Homeowner Insurance 2014 update for Spanish Fort, Daphne, Fairhope and Baldwin County
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I saved $1,100 on my homeowner’s insurance. Interested?
I also incurred more financial risk should catastrophe strike. That’s what I learned when I talked to two of my favorite go-to guys who sell insurance in Fairhope, Daphne and Spanish Fort … and beyond.
But first, let’s talk about my last insurance carrier, Wilshire. The policy was written by a Mobile insurance company in 2011 for $2,556. When my renewal notice arrived in April, the cost was $3,499, roughly a $1,000 increase in 3 years. When I called the local office about the increase, let’s just say their explanation was unacceptable.
“People need to shop around at least on a yearly basis,” Gorowsky says. “If your insurance renews between May and say October, it’s good to try and shop it in the first quarter of the year and try to have your renewal happen in the first part of the year before hurricane season starts.
“No. 1, prices are more stable the first quarter up to say May” before the “Weather Channel says you’re going to have 900 storms coming up Mobile Bay.”
Both Drago and Gorowsky say there’s more to the policy than just the annual fee.
“I find a lot of people that have high percentage deductibles, and they’re really not saving that much. So their exposure is higher than what the savings is,” Gorowsky says.
Drago agrees: “The biggest mistake I see people making is exactly what’s it going to cost me instead of what is my coverage, what am I getting.”
For many, it will come down to how much risk you want to take.
- Named storm coverage (hurricane deductible) vs. wind and hail:Most carriers offer an a la carte menu of deductibles to choose from. Get out your calculator when you make those decisions. Gorowsky says you may find that a savings of $200 a year could cost you $15,000 if and when any wind deductible kicks in.“For five years, we weren’t writing wind,” Drago says. During that time, State Farm, like other carriers were offering what’s casually known as “fire,” and then going to the “beach pool” to cover wind.
- Drago says State Farm is again writing policies including wind and hail south of I-10 in selected areas. To be clear, State Farm offers named storm coverage vs. just wind and hail, which is more desirable but a bit more costly.
- Basically, you incur more risk as a homeowner if you choose the wind/hail deductible vs the named storm coverage, which is just confined to well, named storms, not just those terrible thunderstorms of late.
- “Beach pool” or AIUA perils:“It’s really designed for somebody who can’t get anybody else to write them,” Drago says. “It’s really an insurer of last resort.”Issues both men cite:
- Gorowsky adds: “It’s a non-profit org(anization).”
- Over the last few years, I’ve come across homeowners well inland who have elected to go into the beach pool, or the Alabama Insurance Underwriting Association. That raised the hairs on the back of my neck and now I know why.
- On homes 25 years or older, it is a depreciated cost policy. (When someone totals that old car, they don’t get the full cost of what they paid nor do they get the cost of a brand new car to replace it. Imagine that with a house!)
- Contents are always a depreciated cost.
- Other structures – fences, decks, detached garages, boat docks, etc. – are not covered.
- And it doesn’t come with personal liability coverage in the event someone is injured on the property.
- Replacement value:The price per square foot of new construction is a better barometer for true replacement cost if your home burned to the ground.
- “Replacement cost may be higher than market value for older homes,” he says.
- “Some people run the risk of being under-insured,” Gorowsky cautions. That’s because they confuse replacement cost vs. market value.
- Home contents and other structures:In fact, this is where my new lower cost insurance may have also left me at risk with only $75,000 for contents. And then there is whether you have other structures on your property that need coverage, such as out-buildings, detached garages, decks and fences. Gorowsky says some companies come with a package for other structures, even if the homeowner doesn’t have any. “Other providers, you can fine tune it to exactly what you need.”
- Ok, here I backtracked and had to add to my policy to cover a second garage and deck to the tune of $189, shaving my savings to roughly $900 a year.
- Tip: Photograph or video tape your contents, upload and then email them back to yourself so you have a record of what you have.
- Drago urges homeowners to examine their contents coverage. State Farm covers contents based on 75% of the home’s value (i.e. $300,000 for contents for a $400,000 home).
- The industry in general: In fact, some were advised that they didn’t need flood insurance. Please, folks, don’t rely on “experts” to give you a pass on flood insurance. Use common sense if you’re near a stream, creek or an area where water rushes through or collects and get flood insurance.
- Finally, with the recent storms and flash floods, we all heard stories of people whose homes were flooded in areas that had never experienced that before.
- New construction, meeting higher building code requirements, has very attractive insurance rates. State Farm has written policies on $400,000 homes on the eastern edge of Spanish Fort and parts of Daphne for as little as $1,900, Drago says.