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What All New Homeowners Should Know About Insurance: An Interview with Allen McGinniss of VanAllen Insurance Agency

By Allen McGinniss

Tell us a little bit about your company and the services you offer.

VanAllen Insurance Agency is an independent insurance agency focused primarily on homeowners, rental, auto and life insurance. As an independent insurance agency, we aren't tied to one or two specific companies or options. We review each family's insurance situation and then offer insurance companies coverage options which best fit their unique situation.

Is there something about getting insured that most new homeowners don't know that they should know?

When purchasing a home understand that the buyer is applying for insurance coverage and not actually finalizing their coverage when they bind it and go to closing. There is a big difference between the insurance "agency" and the insurance "company."

The agency is the distribution and service arm for the company. The company is who would potentially be on the hook for a claim and who actually will underwrite/review and provide the final policy and rate. The agency provides an estimate to the buyer based on the information they gather about the home and homeowner. That information is then submitted to the insurance company who will review and either then approve or deny the policy. The company might also ask for some action to be taken before they approve it like putting a handrail at some stairs or fixing some existing damage on the house. It is very important their agent is knowledgeable about their whole situation and discusses it thoroughly to give the home buyer the best chance at avoiding any after closing surprises like repair requirements or cancellations by their homeowners company.

How would you suggest that a new homeowner approaches "shopping" for home insurance? At what point should they start the process?

Start immediately after receiving an accepted contract. If you take nothing else away from this article, start investigating your homeowners options immediately. There often are lots of requirements for getting coverage (inspections, applications, etc.) and if you start early, you'll be in a good spot to get all those requirements completed efficiently (as cheap as possible) and without having to scramble and rush near closing.

As soon as the home buyer selects an option/company/agency to use, go ahead and ask to complete the application with the agent to finish the preliminary underwriting in order to bind/start coverage. This will make sure you don't run into an issue right before closing that the agent hasn't asked about in the earlier discussions and could keep you from getting the coverage in place. If the agent doesn't do a thorough job upfront, it's possible the rate estimate or eligibility for the policy could change while completing the application (or even after closing - see question 2).

What do you consider "adequate" coverage for a new home in Florida and how do you determine the amount?

Adequate coverage is enough dwelling coverage (Coverage A usually) in order to completely rebuild the home if it were destroyed. That includes debris removal, permits, taxes, fees, profit, overhead, materials, etc. There are lots of free "replacement cost estimators" out there if you Google that phrase, which may help you determine an appropriate rebuild amount. You will also want to speak with your agent about completing a replacement estimator tool they use and what their opinion is about potential rebuild value of the property you are considering.

Why do home insurance rates/premiums increase? Is there any way to prevent this?

Most rate increases are as a result of increased costs to the insurance companies for various aspects of their business. The biggest expense factors that change for an insurance company are usually 1) the amount they pay to resolve claims (cost of reviewing claims, paying for repair/rebuild, legal defense/litigation if necessary, etc.) or 2) the cost of their reinsurance increasing.

Reinsurance is the insurance which your homeowners company purchases to protect themselves from a major catastrophic loss (like hurricane) that could put them out of business. It is especially expensive in those states which are most exposed to a major catastrophe. In Florida currently, between 25 to 40 cents of every dollar paid on a homeowners policy goes to pay for reinsurance.

What are some of the most important decisions that new homeowners need to make about their coverage?

Determining the appropriate endorsements or options they need is key. Having the right endorsements can be the difference in thousands or tens of thousands of dollars in a paid or denied claim. Selecting a reputable, knowledgeable agent to help them navigate the potential exclusions or limitations on a policy and make sure they are accurately quoted is key. Make sure your agent is asking lots of questions when they offer you an option and discussing them with you. If they only ask five questions, how likely is it they really are offering a solution that is tailored to what you may need?

What's the best way for people to contact you and your company?

Filling out our online "Personal Home Quote Request" is a fantastic way to start. That will get us some basics and allow us to make a follow-up phone call to gather the important additional details specific to their situation. Since every purchase is unique (from the buyer, the property, their timeline and more), we prefer to speak to folks on the phone in order to finalize their options and make sure they meet their exact needs.

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