Low Premium Homeowner Insurance Is Costly


The rainstorms of 2011 have taught everyone to spend a little more time discussing home’s insurance policy with the insurance agent. When insuring a home and its contents, our statistics show that many homeowners believed they were insured when they were not. Those who were certain they had coverage discovered they had purchased a very limited amount of coverage which was not enough to cover the damages. Homeowners should consider all the things that could happen to their home when purchasing insurance, especially if they have a basement with sump and/or ejector pump or their drainage system is connected directly to the city’s sewage system. This is very important when deciding on insurance coverage because if the home is under-insured, the insurance coverage is not adequate to cover damages from a sewer backup.

Almost 80% of the rainstorm calls received by Flood Specialists, Inc. during 2011 were due to sewage drain backup and/or sump pumps failing to run because of power outages. Another unfortunate fact is that not all these losses are covered under the standard homeowner’s policy. Such policies are preferred by the insurance companies because they are considered “limited liability”, which commonly has a maximum claim payout to the insured of $5,000, $10,000 or $15,000. Flood Specialists advises homeowners to consider the advice of their insurance agent and to buy insurance based on the true value of their real and personal property instead of the premium cost.

Imagine a basement consisting of four concrete unfinished walls with a bare concrete floor and is not being used as storage. A limited coverage policy would usually be suggested because the coverage would be sufficient to clean and dry if water infiltration were to occur. Now imagine a larger sized 2,500 square foot home with finished basement, containing wool carpeting, hardwood trim work and or custom crafted paneled walls, a home theater, sauna and for the more privileged, a 3 lane bowling alley. This scenario would require significantly more coverage than a limited liability policy with $5,000 to $10,000 limitation payouts. Such limits will not even come close enough to cover the replacement costs, and restoration labor. If this basement suffered a water loss, the total cost could easily reach $250,000 to replace damaged items and restore the basement.

Let’s examine another scenario that is quite common today. Imagine a basement that has wall-to-wall carpeting with a bathroom, bedroom and storage space. All of the walls have insulation and drywall, a typical Chicago basement. During a severe storm, the sump pump fails to turn on because of a power failure and water infiltrates the basement. The carpet becomes soaked and all the walls and insulation absorb the rest of the water. The water damage cost to restore would average $25,000. The price includes cleanup and removal of wet materials, replacing damaged drywall, drying the remaining moisture, sanitizing, and painting walls and trim. If the insurance policy for this home were a $15,000 limit liability policy, $10,000 of that amount would come from the owner’s pocket.

Unfortunately, most people do not know what they purchased or simply do not care to understand. Another possibility is they didn’t want to spend the money and felt that some insurance is better than no insurance. However, when it’s time to pay out-of-pocket, some people resort to hiring the cheapest restoration company they can find. The result is usually improper restoration, which includes the reuse of furniture and carpeting soaked in sewage, and incorrect sanitizing leaving the home a ticking time bomb for bacteria and mold to ravage the entire home and create a ‘sick home’ effect. This can be avoided by inviting your insurance agent to your home to discuss the appropriate coverage. It is their job to advise you so you don’t incur any out of pocket costs when damage does occur.

Homeowners whose homes are valued one million dollars or more should consider buying insurance coverage from an agent of Chubb Group. Based on many years of experience, Flood Specialists, Inc. strongly feels that when it comes to the filing and payout of claims, Chubb Group is the preferred choice of real and personal property insurance. With offices in most cities including the Chicago metropolitan area, Chubb Group will offer peace of mind and great service. If you are looking for a new insurance agent or broker, the Wilk Insurance Group, located in Buffalo Grove, Illinois may be right for you. They are very professional and treat their clients with great care.

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