One way to improve your coverage: customize the Other Structures limit on your home insurance

Most home insurance policies provide a limit of insurance for Other Structures – things that are permanent, but not attached to the home.  Maybe fences, gazebos, sheds, etc.  In most cases, the limit of coverage for Other Structures is a flat percentage of the limit for the home.  So if your home is insured for $500,000, your limit for Other Structures might be $50,000, for example.

I’ve never found a client who has a need for Other Structures coverage in the exact amount provided by the off-the-shelf provision.  And yet most agents make no effort to customize that limit for the specific need of the customer.

I’ve seen a $200,000 Other Structures limit for a home with no fence, no gazebo, and no shed.  Wasteful.  I’ve also seen a $100,000 Other Structures limit for a detached garage with a gorgeous guest suite on top of it that was constructed for $700,000.  Oops!

Most people are paying more for coverage they don’t need, but there are cases of severe under-insurance.  Either way, the mistake comes in not relating your coverage to what you need.

5 factors that predict whether a family will make a change to their insurance plan.

After reviewing tens of thousands of insurance portfolios, we know that 80% of families will pursue a change to their insurance plan if they see at least 1 of 5 indicators (R.I.S.K.S) of poor insurance performance.

  1. Real estate investments either not insured correctly, or with not enough coverage and flexibility to fully restore its value.
  2. Immunity from liability missing because of insufficient insurance.  Most common are insufficient limits of protection against lawsuits, but it can also manifest in not covering a family Trust or LLC, family business, volunteer activities, etc.
  3. Special valuables like jewelry, wine, art, collectibles, musical instruments not covered correctly.  Most people don’t know that insurance companies intentionally put limits and gaps of coverage in their standard policies against such important assets.
  4. Knowledge of the agent and underwriter, most especially among high net worth families.  It’s amazing how many HNW families and high-valued homes are insured by insurance companies and agencies that have absolutely no special knowledge or experience of the special needs presented by having significant wealth.
  5. Squandered premiums.  This usually gets folks’ attention. Close to 90% of all portfolios I review show a waste of premiums either because of inefficiency or poor agent professionalism.