Mind the Gap: What Your Insurance Doesn't Cover
In late 2014 a storm hit the Phoenix area dropping record levels of rainfall on the city over the course of a few days. Major streets flooded, highways were not safe to travel and many homes were under inches of water. Unfortunately for most homeowners, their home was not in a previously-known flood zone, which meant they weren’t carrying flood insurance, and they were left drowning in the cost of repairs.
Insurance isn’t something most of us worry about until we need it. Think about the last time you reviewed your Phoenix home insurance policy; was it more than a year ago? What about your auto policy?
Most insurance experts recommend you review your policies every year or whenever you have a life change or large purchase. Based on recent life events (marriage, birth of a child), purchases or an inheritance, there could be gaps in your coverage. Here are some of the common gaps insurance experts find:
Flooding: Thankfully, most cities in the Valley reviewed and rewrote their flood zones after last year’s storm. However, that does not mean you’re in the clear. If another particularly bad storm hits, you could be left paying for damage from outside water entering your home without a flood endorsement on your homeowner’s policy.
You’ll also want to consider endorsements for internal flooding from items like the water/sewer backing up or your water heater or air conditioning unit breaking down and causing flood damage to your home. A standard policy may not cover these incidences.
Possessions: Basic homeowner’s insurance policies will cover your possessions, but only up to a certain amount (and limited to certain items). If you’ve recently purchased jewelry, expensive technology or other major household goods, consider adding on additional coverage. This can also include inherited items like grandmother’s pearls or your great-aunt’s crystal wine glasses.
Additionally, a bare-bones renter’s insurance policy could just include liability for the building you are living in – leaving you responsible for replacing all of your worldly possessions. Review your policy and check that your personal property is covered.
It can be daunting to try and guess how much coverage you need, and what needs to be replaced after a home emergency. Spend a weekend going through each room and cataloging what you own and how much it cost to buy. If you need some assistance, there’s probably an app for that! Once you have a better idea of everything you own, update your insurance policy and consider whether you want to cover the existing value of the item or the full cost to replace it.
Liability: By now, most of us know that it’s illegal to drive in the state of Arizona without basic liability insurance. But carrying the bare minimum in insurance coverage could end up costing you more in the end.
Guess what liability insurance covers? Only the cost to repair the other person’s vehicle, should you be responsible for the accident, up to the limits outlined in the policy. If the car is totaled and the value is $24,000 but you’re only covered for $10,000, you’re left personally responsible for the $14,000 difference, and the cost to repair your own vehicle. On top of this, you may also be personally responsible for medical expenses resulting from the accident for both yourself and the other party.
Even if you don’t think you’ll ever be in an accident, you could end up in a world of financial hurt later if you’re wrong. Call your insurance company (or our insurance experts!) to talk about your options for adding additional coverage to your vehicle.
Traveling: Taking a road trip to Canada, Puerto Rico or Guam? Most insurance policies have you covered! Going on an ever-so-popular road trip to from Phoenix to Mexico? Don’t take your car – or if you do, add an insurance endorsement for that. If your vehicle is stolen while in Mexico, your insurance won’t cover the loss without a travel endorsement.
It’s a simple call to your insurance company to add the travel endorsement to your policy; it’s a bit more complicated to replace your vehicle without insurance.
While insurance can seem like a crazy maze to navigate, know that your insurance agent can help guide you along! There’s not a lot out there that an insurance company will not insure. If you’re nervous that you are missing coverage, sit down and talk with an expert – and update your policies regularly!