Colorado Group Realty Sits Down With Joanna Allison, An Insurance Agent With Allstate Insurance, To Answer Questions On Homeowners Insurance

What does homeowners insurance cover? 

• It covers your dwelling and any other structures on the land such as sheds, a barn and a detached garage. It also covers personal liability and personal property. If someone has a lot of assets, we always recommend an umbrella policy, which essentially extends your liability coverage. This is especially valuable to anyone who has a teenage driver in the house, high value assets, rental properties or travels frequently. We tell clients that when you watch your teenager drive off, all your assets are packed in the trunk with them. The umbrella essentially extends your coverage to protect you from losing everything, should you be sued. As assets get larger your risk gets larger.  For high value possessions, we offer scheduled personal property, which lists specific items based on purchase price or valuations.
• Insurance only covers you up to the limit on the policy.

Is it illegal not to have homeowners insurance? 

• No it’s not illegal if you own your home outright. If you have a mortgage, the lending company will require homeowners insurance.

Are there different options for the type of homeowners insurance you can purchase? 

• Absolutely, it all depends of the customer’s specific needs. Some of the options include, fire only, secondary homes, landlord homes, rental homes and properties during construction.

How much homeowners insurance you do really need? 

• You need to cover the cost of replacing the dwelling. If you have a $1 million property and the dwelling is worth $500,000 and the land is worth $500,000, you only need to insure for $500,000. Homeowners insurance does not include the land your dwelling sits on.

Does it matter how much stuff I have? 

• Basically, if you tipped your house upside down, whatever falls out is called personal property. The personal property piece of your homeowners policy is typically a % of the dwelling amount and you can choose the right number to cover your possessions.  However, there is usually a limit based on the value of the dwelling itself.  In an extreme example, insurance on a house worth $500,000 will not cover $3 million worth of personal belongings.

If my house gets destroyed for whatever reason, will my homeowners insurance cover everything? 

• No, your individualized policy will dictate what is covered. We work under the premise that damage has to be sudden or accidental, not a result of poor maintenance. Policies tend to cover the most common perils such as fire and smoke, hail, windstorms, falling objects such as a tree, freezing of plumbing and water damage from plumbing. We have a saying that if it’s not included, it’s excluded.  An adjustor will make the final call on what is covered. When your claim is approved, the replacement is equal to what you had before. If you had laminate counter tops and flooring in the kitchen, you can’t replace them with granite tops and wood flooring. If someone wants to upgrade, they will be limited to the original value as per the policy limits.

Are there certain things or situations my homeowners insurance will not cover? 

• If it is sudden or accidental and included in your policy, then it is covered. Most people are surprised that damage caused by failing to maintain a property is excluded.  Each situation is unique so you are encouraged to contact your agent who can put you in touch with a claims adjuster.
• Additionally, if you own a piece of vacant land, the liability piece of your coverage will extend from your homeowners policy. For example, if someone is injured on the vacant property, you are covered. This changes as soon as you start building or put a structure on the land.

Does the homeowners insurance cover the cost of renting a property while repairs are done after an accident? 

• Yes, you will be covered for additional living expenses such as rent, pet care, hotel accommodation and food if your own dwelling is deemed uninhabitable. The amount is a percentage of the dwelling’s value.

Do I have to review my insurance regularly to accommodate changes in building costs? 

• In a nutshell, yes.  Allstate offers 120% of the dwelling amount as a cushion to absorb increases in building supply costs. We look at the price per square footage in an area, what kind of construction was used; is it a modular or a custom home, the purchase price and the value in the assessors report to come up with the replacement cost or dwelling amount.

Does the cost change if you have never made a claim, or are a first time buyer? 

• There is a whole formula based on a ratings system that insurance companies follow to determine the individual cost of insurance.  This could include someone’s insurance experience, any claims they have made, whether they are male or female, married or single, their drivers record and credit rating. If someone has made multiple claims for the same thing, such as water damage, they may find it tough to get insurance.

Do I need homeowners insurance if I am renting a property? 

• No, you would get renters insurance to cover your personal property and liability. The landlord should carry the homeowners insurance for the dwelling. The rental insurance will have a limit of liability coverage. For example, if the property burned down and you were found at fault, your renters policy contains liability coverage to cover the rebuilding of the home – but only up to the liability limit on the policy.

What happens if I buy a property with a friend or family member? 

• You would need to buy insurance in the same name/s on the title.

Is there anything specific to Routt County and Colorado I should be aware of?

• The biggest thing right now is fire mitigation. There are strict rules on wildfire prevention, which means clearing brush and trees away from any structures and creating a defensible space. The fire department must have clear access to a property and if you are more than 10 miles from the nearest fire department, it can be difficult to get insurance.
• Other things that we’ve seen here relate to water damage. If tree roots grow and cause a water pipe to burst, the pipe damage is not covered. The same goes for water backup. For example, if you have a sump pump, the water damage inside the property is covered but not any external pipe damage.  We offer water backup insurance specifically if you have a sump pump.