Home inspection findings by Frank Schulte-Ladbeck, Professional Real Estate Inspector TREC# 9073

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Homeowner’s Insurance

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Ways to obtain the best homeowner’s insurance in Houston (and elsewhere) form a home inspector.

The State of Texas has a Department of Insurance website (www.tdi.state.tx.us), which is helpful with various insurance needs, but for some one purchasing a home, the list of price estimates is a great tool. Insurance becomes difficult to compare from one company to the next if you are not aware of what is being offered. Generally, a home owner’s insurance policy will cover these areas: the dwelling; other structures on the property; personal property; personal property off premises; liability; and medical payments. The person giving you a quote could assign any value to these areas, which could drastically change the cost of your coverage. Many people put the amount of the cost of the dwelling at their purchase price, but this would include the price of the land. Ask the insurer to exclude this cost. There are mainly two methods for determining the value of the dwelling:1) apercentage of the sale price is deemed to be the value of thedwelling (frequently around sixty percent); and 2) the cost ofrebuilding based on your square footage. The next step in loweringyour insurance cost, while maintaining proper coverage, would bechoosing your deductible.

Insurerscalculate a 1% deductible on your policy. If you could afford to pay for more repairs out of your own pocket, you might want to go up to 2% deductible. If you maintain the savings, thismight not be a problem, but make the determination what expense youcan afford. The other coverage areas also can lower your cost if theamount of insurance you need is less. How much would it cost you toreplace your furnishings? How much would it cost to replace that shed? Go over the coverage with your agent to obtain a quote for the insurance you really need.

Another way to lower your insurance is by bundling your insurance to one provider (car, home, and any other insurance with one agent). You should also ask about discounts. You may lower your policy with discounts for not smoking, or having an alarm system (monitored or unmonitored), or for the job you have (like working in a teaching institution). Different insurers will have their own policies on discounts, so their might be an insurer who will give you something as a discount. Just remember to negotiate for the best coverage.

Before you start calling for quotes, have this information on hand: the year the house was built; the square footage; the tax appraisal as well as your cost for the home; the buildings exterior veneer (wood, brick, etc.); and an idea of the condition of the roof. Most of this data can be obtained at HAR.com’s home value finder option, but other information can be from the home inspector. There will probably be other questions, but knowing this data will help you along with a quote.

If you go to the Texas Department of Insurance site, you will find the price estimates when you look for a line that says “Rate comparisons” on the homepage. This line will have several links; you will want the one for “Homeowner rates”. This will bring you to a page that you should read to understand the chart for the estimates. On the top of the page, there will be a link that says View Price Estimates. Pick an area, which would be Southeast Texas for Houston.

Pick your city, and then you will have your estimate sheet. As in any process involving a large expense, you should obtain three quotes, so you have options.

NOTE: my advice here is for first time home buyers, but I just read a disturbing fact about homeowner’s insurance. Most Americans do not update the amount to reflect the current cost of rebuilding, because they go with the figure that they used when they first bought the home. Re-evaluate the cost of replacement for building the home every few years with your agent, so you will not come up short if you have to rebuild.

Texas has not been too badly effected when it comes to falling home prices, since our home prices where already low due to an earlier housing meltdown in the state. Considering that there are reader’s from other states on this site, I wanted to add a clarification to the note above. Your homeowner’s insurance needs to reflect the value of what it will cost to rebuild. When prices are falling fast as they have been over the last year, talk to your insurance agent about your options. The agent has a method to determine how much the rebuilding cost will be, and that should be your insured valued.

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© Frank Schulte-Ladbeck Professional Home Inspector Houston, Texas
Frank Theodor Schulte-Ladbeck
home inspector, TREC# 9073
Houston , Texas , 77063 United States

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