Home Insurance

Common Gaps in Home Insurance

What does home insurance cover? Homeowners often assume they have coverage for everything located on their premises, but all policies have built-in limits. It’s important to discuss your insurance needs with a licensed agent, so that you can add coverage or increase some of those internal limits on your individual policy. Here are some common items that people forget to include: 

1. Boats and trailers: If not added specifically to a policy, there is a $1,500 limit for watercraft, including their trailers, furnishings, equipment and outboard motors.

2. Trailers not used with watercraft: If not added specifically to a policy, there is a $1,500 limit for trailers.

3. Jewelry: If not added specifically to a policy, there is a $1,500 limit on jewelry and watches, if they are stolen.

4. Firearms: If not added specifically to a policy, there is a $2,500 limit on stolen firearms.

5. Business use items: There is a $2,500 limit on items used in any time or in any manner for business purposes while on the residence premises. There is a $500 limit if something happens to those items away from the residence premises. Business use items can be anything done in exchange for money, like lawncare, Tupperware, an online Etsy shop or even making shirts and decals with a Cricut machine. The verbiage that says “any time or in any manner” can even apply to laptops used to place or process orders.  

We often see other gaps in coverage, including: 

• Water damage: Damage to your interior caused by accidental discharge of water, such as a leaking pipe, is typically covered. However, water damage arising from the backup or overflow of sewers and drainage systems is not automatically covered. However, it can be purchased as additional coverage.
• Flood loss: Virtually all homeowner’s insurance forms exclude the peril of flood. Typically, flood insurance is purchased from the National Flood Insurance Program and is often the only source of financial recovery in the event of a flood loss. 
• Mechanical breakdown: Most homeowners know how costly it can be when malfunction occurs on major appliances, such as air conditioners, water heaters and sump pumps. The mechanical breakdown of appliances such as those are not typically covered. However, it can be purchased as additional coverage. 
• Personal injury: Personal injury is your legal obligation to a third party arising out of libel, slander, defamation of character, wrongful arrest, wrongful imprisonment or invasion of privacy of another. Even in today’s world of social media, many people overlook this important coverage and do not realize it can be added to their homeowner’s policy as additional coverage. 

Get a Free Insurance Review from an Experienced Agent

Georgia Farm Bureau’s dedicated agents will provide any insured a free insurance review upon request. The comprehensive review is intended to help you better understand your policies, as well as check for any available discounts or coverage gaps. An annual insurance review, which typically takes an hour or less, will ensure you understand your policy coverages and that you have chosen the right coverage for the right price.

Your agent will ask you about any recent changes to your home. Have you taken steps to make it safer? You may be eligible for new discounts. Have you added on or made a big purchase? You may need additional coverage to be truly protected. Do you have the right amount of liability coverage? You may consider an umbrella policy, which provides additional liability above the policy limit in the case of a catastrophic home or auto claim.  

Invest in a Company that Invests in Your Community

When you purchase insurance from Georgia Farm Bureau, a portion of your premium is invested back into your local community. On top of helping fix your neighbor’s houses and cars in their times of need — and yours, too — local agents help support many different events and organizations in your area. Your local Georgia Farm Bureau agent regularly and proudly sponsors school sports teams and charity events, and contributes to fundraisers for worthy causes. In addition, our employees all live, work and play in your community. When it comes time to shop around, give Georgia Farm Bureau a chance to earn your business. We are here to serve you, and are proud of our slogan, “Always the Home Team.”

Frequently Asked Questions About Home Insurance

How do I know how much to insure my home for?

Your Georgia Farm Bureau agent will meet with you to learn more about your needs and explain your options. Your agent will be able to tell you the approximate Replacement Cost Value to completely rebuild your home using current cost of labor and materials. You can use this information to decide on the amount of coverage that’s right for you.

What does Replacement Cost Value mean?

There are many different values assigned to your home. Realtors will generally be able to estimate the market value of your home by comparing it with similar homes in your area. Banks will often conduct appraisals to determine the value of your home to ensure they have sufficient collateral for a loan. Even still, local municipalities will determine a value for your home to collect various taxes.

Many insurance companies use replacement cost estimators to estimate how much it would cost to rebuild your home. These inputs are specific to your home and include square footage, materials used, type of foundation, garages, porches and even types of trim. These factors are compared to the current trends in construction. The purpose of this estimation is to ensure that the limit of insurance on your policy can sufficiently protect you in the event of damage to your home. The majority of the policies that Georgia Farm Bureau agents write provide Replacement Cost Value coverage.

What other items can be added to a homeowner’s policy? 

Some items that people commonly add to their insurance policy include jewelry, golf carts, ATVs, boats, firearms and artwork. If you want to ensure it is protected financially, we recommend discussing it with your agent to make sure it will be replaced if lost.

Why is the cheapest policy not always the best policy? 

The old saying, “you get what you pay for,” holds true for your insurance coverages. You need a policy that is affordable, but also includes the coverage you would depend on in the event of a loss. Could you afford to repair your house if a water line ruptured behind the walls? The answer for those questions depends on the person, but most would prefer that their insurance pay for the damages. Obtaining the proper coverage to protect you may cost a little more, but the peace of mind that you’re taken care of by a trusted company is well worth it.

Additionally, if your homeowner’s policy does not adjust Replacement Cost Value periodically, then the rising construction costs — labor, materials and appliances — may mean your coverage is outdated. Replacement Cost policies generally revise the dwelling coverage amount along with changes in construction costs. This allows you to rebuild your house from the ground up in the event of a total loss. 

While you may be able to buy a house for $200,000, rebuilding your home after a loss can easily cost double that. The market value of your home may change based on various factors that don’t necessarily follow the construction industry. For example, the value for which you could sell your home may decrease due to changes in the federal interest rate, but this doesn’t mean it would cost any less to build your home from the ground up. Similarly, shortages in construction labor may increase the cost of rebuilding a home, while not necessarily affecting the market value.

Should I insure my home for what it would cost to reconstruct it, or for Actual Cash Value?

Generally, if you have a mortgage, your mortgage company will require you to insure your home for the Replacement Cost Value. Even if you do not have a mortgage company, many people decide to continue to insure for the full value to rebuild their home with same or similar materials in the event of a total loss.  

You may decide to insure your home for Actual Cash Value, which accounts for depreciation, to save money on your annual premium. However, this often results in you contributing more than just your deductible to cover your repairs. For example, if a windstorm damages your roof beyond repair, a Replacement Cost policy would pay the amount of money it takes to replace the roof, minus your deductible. With an Actual Cash Value policy, the amount to repair will be reduced by how hold the roof is. If your roof is 10 years into a 20-year life span, your out-of-pocket costs will include the deductible as well as the depreciation calculated for 10 years.

A local agent can help explain these differences in policies. By allowing one of our Georgia Farm Bureau agents to provide you with a personal insurance review, we can help you balance your premium with proper coverage. Ultimately, the decision is yours on what types of coverage you buy, but it is important to have expert guidance along the way.  

Why does my premium increase every year?

While companies often review their rates regularly to ensure they are sufficient to pay for claims, your premium may have increased for a different reason. If you have a Replacement Cost Value policy, the amount to replace your home may have increased. As the coverage amount increases, so does the premium. In recent years, the increases have been much higher, causing homeowner premiums to rise. While that can be frustrating, the increased coverage ensures that you have enough money to repair or replace one of your most important assets.   

Everyone is familiar with inflation and its affect on your daily life. While you may have seen the prices of groceries increase, oftentimes this does not mean you receive more groceries. If your policy increases due to the increased coverage amount needed, you are receiving more value for your hard-earned money.    

What is a storm moratorium?

When a hurricane or tropical storm is bearing down on your neighborhood, your insurance coverage may be all you can think about. Many insurance carriers, including Georgia Farm Bureau, place moratoriums on new business and coverage changes during natural disasters such as hurricanes, tornados, flooding and wildfires. An insurance moratorium, also called a binding restriction, places a temporary halt on writing new business or making changes to an existing policy for a certain timeframe. It’s important to be proactive with your insurance needs and not wait until it’s too late.

Understanding Your Home Policy: Common Terms Explained

There are many types of coverage on a homeowner’s policy, and since many people don’t often review their policies in depth, these terms may seem unfamiliar. A Georgia Farm Bureau agent can explain what each of these terms means, and how they work in the event of a claim.

Generally, your policy will contain a coverage type along with a dollar amount. This dollar amount is the maximum amount an insurance company will pay in the event of a loss.

Dwelling (Coverage A): This is the primary coverage on your policy and covers the actual structure of your home, such as the foundation, framing, interior and exterior walls, ceilings and floors. This also includes your garage, porches and other features, such as fireplaces.

Other Structures (Coverage B): This amount of coverage is designated for detached structures, such as storage sheds, fencing and swimming pools. It is often calculated as a percentage of your Dwelling (Coverage A) amount. Your Georgia Farm Bureau agent can help ensure that if you have detached structures of high value, you have the right amount of coverage.  

Personal Property/Contents (Coverage C): This covers personal belongings typically found in your home, such as furniture, electronics and clothing. While this covers your items anywhere in the world, there are certain sub-limits that your Georgia Farm Bureau agent can review with you. Some common sub-limits are for jewelry, firearms and cash.

Loss of Use (Coverage D): If your home is damaged to the point where it is uninhabitable during repairs, this coverage provides you with payments in order to rent another home while yours is being repaired. As the construction industry experiences labor shortages, being without your home can cause a significant inconvenience. This coverage works similar to rental car reimbursement coverage for an auto policy, and allows you to get your basic needs met while your claim is resolved and repairs are made.

Personal Liability (Coverage E): The limit of insurance shown here protects you in the event of a lawsuit. This may happen if someone is hurt on your property. Regardless of whether you are considered negligent or liable, someone may still file a lawsuit. Defending a lawsuit can be prohibitively expensive. Just merely owning property can make you susceptible to a potential lawsuit.

Medical Payments to Others (Coverage F): This covers medical payments regardless of fault. It is generally a much lower limit, but it provides some relief to someone who may have been hurt on your property, even if it not related to something you caused.  

Deductibles: Dollars versus Percentages: Sometimes, your homeowner’s deductible is listed as a dollar amount, such as $1,000 or $2,500. Other times, it may be a percentage, such as 1% or 2%. The dollar amount is a fixed amount that is your responsibility for a loss. If your deductible is listed as a percentage, such as 1%, this means your deductible is 1% of the Coverage A amount. For example, if your Replacement Cost Value is $400,000, your deductible would be $4,000. This means your out-of-pocket expense can increase along with the reconstruction value of your home.