s insurance agent had written an actual cash value policy rather than a replacement cost policy. With an actual cash value policy, the insurance company deducts for depreciation which often leaves homeowners with less money than it takes to actually rebuild the house.
Often people are too eager to save money on insurance and don’t take the time to understand the coverage that is afforded in their insurance policies. When shopping for insurance, it is just as important to buy from a reputable agent as it is to purchase a good policy. Ask around; talk to friends and family and co-workers to find out who they use for insurance. You may even want to interview several agents before you choose the right one. There are many ways to save money on insurance, but cutting coverages is not nearly the best way.
After choosing an agent with a good track record; take time to discuss your policy with him or her. Review the policy and have the agent explain it. Make sure you ask if there are any potential coverage gaps in the policy. Take good notes of your meeting with the agent so in the event, something does go wrong, you have something to refer to.
Also, ask your agent about all the available discounts. Just because they are available doesn’t necessarily mean that the agent has applied them to your policy. Also, ask the agent what you can do during the policy term to prepare yourself to get a lower rate at the policy renewal. If your agent looks like a deer in headlights, you may not have an agent that understands insurance well enough to be putting you in the best position to save money. An agent who understands the detail of how insurance companies rate their products knows the “tricks” of the trade and will be able to help you make adjustments that will save you significant money in the long run.
Don’t end up like David and Sarah, who learned the hard way that not all insurance policies are created equal, even if on the policy summary page they look similar. What is buried in the “small” print can really make the difference for you in the event of a claim.