As an insurance agent, a primary part of my job is to compare coverage between different insurance companies and policies.  As a result, it can get quite hairy when a client asks me to beat a rate they received from another insurance agent.  With all the coverage combinations, and home policy types available to today’s insurance consumer, the lowest rate can get you in trouble.  In most cases, it doesn’t make sense to choose the lowest rated home insurance policy.  To help you, I’ve come up with the following items to help you avoid getting cheap rates that ultimately cover nothing.

Actual Cash Value Policies – Dwelling policies

With all the different insurance policies available, the cheapest policy sold is generally the Dwelling fire policy.  This policy was designed to provide basic financial protection for homeowners and landlords.  Generally, agents write this policy on older homes and properties that do not qualify for traditional home insurance policies.  In the case of the dwelling fire policy, these basic policies are generally written to protect the home against catastrophic total loss due to a covered peril.  While that sounds ideal if you’re looking for the cheapest home insurance policy, the downsides may outweigh the cheap upside.

One major downside of dwelling fire policies is that they are generally coinsurance policies.  In short, this means you won’t be filing any partial claims for roof replacement or broken trees.  Another downside to dwelling policies is that many of them have little or no liability coverage.  Unlike their more expense counterpart, if your neighbor’s kid slips and breaks a leg on your premises, you could be held liability for the child’s doctor bills.  Another gaping hole in the coverage provided by the Dwelling fire policy is the lack of content coverage.  Imagine having a fire, losing all your personal belongings and then finding out that your policy was written to a level that only pays off the mortgage company.  Long story short, if you plan to live in your home, try avoiding a dwelling policy.

Foundation Water Damage Protection

I always say that there are two types of homes in Texas; those with foundation problems, and those with repaired foundation problems.  The housing shortage in north Texas only makes things hairier.  Imagine purchasing a newly remodeled home only to find that you have a water leak underneath your home’s foundation.   In talking to the leak expert, you find the only way to repair the leak is to pay thousands of dollars to access, diagnose, and repair that leak.  Is this covered under your home insurance policy?

This is another case in which choosing the cheapest policy is not the best course of action.  For additional bucks each year, many insurance companies offer some type of foundation coverage which gives you access to the plumbing leak.  While the insurance company does not pay for the actual damaged pipe, the cost to access a slab leak usually exceeds the cost of repair the damaged section of pipe.  With the number of homes with foundation problems, it is probably a wise course of action to ensure your get this coverage.

Slow and Continuous Leak  or Sudden and Accidental Water damage coverage

Aside from slab leaks and water backups, Texas home policies can be a bit confusing when determining the level of water protection.  While most Texas homeowners insurance policies will cover damage resulting from a broken hot water heater, dishwasher, or toilet, coverage resulting from slow and continuous leaks could cause a problem.

Not all policies have the option of both types of water damage.  In the case of covering slow leaks in Texas, each company has a different method of covering the resulting damage.  Some companies will cover a slow leak only if you report the leak within 14 days of the occurrence.  Other companies will cover damage resulting from a slow leak regardless.  The takeaway here is simple.  Ask your agent if the policy provides coverage for water damage.  If he (or she) cannot answer that question, then it’s probably time to find another agent and policy type.

All home policies are different

Since there are so many differences between policies, does it make sense to revert to the cheapest one?  Now that you’ve looked at this article, do you have questions about your home insurance policy?  That last thing you want to do is purchase a useless policy.  The only way you know that is after a claim.  Did you purchase the cheapest policy when you purchased your home insurance?  Give us a shout and let us take a look.