The two most critical issues to understand when purchasing home insurance

If you’re shopping for home insurance, there’s a good chance it’s because you’re purchasing a new home.   And there is A LOT that goes into purchasing a new home:  possibly selling your existing home, getting ready for the move (packing, the physical act of moving— SO painful) finding a mortgage broker or loan office and getting all of the paper work needed for the mortgage application—it’s a lot, and although worth it to get to your new house, it’s not all that enjoyable.  If you’re like most people, getting home insurance is just another check on a very long list of “to do’s,” when you’re buying a house, but don’t overlook the importance of protecting this asset (and all of it’s belongings)  that you’re putting so much of your time, thought, energy in to purchasing—once you’ve purchased the home,  it’s of equal importance to make sure you know “how,” and “what,” is protected as part of your home insurance.

Below are the two most important considerations we discuss with all our customers when they are looking for home insurance


Does my policy include full value replacement on my roof?  

Friend, if you only read one section of this post— READ THIS!!!   This is a biggie, and most people do not understand the language carriers use to describe roof coverage.   Full Replacement Value (“FRV”) means that should a catastrophic event happens to your roof, the insurance company agrees to repair or replace your roof to how it was before the catastrophic event.   Make sure to ask your agent if your homeowners policy includes full replacement of the roof.   Several policies today do not provide full replacement and instead provide Actual Cash Value (“ACV”)  replacement.  This means that if a catastrophic event occurs, the insurance company pays you the depreciated value of your roof.  As an example, if your roof is 10 years old, the insurance company will depreciate the value of your roof by 10 years and only pay you the depreciated value of the roof.  Often, the depreciated value is not enough to replace or repair your roof if you have significant damage.   Understanding your roof insurance can save you SO many headaches down the road if you ever have an issue with your roof.

In my town (Dallas) we had a major tornado barrel through the middle of the city 3 years ago damaging and destroying tons of houses and buildings—some are still being repaired.   We talked to many people who didn’t understand their roof coverage and were disappointed to learn that their roof coverage was ACV.   Don’t get me wrong, ACV coverage may be right for you and your circumstances, especially if your roof is new and/or you live in area that isn’t often effected by catastrophic events (hail, tornados, hurricanes) just please make sure you know what you’re buying in this regard.  Again, it’s better to understand this now then when you need to use it.

Should I consider endorsements?

Endorsements or riders are “add-ons,” to standard home insurance policies to provide additional or extended coverage for issues or items not included in the original contract or policy.  Endorsements are always optional but do increase the amount of your policy premium.  Included here are a few of the endorsements we most often discuss with our clients.  First, there is an optional endorsement that protects the rebuild cost of your home– an inflation guard endorsement. They’re pretty common and automatically increase the amount of insurance on your home by a certain percentage each year to account for the disparity caused by inflation.   Second, many home insurance policies exclude coverage for mold or water leaks and flood damage.  Water damage can be very expensive, so we always discuss this endorsement with our customers, as it can really help save cost should you ever have a water leak (think dishwasher leak, clothes washer leak—my husband and I had to pull out an entire wall in our previous house for this type of leak) or a drippy upstairs faucet that was on while you were away for the weekend and now has caused damage to the down stairs ceiling, your kitchen cabinets, countertops, wood floors, carpeting and furniture— yep, true story.    And thirdly, you may consider endorsements for your important belongings, including fine, expensive jewelry, like a diamond engagement ring, or heirloom jewelry.  People sometimes also include endorsements on their home insurance policies for: fine art, priceless stamp or coin collections, antique cars kept in the garage.  Endorsements are a really good way to extended coverage for situations that would incur costly repairs or costly replacement, but they themselves come with a price so be sure to discuss with your insurance agent to make sure you’re getting what’s best for you and your family.


Thanks for reading, I hope this was helpful to you.  Best of luck with your home insurance needs.  We’re here to help if you need us.   Everyday is a new day, so enjoy what’s before you!