Over the last few weeks, we’ve been talking about homeowner’s insurance a lot. Specifically, what homeowner’s insurance is, why it’s a good idea (and mandatory if you are taking a loan to purchase a home), and what it covers. Today, we will discuss what it might not cover; sometimes it’s a good idea to purchase additional insurance coverage for these items. As an initial matter, no two insurance policies are the same; it pays to read the fine print and inform yourself of what is actually covered by your policy.
Generally, “floods” are not covered by homeowner’s insurance. Sure, it covers “flooding” from a burst pipe or something of that nature, but an honest-to-God flood caused by torrential rain is rarely covered. Living in Southern California, you probably don’t need to purchase additional coverage for floods. However, as the global climate changes, more areas of land will be flood-risks, so it would be wise to keep an eye on that as time goes on.
The vast majority of homeowner’s insurance policies do not cover earthquake damage; the California Earthquake Authority sells earthquake insurance, as do most insurance companies. Given that most Californians are within 30 miles of an active fault line, it would behoove you to spend the money now. It is also worth noting that many companies will offer you a rebate or discounted premiums if you invest in home upgrades that make your property more resilient to earthquake damage.
Most homeowner’s insurance policies do not cover damage from wear and tear, or damage caused by renovations. While most contractors have a builder’s risk policy, it is important to note that these policies only cover new construction, it does not apply to existing structures. Thus, if you are installing a new roof, you’re going to want additional insurance coverage just in case.
At the Chernov Team we understand that knowledge is power, and knowledge of how to
insure what is likely your largest asset is powerful knowledge indeed. At the Chernov Team we
know that whoever comes to the table most prepared leaves with the most, and the Chernov
Team always leaves the table with the most.