A Lesson about Hazard Insurance in California
If you’re a home buyer getting some quotes for hazard insurance, you look for the lowest possible insurance premium, right?
I used to think so until I got a thorough insurance lesson from a very smart Sacramento insurance agent. A miscalculation on hazard insurance could end up being a BIG and unpleasant surprise in a much higher than expected annual premium to the homebuyer to get the actual coverage they need.
Forego the increase and a homeowner is in a precarious place of not having enough coverage. Here are some special items to consider when shopping for insurance: Be sure to ask your insurance agent what their policy is for “loss of use” coverage. This is to help replace the loss of use of the home that has sustained damage and is unlivable for a period of up to one year. What would it cost to get a suitable home until the repairs are made?
Check policy coverage for “building code and ordinance upgrades”. If an older home sustains damage, local codes or ordinances may require “upgrades” (for compliance with code or ordinances changes after the home was originally built) during the repair. The insurance policy may not cover these “upgrades” or they’ll only cover a small percentage of them. Make sure you ask your insurance agent about this when deciding on what kind of coverage is adequate. You might be surprised at which companies cover 100% building code and ordinance upgrades and the ones that don’t. I know I was!
If the home is located in a rural area you might want to check with the local Fire Chief and find out what “protection class” the home is in. If the home is located five miles from the nearest Fire Station and there is no fire hydrant near the home, this is a protection class 8, 9, or 10 and will increase your premium dramatically. While you’re at it, find out if the nearest Fire Station has a paid or volunteer staff. This is also a major factor in the annual premium you’ll pay.
Be knowledgeable when shopping for California homeowners insurance!