We are excited to introduce you to a new series of educational pro tips, specifically for financial advisors. We’ve all been following the winter storms in Texas, accompanied by harrowing stories of thawing pipes, likely to cost a whopping $18 BILLION in insurance claims (according to Bloomberg). As a result, this has placed home insurance at the forefront of people’s minds.
According to a variety of sources, nearly 2 out of 3 houses in the US are underinsured, meaning in the event of a claim, the owner would be financially unable to repair the house to its former condition. In addition, many people do not even realize they fit into this underinsured category. Simply put, the many small choices a client makes with their insurance agent can dramatically impact the predictability and stability of their financial future.
As a Financial Advisor, you may want to evaluate your client’s Homeowners Insurance to prevent significant loss. Here are a few helpful tips to value the health of your client’s homeowner’s insurance:
Replacement Cost: This is what it would cost to re-build in the event of a total loss.
Actual Cash Value: This is the estimated replacement cost minus the depreciation. In the event of a total loss, a house could not be replaced in the same condition at this amount.
Replacement Cost Upfront: Some carriers (Safeco is one example) offer an option that allows customers to walk away from a total loss with a check, and no requirement to re-build. This is a small additional cost, but it may be attractive for older homeowners who were considering moving anyway—into an apartment, to a sunnier climate, etc.
Inflation Guard: This ensures that whatever the house was insured for when the policy was initiated, will automatically keep pace with inflation each year. This can often be added at no additional charge, but it may require a detail-oriented agent to make sure it is included.
Here at Heritage Insurance Advisors, we are happy to help you add value to the services you provide, by prioritizing your client’s financial and risk-management health.