Home Insurance Limits a Lightning Dose of Reality

Letter to Philippians: Since nearly HALF of home insurance claims are denied, maybe it’s time for folks to come out of the fog about how lightning can strike & grasp the limits of coverage before a claim is filed. Let’s call it a key part of “insurance planning.”

The WSJ’s headline was a bit misleading by suggesting home insurance had become a “coin flip.” Part of the reason industry & govt records show so many claims these days are being denied is because there are more “exclusions” for high-risk regions like California & Florida that help skewer the national stats; struggling insurance companies themselves are increasingly protecting profits via the standard “wear and tear” offset provisions; and claimants themselves don’t realize the importance of documenting/proving losses. Then, again, more cash strapped homeowners these days are opting for higher deductibles in return for lower premiums. Yet, the paper warns, the alarming “coin toss” phenomenon is real for the entire industry, including the most high-profile insurers who advertise their customer friendly mission ala MacDonald’s.

While recounting horror stories for disappointed claimants, the article does suggest the wisdom in an attitude adjustment by homeowners. For starters, I’d advise folks disregard the marketing hype. Do your AI research. Carefully read your insurance policy with fresh eyes & focused on the LIMITS it calls for, usually in fine print. Talk to your attorney about them. Talk to your insurance agent about them. Review your budget with your accountant. Now better informed, decide the deductible you can afford in light of the risk you can live with. Maybe create a personal slush fund to cover the cost of smaller disasters. Perhaps shop for the best deal. Flip a coin with your spouse to see which insurer you’ll “save a bundle” with by switching to it.

Davd Soul