You’re about to buy a new house and you need to get homeowners’ insurance in Johnson City. What do you do? What are you looking for? Everybody and their brother wants to sell you home insurance right now. The mortgage brokers are sending you to folks, the realtors are sending you to folks… There are some things you need to know about home insurance in Tennessee, because if you just look at a quote from the homeowners insurance company, a lot of times it doesn’t tell you much of anything. Most people just make sure there is enough coverage on their house, and make sure there’s enough on their contents coverage, and they might also look at a deductible.
Replacement Cost or Actual Cash Value
Here are some of the things you need to look at beyond those basics. How will the insurance company replace a house? Is it on an Actual Cash Value (ACV) basis where they take into account depreciation? Or is it on a replacement cost basis where you get a brand-new house? Is there a limit to the coverage? Some companies only pay up to whatever the limit of coverage is. Some companies pay another 25% on top of that. The problem with that is that the insurance agent might lower the amount of coverage and tell you that you will get another 25%. That is true, but if there is a tropical storm coming or some sort of natural disaster, the price of building in Johnson City can go up quite a bit during that period of time, so it will cost you a lot more than that amount to rebuild your house. That is why the insurance companies give you that cushion—it is not so that you can insure it for less, but it is in the case of a bad situation. A lot of insurance agents will just give you the lowest price possible to get you in the door, but they are not going to sell you a good policy that will protect you when you need it most—at the time of the claim.
A lot of companies are not giving full replacement coverage on the roof, which means they will take into account depreciation in the value of the roof. If your roof is 10 years old and it is a 20-year roof, you will only get half the value of the roof.
Another aspect of homeowners insurance coverage you should consider is sinkhole collapse. In the Kingsport, Bristol, Johnson City, and Jonesborough, there are sinkholes everywhere because we have a lot of limestone that creates those sinkholes. Many companies have stopped adding that coverage automatically, so you have to buy it separately. You don’t want to have a sinkhole claim and your house isn’t covered because you saved $20 a year.
Earthquake coverage is another coverage you should consider. We had an earthquake not too long ago in the Tri-Cities! Some folks felt their dishes rattling close to our office in the Boones Creek and Johnson City area! If water backs up through your drain and comes into your house, a lot of policies do not automatically cover that. Make sure you consider adding coverage for sewer and drain backup.
You need to know these things and you need to sit down with someone who knows what they are doing who can give you options on the coverages you need. In the event of a claim, you should be confident that you are going to be protected, your house is going to be rebuilt or repaired the way that you need it done. You don’t want to be out thousands or tens of thousands of dollars at the time of a claim. The time of the claim is a lot more important than the time of the purchase. Usually at the time of purchase you are talking about maybe $10-$15 a month difference, but at the time of the claim you may be talking about tens of thousands of dollars difference.
You should also be aware of liability. A lot of companies limit your liability for animals, such as horses and cows that get out of the fence and injure someone, or your dog or cat biting or scratching someone. All those things can be excluded in policies, and if you are simply looking at a quote, you may not know about these issues and it can be a problem.
Contact our office in Johnson City today at (423) 292-4142 to have one of our knowledgeable and local agents sit down with you to show you your options and the different coverages you will want to consider. Our job is to educate you so that you can make the proper decision for your family.
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3 Insurance Lessons from a Johnson City Apartment Fire
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