Importance of Insurance
Short and simple story lessons of insurance that can create a huge impact for you and your family.
"A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. "
The 3 Insurance Terms You Should Know
1) Dwelling Coverage
2) Premium
3) Disqualifiers
Here we will tell you a story using the 3 most critical terms in home insurance that every policy holder should know:
Jack and Jill went up the hill...
...And they found a really nice house that had a beautiful view. It overlooked some hills, and it sat on a great plot of land that others would also love to have.
They talked to the owners of this house and found that they had just decided to list it for sale, for Jack and Jill got first dibs on this home before it even hit the market.
They were able to buy the property for $1,000,000, having taken out a mortgage, and now they needed to shop for homeowners insurance.
The insurance agent advised them on the policy that they should get while also making sure it had an affordable premium.
Additionally, their property had nothing that would count as disqualifiers, such as trampolines, certain kinds of dogs, etc.
3 seasons pass, and a there was terrible weather. Jack and Jill went down into town, but they later found out that there was an unfortunate landslide, and now part of their house had been severely damaged. They were unable to live in it.
Jack and Jill decided that this property was too dangerous for them, and they were going to try and sell it.
When they contacted the insurance company, they accepted their claim, but they only paid out $250,000.
It turns out, because Jack and Jill were more focused on the premium, they didn't understand the dwelling coverage, which essentially means that the insurance company is only insuring the structure on the land, not the entire value of the land and house.
The land was valued at $750,000 while the house that sat on it was valued at only $250,000. Additionally, Jack and Jill didn't get any coverage for their belongings, so they actually took a loss.
Are You About to Get Screwed Over for Not Knowing the Difference? Because Jack Sure Did.
Flood insurance vs homeowners insurance.
Homeowners insurance covers structural damage to a house or complete replacement, but there are certain clauses that insurance companies add in order to try and protect their own assets.
Flood insurance specifically covers scenarios where there are floods, but some insurance companies add clauses to have loopholes, some of which may include one such as: the flood must have been directly caused by rainwater. If the flood occurred from a ditch or creek that overflowed, that is not covered.
Avoid Being a 2018 "Hurricane Harvey" Victim
Many families experienced the Hurricane Harvey flood, and they have to carry as much as they could in waist-deep water. They lost their homes and their lives changed forever. Many of these homeowners ended up going into foreclosure or having to sell their property for pennies on the dollar.
Flood insurance could have saved many of these families from a horrible financial situation after the effects of the hurricane.
Rockland Insurance Agency is one example of a company that is specifically trying to help homeowners prevent this from happening again.