Choosing the right insurance for your home

STEAMBOAT PILOT & TODAY

A single lightning bolt five years ago was all it took to burn the Schoenemans' house south of Steamboat Springs, leaving the couple with nothing but the clothes on their backs.

Luckily, they had a good homeowners insurance plan. In fact, just a few months earlier, Mary Kaye Schoeneman had switched insurers and upgraded the plan, a move for which she is thankful.

"It would have totally bankrupted us if we had not had great insurance," Schoeneman said. "We've lived here for 23 years and you just don't anticipate those things will happen... I don't think people think of it at all until they actually need it."

Schoeneman said that the story of the fire that destroyed her and her husband's house has convinced a number of their friends to invest in better insurance plans.

"I don't think people have a clue about what (policy) they have," Schoeneman said. "Certainly my advice would be to check your policies and do the best you can to have the maximum coverage, because if something happens to you, it's devastating."

Debbie Aragon, a State Farm Agent in Steamboat Springs who helped the Schoenemans with their insurance plan, agreed.

Homeowners insurance is required at closing for new home buyers who have any sort of a loan on their house, and although most policies are standard and cover perils such as fire, lightning, wind storms and water damage, as well as theft, Aragon said it's important for homeowners to understand their plans.

One of the first steps in getting a good plan is to find a reputable company, Aragon said.

"If you've got a company that really is dragging its feet in making payments, that could make your life miserable," she said.

Homeowners should then be sure their plan has adequate coverage for replacement costs, or the cost of replacing the home if it is destroyed. Aragon cautioned that market value and replacement costs are different, and said that insurers should be able to guide their clients through these differences.

It's also important to be sure that content is adequately covered. Most plans have limits on coverage for items such as jewelry, fine arts and firearms, so if homeowners have a lot of value in these items, they should insure them separately.

The cost of an insurance plan varies widely depending on a range of factors, such as when the house was built, if the owner has any prior claims and how much the house is worth.

One way to get a reasonable insurance price is to take a large deductible, Aragon said.

"People should be looking at homeowners insurance as a catastrophic insurance, (for example) for if the house burns to the ground," Aragon said. "In that scenario they should be looking at carrying a big deductible and that will give them a better rate."

Homeowners can receive discounts on their insurance plans if they have several plans or lines with the same company, and if they don't file claims. For instance, staying with a company for several years without filing a claim can result in bills that are reduced by 10, 15 and even 20 percent.

Another good way to get a reasonable price for a plan is to add to the safety and security of the home by installing dead bolts, security alarms, smoke detectors and fire extinguishers.

There is a variety of additional coverage that homeowners can consider such as coverage for sewer and drain backups or for business property. The latter is especially important for people who work out of their homes, as most insurance plans only cover about $1,000 worth of business property. Owners of older homes may want to purchase building and ordinance coverage, which covers the costs of repairing a home and bringing it up to new code.

There is also liability insurance for lawsuits brought by someone who is injured in a fall or is bitten by a dog while on the owner's property.

Homeowners should remember that there are a variety of steps to take to make it less likely that they would ever have to file a claim. For instance, owners can clear the land around their property of dead trees and branches to help wildfire-proof their homes, and can shovel their roofs in the winter to prevent damage from the weight of snow.

Even before buying a home, Aragon said it's a good idea for buyers to consider how much insurance will cost because the location of some homes could mean a hefty price for insurance.

For instance, homes that are more than 10 miles away from the nearest fire station are extremely expensive, if not impossible, to insure. And homes located in a 100-year flood plain can come with big insurance bills.

"There are areas that they could be buying a home that they can't find insurance for," Aragon said. "That's something they need to know right off the bat."

Knowing the ins and outs of an insurance plan can save people from a range of difficulties if the worst happens and they lose their homes.

"Your life is already so disrupted, the last thing you want to do is fight with the insurance company about your settlements," Schoeneman said.