HOMEOWNER’S INSURANCE RIDERS FROM AMERIDRI
Hi, my name is Joe Crivello and I have been in the restoration business for nearly 25 years. I have worked with all the major insurance companies over the years and have seen every type of claim you could imagine. The sad part of my business is working with under insured homeowners. I know this report is a long read, but you will gain very valuable and much needed information. I hope this E-Book helps you in buying the right insurance riders. Based on what AmeriDri runs into most often regarding underinsured losses, directly below are what I believe to be the most needed riders.
CONDITIONS THAT NEED TO HAVE A HOME OWNERS INSURANCE RIDER
Personal Property or home: The personal property insurance coverage under the standard
home insurance policy is filled with limitations. For example, some types of personal property
tend to be covered, however only up to a specific amount and that amount is usually just a
small percent of the actual worth i.e., jewelry, firearms, collectible items, cash, and so on.).
Extra insurance coverage for your entire value associated with these kinds of property might
require a property insurance coverage rider.
Electronic Equipment: Coverage for personal computer equipment and data is usually limited
by standard homeowner’s insurance coverage. You might want to a home owner’s insurance
rider for added insurance coverage.
Home Business: More than twenty percent of United states household’s double as a small
business home office. Standard homeowner’s insurance coverage is very limited on insurance
policy coverage regarding property or home used in small business functions. Practically all
insurance policies are generally far more limited towards business-related liability i.e., a client
is injured when in your home), usually excluding these kinds of claims entirely. In the event
you operate any type of business in your own home, think about adding a business-based
home owner’s insurance rider to your insurance policy.
Secondary Property or Income Property: In the event you own an additional property which is
utilized as a secondary residence or rental property, an individual may be able to acquire
insurance coverage for that property or home with the addition of a rider to your existing
homeowner’s insurance coverage policy. If available, this process may very well be cost effective as opposed to separate insurance policies for each property or home.
Sewer and Drain Back-Up: Any backed up sewer line or drain can easily result in substantial
damage to your property. This kind of loss might be excluded under your homeowner’s
insurance policy. If that’s the case, a home insurance coverage rider might be required to add
this coverage.
Theft: Protection under your insurance coverage policy could be limited with regard to theft
associated with personal property. A home insurance coverage rider could be available to
increase insurance coverage with regard to loss due to theft.
BEFORE YOU PURCHASE A HOME
Are you considering purchasing a home for you and your family, but feel a bit overwhelmed by
all of the things you have to think about? Instead, perhaps you have already invested into a
house and are wondering if you have the best insurance coverage to make sure that you are
properly reimbursed and cared for no matter what happens. Wherever you may be in the
process of home ownership, it is not uncommon to feel stressed out and frustrated with the
technical aspects that you hadn’t realized existed.
Many homeowners, even those who have owned for years, do not give much thought to their
insurance policy. Operating under the assumption that the mortgage company will require a
great minimal level of insurance is a mistake. However, there are many things that are not
covered under most policies.
If you already have insurance, then you need to thoroughly inspect your policy. For those who
do not, reading the fine print before signing is advised. In either instance, you need to work to
ensure that you have the appropriate policy and riders to help you through a devastating
event.
At some point, you may need to weigh out your priorities, due to your budget. When this
happens, you have options to obtain the most protection possible for your money. Be a savvy
shopper for your homeowner’s insurance, and you can likely obtain everything you need.
Once you understand the breakdown of traditional policies for homeowners and more about
riders, you can go forward with that knowledge when you have to make choices.
Understanding how riders work and the ones available to you can end up saving you immense
amounts of money in the long run.
With so many things involved with the purchase of a home, it can be easy to give little thought
to what exactly will and will not be covered by the insurance policy. Additionally, the longer
you live in a place, the more likely you are to acquire goods that may require extra coverage.
In fact, this is one reason that homeowners should inspect their policies at least once each
year.
Regardless of your budget, you should endeavor to keep the cost of your monthly premiums
down without sacrificing the quality of your policy. Looking into your options will empower
you when discussing your insurance coverage needs with the agents from the companies on
your list. This is a great example of what they say about knowledge being power. You are in a
much better position to negotiate when you are organized and have the information you need
to get the best rates you can.
Then, simply make sure you have safe copies of your policy and that you review it at least once
a year, updating as needed.
TYPES OF EVENTS COVERED BY VARIOUS HOMEOWNERS INSURANCE POLICIES
The first thing that you have to understand is how the basics of homeowner’s insurance
policies work. This will help you to select the best one for you to ensure you have a good
foundation to your coverage. Then, you can make the appropriate additions as needed.
The seven typical policies are named HO-1 through HO-8 (there is no HO-7) and cover the
insured based upon events that are either specifically included or excluded from the coverage.
It is important to understand which direction your policy describes these events.
In the event of included perils, it means that the policy will pay according to the terms if the
claim arises as a result of the list of events. Things such as fire and hail are among the types of
included events for policies that are worded in that manner.
On the other hand, some policies refer particularly to excluded perils. In these instances, you
may need to research if you can obtain a rider to gain coverage in those that concern you. For
example, if claims resulting from earth movement will be denied, you may need to obtain an
earthquake rider if you live in an area prone to these shifts in the planet.
The first two levels, HO-1, and HO-2, are both inclusion style policies. HO-1 does not include
personal liability insurance and is insufficient for a mortgage. This most basic policy will only
pay for damages to the home as a result of ten specified perils, which include fire and
lightning, windstorm or hail, explosions, riots, and theft among others.
The HO-2 Homeowner Policy provides inclusive coverage for the events in HO-1 plus six
additional ones. These include falling objects, the weight of ice and snow, and freezing.
Additionally, it covers structures besides the main home, such as the garage and fence damage
that may occur during one of these events. Homeowners personal liability coverage is also
included at this level.
The most popular policy today is the HO-3, which is often referred to as the special form
policy. Not only does it cover the home and other structures like the HO-2, liability is included
in the package. However, unlike the HO-2, this is the first in the list of exclusionary policies.
Instead of including which events will be covered, a list of 21 specific perils is listed that are
not covered.
In addition to certain natural disasters, other exclusions are related to government action, war
and nuclear hazard. The list also includes vermin and insects, which means that you need to be
certain to prevent any infestations in your home. If they occur, you alone will be financially
responsible for repairs.
The HO-4 is for renters and includes liability and medical payments. Additionally, the contents
of the home and living expenses while displaced are a part of the policy.
The HO-5 insurance policy is considered among the best in the nation. It covers the entire
home, including the contents and is the most extensive policy offered. There are 21 exclusions
on the list, virtually the same as the HO-4 with a few minor differences.
The HO-6 is for condo owners and provides for the dwelling and property in the case of 16
different perils. HO-8 includes 10 perils and is designed for older homes. In this event, it is
important to note if the policy is for the replacement cost or the cash value of the home to get
the best replacement cost coverage.
Make sure that you have the appropriate plan to cover you and your family needs when you
are shopping around. Speak to your significant other about which issues are most important
and your finances so that you go into your research well prepared. Knowing how much you
have to spend will help you to find the best policy possible to fit your budget.
WHY YOUR HOMEOWNERS INSURANCE IS OFTEN INSUFFICIENT IN A DEVASTATING EVENT
Though it may seem as though the majority of choices regarding home insurance coverage are
pretty good, you need to know exactly what some of these terms mean and the amounts that
will be paid out if you need to make a claim. Do not assume that if you have HO-3 or HO-5 that
you will have the funds you need to completely recover from the event.
The unfortunate reality is that many policies do not even have enough coverage dollars to
rebuild the home, much less make up for the contents inside of it. However, if you go into
negotiations with the insurance agent knowing how to debate the price difference between
market value and replacement cost of your investment.
Before the devastating 1992 hurricane that struck the southern Florida coast, the vast majority
of homeowner policies did actually cover the costs to reconstruct homes. However, that event
led to alterations in the way policies were written because so many insurance companies were
hurt by the enormity of the damage that arose due to Hurricane Andrew.
Another problem that arises when the damage is due to a larger event is what is known as a
demand surge. The more homes and businesses that have been harmed by a fire, flood or
some other type of devastation, the higher rates of repair will be for everyone due to the
demand. Even coverage adequate for rebuilding during regular times is nowhere near enough
during the day, weeks and months following the event.
The larger the catastrophic event, the longer it will be before construction costs deflate to the
pre-disaster ones. In fact, the prices may never be quite that low again. If you have not
properly planned ahead, you could end up with only enough money to rebuild a portion of
what you had before.
Before you sign your policy, you need to find out if building code coverage is included in it.
When a fire or another event occurs that requires more than half of a building to undergo
reconstruction, the new work must meet current codes rather than the ones that existed at
the time of construction. This often means additional work. If your policy does not include this,
you could end up with thousands of dollars in uncovered expenses to return your home to a
functional and operational status.
Though many policies do have coverage that will pay for injuries to others, there are often
exclusions and rules that apply to these medical bills. First of all, these policies rarely cover
members of the home who should have independent personal medical insurance to provide
for any injuries sustained under your roof. However, other people and their injuries may also
be excluded from your policy.
There are many types of things that people add to their yards and homes for fun. While these
can be enjoyable for those who live in the home to share with family and friends, your policy is
not likely to cover any injuries that these guests in your home sustain. While a zip line in the
backyard may be a great idea if you have space, you will be financially liable for any medical
bills and related expenses to the injury.
Some types of additions and equipment may be able to be added to your policy for additional
funds. These types of additions should be reported to the insurance company when they are
built in and it is a great time to discuss the coverage related to the swimming pool, hot tub or
another amenity that has been added as a part of the home.
If you are operating a home business, the average homeowner’s insurance policy will not
cover those who are on the property for business purposes. This can include employees and
clients. Also, if you have people in your home who may be perceived as employees, their
injuries would likely not be covered.
Homeowner’s insurance has a dollar limit on the various aspects of the claim. If you do not
take the time to figure out what you need to adequately compensate you in the event of a
complete loss, you are likely to lose out on large sums of invested money. As you look over the
claims that you are considering, find out exactly what the categories and amounts are that are
included in your property claim.
If the amounts are inadequate to meet your needs, you can either shop around for a different
policy or speak to the agent about alternatives through their policy options. No matter which
company you choose, nor the policy and provisions associated with it, make certain that you
understand the financial details of what is and is not specifically covered. This will prevent you
from any shocking situation further along.
Hobbies and collectibles are often going to exceed the coverage associated with any basic
policy. Even those who have a higher limit for payout may not provide adequate coverage for
the amount of the goods. In fact, without the proper documentation, some of these valuable
items may not be recognized at all by the insurance company, further increasing the losses you
are experiencing as a result of the event.
Equipment associated with activities can become quite expensive for enthusiasts. Often,
people do not even really consider the cumulative value of the things that they own in a
particular category, such as an extensive sound and recording system or top of the line SCUBA
gear. In fact, AmeriDri just completed a claim where the homeowner had expensive scuba
gear that was not covered due to the cost of the scuba gear. Always discuss all high valued
contents with your agent so you can avoid no coverage.
Those who indulge in collecting or have family members in the house who do can invest
thousands upon thousands of dollars over time as their skills and interests become more
expert. For someone who obtained their homeowner’s insurance policy when the stamp
collection only had two stamps instead of two hundred and two, it is definitely time to alter
the insurance policy.
These are just a few of the examples of how your basic homeowner’s insurance policy may not
be adequate when you need it most. However, by learning about the ways in which your
policy is inefficient, you can work to correct it. Though it will take you some time and
additional study, it will be well worth it.
Once you have figured out exactly what types of coverage you need and have been able to
secure them at great rates, you will be able to rest more soundly at night. Knowing that your
family, home and belongings are all taken care of, along with any guests that you ever have at
your home is sure to ease your mind as a business-minded homeowner.
WHAT EXACTLY IS A HOME INSURANCE RIDER?
Because there are so many things that are not covered by these regular policies, virtually all
homeowner’s insurance companies will provide an assortment of riders that policyholders may
obtain at an additional rate. These are simply add-ons to your policy that you have personally
chosen. They are based upon your belongings and your needs.
Most policies do not cover floods and earthquakes. For those who live in areas likely to
experience either of these events, obtaining a rider to cover damage and loss during one is a
good idea. Though it will cost a bit more each month than if you had not added it, when the
time arises, you will be glad that you had invested in the rider.
The amount of money that you spend on riders will depend on several factors, the first of
which is what your regular policy covers. For instance, if you are in need of additional jewelry
coverage, and Original Policy A covers the first $2,000 of your lost jewelry and Original Policy B
only covers the first thousand, you will obviously need a larger rider for B than A.
Even if you do not own a great deal of jewelry, it is possible that you do not have enough
coverage. Though when you look at your engagement and wedding set you probably see the
love and special memories, in relation to your insurance, you should be looking at dollar signs.
The same is true for antique family heirlooms and other antiques in the home. You may be
surprised to discover the value sitting in your jewelry box each night!
Gun enthusiasts will need to make sure that their collection is covered, keeping in mind that
many insurance companies will have stipulations related to proper care and storage of the
firearms covered by the rider. Those who add to the collection on a regular basis will need to
update their policy as well. This includes good record-keeping.
The riders that are available to you will depend in part on the insurance company that your
policy is through. Every company does not offer every choice conceivable. Therefore, you
should use it as a consideration point when looking at your options.
Even if you already have an existing policy, you can switch to another company when it is time
to renew, particularly if the new one offers riders that are important to you and you can get a
better deal on your coverage. Do not make the mistake of undermining the necessity of riders
and keeping them current with your belongings.
Some do this thinking that nothing is going to happen to their home, or that they want to
avoid increased premiums for a bit. However, if a break-in, fire or another devastating event
occurs, those items not included in the policy will not be compensated for during the claim
processing.
WHO NEEDS TO CONSIDER ADDING RIDERS TO THEIR HOMEOWNERS INSURANCE POLICY?
While those who own an excessive amount of goods generally have the appropriate riders
added to their policy, people of lesser means do not always think to do so. The very wealthy
have attorneys and accountants working to make sure that the finances of these folks run
smoothly. Most people, however, have to do this for themselves.
Unless you have a staff of professionals handling your financial affairs, you will have to explore
your choices for insurance riders on your own. Remember to consider your opportunities with
at least four or five different insurance companies. Though this may seem excessive, this is a
large commitment.
Although you can certainly change insurance providers each time your policy comes up for
renewal, that is not a very good approach. If you have an existing policy, you do the research,
and make a change to a new company in order to receive the coverage and rates you want,
you should stay with them unless something causes you to need to switch down the line.
Many companies offer incentives the longer people have had policies with them. While many
people want rebates, some providers offer rate reductions instead. If you and your loved ones
own more than the bare minimum of assets, you should strongly consider obtaining the
appropriate riders.
When you are considering adding riders, you need to realize that this may increase your
monthly insurance premiums by anywhere from 1 to 20 percent. Rather than look at this as an
unreasonably charged addition, be grateful that these riders exist to help cover those extra
special items in your home. Believe me when I say that I run into this at least 5 or 6 time a
month. It is always sad when your property has some type of disaster and you are not fully
covered. In Colorado Springs, sewage backup in a basement is the most under insured disaster
we are called out to mitigate.
HOW TO PREPARE FOR YOUR INSURANCE NEEDS
If you are in the process of purchasing a home and in need of the best insurance for your
needs, you need to set aside several hours so that you can review it carefully. This means
gathering your materials and going to a quiet place with no distractions. While you are likely to
use your computer during this time, you need to turn off Skype and any chat type of
communications that can disturb you.
By focusing in on the insurance aspect for this time, you should be able to clearly figure out
your plan. At the very least, during the first stage, you will be prepared or have already made
contact with an agent from the companies that looked most promising. Remember to keep an
open mind during the investigative process and to be open and honest with the agent.
If you have not yet decided on which company to go with, tell the agent that at the beginning
of the meeting. You should have all of your information clearly organized so that you can
converse like a pro. This will provide you an advantage during the negotiation process.
Let the agent know your needs, including specific amounts for various types of coverage. If a
competitor provides a lower rate on a particular rider, mention it to the agent. In some cases,
you may be able to get them to come down on the overall price in order to get you as a
customer.
The same thing is true if you have a policy already. Adding riders to an existing policy or
expanding on those you already have is a fairly routine procedure. Your insurance agent
should be happy to help you make these additions to your policy. You may also want to discuss
any incentives or package type of deals that you might receive at that time. After all, it never
hurts to ask.
Those with an existing policy that are contacting competitors should wait until their current
policy is within a month or two of renewal. Then, you can speak with the other companies,
letting them know what you have and discussing what types of incentives could be used to
lure you to their company. Speak to them openly regarding the riders you need and how much
you believe them to be worth each month.
Once you have a few of these, you can contact your current insurance agent and discuss what
offers they might provide that are better. It is possible that they can give a boost to the
coverage or a reduction in rates on one or two of your riders in order to retain you as a
customer. Of course, the exact specifications of what they are allowed to do will depend upon
their employer.
PRIORITIZE YOUR RIDER NEEDS
As you are preparing to speak with an insurance agent, you will need to know which riders are
most important to you, along with the value that you need for each of them. In each category,
find out what the basic payout will be for it. For instance, your basic policy coverage may pay
out $1,000 for something, say your important documents, photos and related items. If the
total worth of your belongings in that category is $2,000, you will need an additional $1,000 in
coverage through a rider that specifies these items.
The more belongings that you have, the more extensive this process becomes. However, most
people start out with smaller amounts of goods that need riders. By the time they require
several, most are comfortable with the process of obtaining them when needed.
If you own a second residential property, that should certainly be a priority in your list of
riders. Rather than obtaining a second homeowner’s insurance policy, you can generally get a
rider that covers rental property or your vacation home. This is a far more affordable
alternative and reduces the total cost for insurance and the number of bills you must pay
monthly.
As was mentioned before, most policies today do not include coverage to bring buildings up to
code in the event more than half of it requires repair. The good news is that there is a rider to
cover these additional costs. Depending upon how old your home is, the laws and ordinances
that govern the codes may be drastically different than the ones for today. This could easily
turn into a large sum of money. Find out if you need this coverage. If so, it needs to be right
under the secondary properties as far as priorities go.
Those who own and operate a small business from their home cannot afford to be sued by
those who are there “on business.” You want to be sure that any person who is on your
property will be covered by the company should they suffer any injuries while there.
At the same time, workers’ compensation for “employees” is often recommended for those
with casual workers. From the kid down the street who mows your yard once in a while to
your daily child care provider, you can get a rider to cover your workers. Find out what the
laws are in your jurisdiction to ensure that all of your paperwork regarding those who work on
your property are appropriately filled out and filed with the agencies who need them.
Another important consideration is theft. While nobody wants to consider a break-in, or even
an inside job, the reality is that many homeowners go through this every year. Make certain
that the coverage amount is adequate for your family. Also, read the fine print as far as this
section goes to make sure you understand the exclusions that apply.
There are many other types of riders, some of which may be more important to you than
others. Make a list of them all and then prioritize. You and your spouse may want to do that
part together. After all, hobbies and collectibles need to be added and agreed upon even if
only one party is interested in it. The financial investment still requires coverage.
LOOK INTO SEVERAL INSURANCE COMPANIES BEFORE DECIDING AND REDUCING COSTS
Once you have done the research regarding the policy and riders that are most relevant to
you, you will have to speak with agents from several companies before deciding which one to
go with. Even if you already think you know which one you want to use, you will feel even
better about your choice if you take this step.
You can talk to others and go online in order to find out which insurance companies serve your
area. It is your choice if you want to work with an exclusively online provider or one where you
can walk into the office. This will depend in part on your schedule as well as your
communication preferences.
Either way, look into the reputation of each of the companies that you are thinking about. You
may have as many as eight or nine on your list at this point. Keep in mind that you are looking
for the best, not the fastest to get signed up with.
Go to independent review websites for this information, not the insurance company sites. If
you are looking at an agency in your local environment, make sure that you are reading about
that specific branch, and not the company as a whole, particularly in regards to customer
service. For many, being able to speak to an agent face-to-face helps them to feel comfortable
taking care of the monthly expense.
Others are quite comfortable with the Internet and may choose an insurance company with
only an online presence. In this case, the online reputation is the thing to go with. Looking into
how the businesses treat consumers is very important.
Keep your eye out for reports regarding how quickly they process claims and any difficulties
that customers have encountered when attempting to recover from a theft or other disaster.
At times, people will give incredibly low and unjustified ratings to companies when they are
going through something traumatic.
A more careful look may reveal that the person is upset about the flood or other incident and
that the insurance agency did, in fact, provide services and payments in a timely manner. This
is why you need to check out the reviews rather than depending upon rating alone.
Also, it is important that you make sure you are viewing sites that are not funded in any way
by the medical or insurance industries. Read the pages that tell about the company and look
for ads on the page. One strategy that many businesses have is to invest as a team into a
website that contains “reviews.” Then, they have negative ones about themselves removed
and might even place false positives on some of their names.
Finding out who is behind the site and checking out more than three of them should help you
to be sure that you are getting a fairly well-rounded view of each of them. Then, see which
riders each of them offers. If any of them did not fare well in their reviews or do not have the
riders you need, scratch them from your list.
For those who are shopping online, look around for codes and discounts that you may be able
to apply when you first sign up with a company.
Contact each of the insurance providers that are on your list still, and speak with a
representative regarding your needs. Make certain to let them know that you are speaking
with other agents as well. During these communications, pay attention to how you are
treated. If the agent is ever rude or disrespectful to you, you can expect that behavior to only
get worse after you sign with the company.
Make your decision based on the policy and riders you can get for a price you can afford
through an agency you trust.
KEEP SAFE COPIES OF YOUR INSURANCE POLICIES
After you have completed the paperwork for your insurance, you should have a few copies
made. You can keep one locked in a fire-proof safe at your home. If you have a wall safe at
your office that only you have access to, you may also want to place a copy there. Many also
decide to use their safety deposit box as a way to protect the documentation, or even using
the safe of a trusted family member.
The important thing is that you have at least one, and preferably two, policies stored off of the
property. Even if you have a fireproof safe, it is still possible for the contained items to become
damaged. Rather than take this risk with your only copy of the policy, be sure to have at least
one hard copy in a safe location.
UPDATE YOUR POLICY AND RIDERS AS NEEDED
No matter how carefully you craft your basic homeowner policy and the riders attached to it,
you are likely to need to change it at some point. Any time you sell property that is covered or
purchase new items that need to be, you need to contact your agent. It is important that you
do not delay on this action.
In addition to considering it when you make these types of transactions, you, and your spouse
if you have one, should go over the policy, riders and your belongings. This way, if any item
was overlooked during the sale or purchase process, you can rectify the situation. Make it an
annual event, or even semi-annual if your family does enough trading in a particular type of
item.
CONCLUSION
Owning a home is a tremendous responsibility with many benefits as well. Taking care of the
business side of matters will allow you to most fully enjoy home ownership. The right
insurance coverage is vital not only to your peace of mind but to you and your family in the
event something happens.
If you have taken the time to properly do your research and been able to negotiate with your
insurance agent successfully, you should be satisfied with your coverage. The time you took to
educate yourself and arrange a fair price for your riders will pay off in the end. Then, you will
have ample time to relax and enjoy living in your very own home!
I would also like to mention that if you have an impact resistant roof on your home you could
save up to 36% on your yearly homeowner’s insurance policy. I used to own a roofing
company and I saw this savings first hand. Here is a link to a great roofing company that can
help you better understand the savings. http://www.restorationcoloradoroofing.com/
Below are links to insurance agencies that I have personally done work with and
recommended you interview these agencies.
http://www.cuffeinsurance.com/
https://www.farmersagent.com/molsen#Agent-Home
https://www.statefarm.com/agent/US/CO/Colorado-Spgs/H-P-Watson-4T1MH1YS000
