Identifying the top homeowners risks and what you can do to lower them
According to a recent Chubb survey, 30 percent of homeowners surveyed in early August said they were considering moving out of the city due to the pandemic. Keeping that in mind, there are many common risks that come with homeownership that every homeowner or potential buyer should be made aware of. With that in mind, we compiled a list of 11 of the top homeowners risks, along with tips on what you can do to lower them. Personal lines producers, share these risks and prevention tips with your clients and prospects.
- Weather damage: According to Travelers Insurance, half of property loss claims came from homeowners in parts of the country prone to wind, hail or other water-based damages. That makes weather damage number 1 on the list of top homeowners risks. These can also include damages caused by falling tree limbs or branches, so it’s recommended you check any trees on your property to help stem potential losses.
- Water damage: While many homeowners may think of water damage as being the result of heavy rains or hurricanes, it’s more likely to result from regular appliance issues, clogged drains or broken pipes. Keep a close eye on older appliances for leaks or cracks and replace them as needed. It pays to remind clients: without a specific flood policy, their water damage claim from rising waters may not be insured.
- Frozen pipes: Damage caused by frozen pipes can be especially disastrous, potentially requiring significant amounts of costly repairs. If you live in an area prone to long, cold winters, it’s a good idea to consider taking steps to winter-proof your pipes to help avoid freezing.
- Remodeling: As many homeowners already know, any remodeling work done to a home is very likely to raise its value. Insurance Information Institute (III) states that any homeowner who’s completed a remodeling project must have the increased value reflected in their policy; otherwise, any future damage to that remodel project may not be adequately covered by your policy.
- Fire damage: While fire damages statistically don’t occur as often as water issues, the repairs can be more costly. Fires can start from something as small as a cooking accident or overloaded circuits and blow up into major damages. Travelers’ claims group estimates that major fire damage accounted for 25 percent of the costliest claims made between 2009-2016. The don’ts here are obvious: never leave a candle or fireplace fire unattended; keep fire extinguishers on hand and make sure everyone in the home knows how to use them; ensure your smoke detectors are working properly.
- Wildfire damage: While we read about fires in California and Colorado, truth is, wildfires occur in every state except Delaware and D.C. All homeowners should keep their gutters cleaned out; remove dry brush from around the home; avoid stacking firewood or other flammables next to the house. For homeowners in wildfire-prone areas, you can find additional tips and information here.
- Earthquake risk: Earthquakes are another risk not covered by homeowners insurance; a separate quake policy is needed. The U.S. Geological Survey says 16 states are at high risk for a damaging earthquake in the next half-century: Alaska, Arkansas, California, Hawaii, Idaho, Illinois, Kentucky, Missouri, Montana, Nevada, Oregon, South Carolina, Tennessee, Utah, Washington and Wyoming.
- Dog breed owned: Homeowners with certain breeds of pet pups may love their furry friends, but they can prove a potential headache for insureds. If your dog attacks or bites someone on your property, the costs could come back to bite you in a big way. The III recommends potential homeowners have a detailed background and history about their dog when discussing policy with their insurance agent.
- Theft: This isn’t something many homeowners like to think about, but the truth is theft generally makes the top of the list of property loss claims. Homeowners can take steps to help curb this by adding extra outdoor motion sensor lighting and smart home alarm systems, cutting back shrubbery near windows and not broadcasting their travel plans on Facebook.
- Home liability limits: The III recommends that personal liability limits should be carefully calculated to cover these top homeowners risks, as many have a tendency to underestimate the amount of coverage they should have. When working with an agent, it’s advised that homeowners take into account just how quickly their personal liability can be taken up by medical expenses or major accidents and go from there.
- Swimming pool: Everyone loves having a personal swimming pool in their backyard during those hot summer months, but this luxury feature can easily increase insurance rates due to added liability coverage needed if someone gets injured. If you’re set on having a pool, an umbrella policy is recommended for additional protection and coverage.
- Credit history: Insurance companies can use your credit history to help them create home insurance rates in all states except California, Maryland and Massachusetts. They factor in things like payment history, outstanding debt and length of credit history, among others.
More ways to lower these top homeowners risks
Now that you know some of the major risks involved, here are a few steps you can take to help lower them:
- Get recommendations on an agent – While this might add some time to the process, it can help you save more money in the long run. Ask your friends and family who they’ve used, check consumer guides and the Yellow Pages, and online insurance quote services. Consider both the price and how helpful the agent will be in filing a claim; ask what they can do to help you keep costs under control.
- Buy policies for home and auto from the same insurer – There are companies that offer package deals on home, auto, and liability coverage. Check with your provider to see what type of deals they offer on policies.
- Improve security – To help discourage theft, ask your provider about potential discounts on items like burglar alarms or dead-bolt locks. They may also be able to hook you up with deals on more sophisticated systems.
- Maintain credit score – If you don’t reside in one of the three states listed above, you’ll want to keep a close eye on your credit history when shopping for a home. Your insurer can advise you on steps to take to resolve any outstanding credit red flags. Be sure to pay all bills on time, keep your balances low, and not take on more credit than you need.
- Look for other discounts – Each provider offers unique discounts that can help you put a little extra cash back in your pocket. Check with your insurer to see if there are any additional discounts you can have added to your package.