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In these uncertain times, we are all trying to figure out what is in store for our livelihood. Not knowing how long it will take until we get back to what we once knew as “normal” can be very stressful to some. Realizing that we still have bills that must get paid forces us to evaluate our expenditures. What is a necessary expense, and what is a luxury item?

Since this pandemic has occurred, banks, mortgage companies, and others have offered a variety of relief options that may reduce or defer payments, sometimes even up to six months. Check with your bank and credit cards to find out what programs they offer.
Now maybe a good time to call your insurance agent and review any options for cutting unnecessary costs associated with your insurance policy. Most insurance companies have standard forms that include a variety of coverage’s meant to cover a board range of potential losses.

Depending on where you live, this standard coverage bundle may be included in conventional insurance policies. It is crucial to understand how these coverage’s protect you and your home before making any changes to your insurance policy. The age of your home, it’s geographical location, or any number of factors may determine how valuable those endorsements are on your particular home policy.

Some of the typical coverage limits that you will find in these standard form policies will include the following. Law and Ordinance coverage, Personal Property Replacement Cost coverage, Extended Building Replacement Cost, and Water Backup/Sump Overflow Coverage. Each of these items can be added or deducted from your policy at different amounts or percentages.

A typical endorsement that is showing up more often in recent years is called a Limited Water Damage Endorsement. There is a trend within the insurance industry to try and reduce their exposure to claims caused by water damage. The Limited Water Damage endorsement is a way for insurance companies to offer their customers a reduced insurance premium in exchange for a dollar cap on any water damage losses.

Let say you have a significant water loss in your home and that your deductible is $2,000. The repair estimate comes back at $17,000. Your insurance policy with the Limited Water Damage coverage will only pay up to $10,000. Leaving you to pay the remaining balance of $5,000, and this claim has now cost you a total of $7,000.

As the homeowner, it is vital that you understand what you may be giving up in coverage in exchange for the savings or discount offered by your insurance company. Though we are all looking to save money during these times, it may not always be the best idea to try and save money on your insurance policy. It could end up costing you more in the long run. If you are having an issue understanding your insurance policies, have your insurance agent explain your insurance policy to you in terms that make sense.