Homeowner FAQ

Frequently Asked Homeowner Insurance Questions

Do I need flood insurance? What does it cover that my regular policy doesn’t?

Flood insurance protects your home against outside water coming in. We recommend that everyone consider this protection, whether they live in a flood zone or not, and make an educated decision.

Have you ever had water in your basement? Have you ever had a flood? Did you have damage from Hurricane Irene or Superstorm Sandy? Have that conversation with your insurance broker and decide whether flood coverage is right for you.

Aren’t most homeowners’ insurance policies basically the same? Shouldn’t I just shop on price?

The bones of homeowners’ insurance policies are similar, but the companies vary widely. You should consider the company that you’re buying the policy from, more than the policy itself. Some companies offer more bells and whistles and benefits. You need to consider the financial strength of the company. Does it have a reputation for paying promptly? Also, what are the policy benefits and coverage limits?

We never recommend shopping on price. At the same time, one benefit of working with City Building Owners Insurance is that we do the comparison shopping for you. We only work with companies that are A rated. More importantly, we help match the company to the customer. We educate our clients, so they’re part of the solution and understand what they’re buying.

Think of an insurance policy like a pair of shoes: If you’re a size 7, would you buy a size 11, just because it’s on clearance? It may be cheaper, but it won’t fit right.

What can I do to lower my premiums?

We recommend the following steps to help homeowners qualify for the best possible premiums: raise the deductible, install fire and burglar alarm systems, and keep your home updated and well-maintained. In addition, make sure you tell your broker of any improvements or additions. Some improvements may qualify you for discounts. (But even if they don’t, you’ll want to keep your coverage current.)

Why did my other company increase the rates so much? What are the factors that make rates go up?

The states allow insurance companies to increase rates based on claims experience. Rates increase based on frequency and severity of claims, averaged out each year.

Does insurance cover bug, mice or other pests in my home?

No. Animals and insects are a common exclusion.

Why don’t you recommend small deductibles?

Two reasons:

  1. Small deductibles can cause you to lose your loss-free discount. If you do not have any claims, you pay less than someone who does have a record of claims. (When you have a large deductible, you avoid smaller claims by paying those out of pocket.)
  2. When you make claims with small deductibles, you give the insurance company reasons to increase your premiums at renewal time. Those increases stay in effect for the next three years. In most cases, you pay more in higher insurance premiums over the next three years than if you had paid the small claims outright.
Does insurance cover breakdown of appliances?

Insurance usually does not cover appliance breakdowns. Such protection comes from warranties.

Whether or not a policy would cover related damage depends on whether the breakdown resulted from improper maintenance or an appliance malfunction. For example, if a 30-year-old water heater floods the basement, insurance would not cover the damage because homeowners are responsible for maintaining and updating appliances. However, if a five-year-old water heater fails, then the policy may cover the resulting damage because the appliance did not serve its recommended term.

Why won’t my mortgage lender accept some insurance companies?

Mortgage lenders have requirements regarding the financial stability of insurance companies. Often, they will require a certain rating (A or higher) and not accept a B-rated company to protect their own interests.

Can I change a policy in the middle of the term?

Absolutely. You can change insurance companies at any time.

What fees does your office charge?

Zero. In more than 40 years of business, we have never charged fees. We are strictly compensated by whichever insurance company you choose to do business with.

How do I change insurance companies? And is there a cancellation fee?

You can change insurance companies at any time on any day of the year. You don’t have to wait until the policy’s anniversary date. You simply have to sign a standard cancellation form, and your broker will file it with your current insurance company. Here at City Building Owners Insurance, we handle everything for you. All you have to do is sign your name, and we’ll take care of the rest.

Depending on the reason for cancellation, insurance companies will use either a pro rata or short rate method for calculating the earned premium. Cancellation fees are included in these mathematical computations, so you don’t have to pay any additional fees.

What is an umbrella policy, and do I need one?

An umbrella policy provides excess liability coverage over the base homeowners’ insurance policy. Base policies have a maximum liability limit of $1 million. An umbrella policy offers higher liability limits to increase your protection.

How much liability insurance do I need?

You should purchase enough liability insurance to protect your assets. We recommend speaking with your accountant or financial advisor to determine the right coverage for your situation.

How much should I insure my home for?

Insurance coverage should be based on replacement cost (the cost of rebuilding your home), not on market value (the amount for which you could expect to sell it). Replacement cost is determined using a formula that calculates cost per square foot of livable space. This number is based on the cost of labor and materials, or what a contractor would charge to rebuild per square foot in your geographic area.

In New York City, for instance, the cost per square foot varies widely—not only by borough, but also by zip code. An experienced insurance partner can guide you in determining the right replacement cost for your area.

People who don’t adjust their policies or upgrade their limits often find themselves underinsured because they’re using outdated construction costs. Replacement costs need to be reviewed and updated on a regular basis to ensure full reimbursement at claims time.

How do you choose which carriers to work with?

One size doesn’t fit all. Certain carriers have expertise in certain property types and in certain geographic areas. Some companies don’t write coastal properties. Some specialize in brownstones, others in multi-family buildings. Our job is to match customers with the best policy for their unique needs.

We research all our partners to make sure have the proper licenses and financial strength. In fact, we don’t do business with any company that’s not A-rated.

For a list of the carriers we work with, see our Contact Us page.

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