Smart Strategies to Tackle Rising Home and Renters Insurance Costs

What if you could protect your home and wallet from skyrocketing insurance costs with a few savvy moves? In this episode of Better Financial Health in 15 Minutes or Less, I, Stacey Hyde, share the hard truths about homeowners and renters insurance amidst rising premiums. After personally experiencing a 50% increase in my condo insurance, I explore essential strategies to alleviate these financial burdens. From leveraging home safety features for significant discounts to addressing mold issues swiftly, I provide actionable tips that can save you money and headaches alike. 

Don't miss out on understanding the crucial differences between flood damage and storm damage, and the necessity of additional flood insurance, particularly in an era of extreme weather. We also touch on the often-overlooked earthquake insurance for those near fault lines like New Madrid. Learn why having a financial safety net and safeguarding essential documents is more important than ever, especially if you live in a flood-prone area. Tune in to equip yourself with knowledge that could be a game-changer for your home's protection and your financial peace of mind.

Envision Financial Planning. 5100 Poplar Avenue, Suite 2428, Memphis TN 38137. (901) 422-7526, This communication is strictly intended for individuals residing in the United States. Advisory Services offered through Envision Financial Planning, a Registered Investment Adviser.

Transcript

Speaker 1: 0:00

Hi, I'm Stacey Hyde and I'm back for another episode of Better Financial Health in 15 minutes or less, and today I'd like to talk about homeowners, renters, insurance, that type of thing. It's not a product that we sell or anything, but I think it's becoming more and more important because, as people are getting their renewals, they're seeing some very large cost increases, like, for example, we got one on our condo and the price increased by 50%. We haven't had any claims. Nothing's really changed about the price of our home over the past year, but the prices that they're charging have gone up dramatically and our agent said that they had shopped it and that was still the best rate and the only thing she could recommend was we already have a pretty high deductible and she was proposing doubling that amount, but it was so much the savings in the premium was so small compared to the risk that we would have to shoulder that we decided not to do it. We did determine we have in our home we have an automatic water shutoff that if it detects activity that's beyond the norm, that looks like a leak, some, you know, something's on too long or we have set it to say that we're not home and it detects water usage, it will cut it off. So we had not sent that certificate to our agent, so we sent that and that actually saved saved us some money on that policy. So if you have an alarm, if you have fire coverage, that type of thing you want to make sure you get that certificate and get it.

Speaker 1: 2:10

Speaking now, much more limited coverage if you have mold or fungi in your home. So you really want to keep an eye on that. If you start seeing some mold in the shower or something like that, you want to take action very quickly, because your policy is likely going to have some pretty low limits on that and it could be quite expensive to fix if you don't take quick action. The other thing to keep in mind is that flooding is not covered. So if a storm comes and the rain comes in your house through like a ceiling or a tree falls and puts a hole in your ceiling, that's where your homeowner's coverage is going to kick in. But if, on the other hand, the water rises up because it floods so fast that it overwhelmed the sewer system and you get water in your house that way, that's likely not going to be covered. And so with the global warming, with more extreme weather that we're seeing, more and more people should probably look at purchasing flood insurance. You can. Generally you have to buy it through a government program and you really want to look to see. If you are in a flood zone and you have a mortgage, your lender's likely going to require it. But some people live not in a flood zone but in a flood adjacent zone, and they often will choose to purchase it just out of an abundance of caution. And it's not terribly expensive.

Speaker 1: 3:47

What is terribly expensive, especially if you live in the Mid-South area like we do, is earthquake insurance, because your basic homeowners policies in most cases do not cover for earthquake. Personally, we used to have a separate policy that covered earthquake, but then I really the premium kept going up and up and up and I I really shame on me for not having done this sooner really dug in and read the policy, and when I did, I found out we didn't really have the protection that I thought we did, and so we chose not to renew it because the deductibles were around $50,000 anyway and we were like I just I don't see how this high policy premium makes sense. But we are diligent and we have very large cash reserves to make sure that if something were to happen, we could get over this, because you know, memphis is on the New Madrid fault and you know as a kid now I'm going to date myself I remember feeling tremors quite often. Haven't felt them in a long time, but it is not outside the realm of possibility that that would happen again.

Speaker 1: 5:07

So it's important to prepare and if you live in a flood prone area or place with earthquakes or stuff, you want to make sure that you have your key documents and papers and things, particularly in a flood area. You don't want to store those on the first floor of your home. If you've got a two-story home, you want to store them higher. Or if you only have a first floor home, maybe if you have an attic, you may want to put them there. Or make sure that you have copies somewhere, maybe at your office, something along those lines and make sure that you've got those where you can get, where they're readily accessible, or at least a copy of those documents.

Speaker 1: 5:49

But I think it's important, especially now with the way insurance rates have gone up, that it's important that you shop those and ask for discounts many times, particularly if you're renting, if you have your car insurance.

Speaker 1: 6:05

Oftentimes you can get a rental policy and when they bundle those two together you get a combo discount that almost pays for your renter's insurance, which is important if your apartment were to catch on fire theft, that kind of stuff I can't encourage you enough, if you do rent, that you do have rental insurance.

Speaker 1: 6:27

Some landlords will require it, many don't, but it's a product that is not terribly expensive. But if you were to suffer a loss like, for example, I've known people who their place didn't catch on fire but the one next to it did, and the smoke came in and basically ruined all their clothes and a lot of their soft goods and in some cases they were out of their apartment for some period of time because of the water damage from the fire department putting out the fire, the smoke and that sort of thing. So it is something that I'd encourage you to take a look at and consider. But just remember limited coverage, often for mold and fungi, and no coverage for flood or earthquake in most policies. So be sure to read the fine print, ask lots of questions and make sure you understand what your policies cover. Thanks for tuning in. This has been another episode of Better Financial Health in 15 minutes or less.