SIOUX CITY | Marlene Gallardo, senior account manager for Pioneer Wooldridge Insurance, encourages homeowners to come to her office and discuss their insurance options face to face.
Gallardo gives an "insurance 101" lecture. Most people, she said, don't understand the difference between replacement cost and actual cash value or that they have to add water or sewer backup by endorsement for an additional premium or the damage won't be covered under their policy.
"They also don't know if valuables should be scheduled and what the difference is in the coverage if they are scheduled. There's so many things they don't understand," she said. "They come off understanding, hopefully, what their choices are and what they bought."
Tim McClintock, agency manager of McClintock Insurance, said previous homeowners have an idea of the coverage they need. First-time home buyers, he said, don't.
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"A lot of time they'll come in and say, 'The bank says I've got to have this' or 'The loan officer says I have to have this' and they'll give you a figure," he said. "They won't have an idea of market value, replacement-cost value. A lot of time we have to kind of go through an education process with them."
How much a homeowner paid for their house, McClintock explained, is different than the amount of money it will take to put the house back together in today's market after a fire or tornado. The latter is how much insurance companies want to insure the home for.
"There's a depreciation. There's what they call market value versus replacement cost; and then there's what they call an actual cash value policy, meaning I paid this, this is all I want to insure it for," he said. "Both styles of policies can lead to some issues when there's a loss."
McClintock said 99 percent of the insurance polices he writes are replacement cost to value. He said liability coverage of $300,000 to half a million is also advised.
"They worry about the house itself, but they forget about the liability that comes if you don't shovel your sidewalk, if you have a dog or a cat that gets out and hurts somebody or bites somebody," he said.
A typical homeowners policy doesn't cover water line or sewer line backups. Gallardo recommends that homeowners purchase additional coverage. That coverage, she said, could cost anywhere from $30 up to more than $100 per month depending on the limit of coverage the homeowner wants. Through a partnership between the City of Sioux City and HomeServe USA, water line protection is available for $4.49 a month and sewer line protection for $7.99 a month.
"They should definitely have it on there," Gallardo said.
THINGS HOMEOWNERS SHOULDN'T HIDE
Homeowners need to be aware of how trampolines, swimming pools and dogs considered "aggressive breeds" could affect their insurance policies. Both Gallardo and McClintock said they need to know if any of these animals or recreational objects are on the property.
Gallardo said a lot of insurance companies don't like pools. Homeowners, she said, have to show that they have fencing of the proper height surrounding the pool and gates that are locked and secure.
Small dogs and cats with no bite history, Gallardo said, shouldn't be a problem. A Doberman pinscher or Rottweiler can be an issue if the homeowner doesn't tell the insurance company that they have the dog. Not every company, she said, will insure a home with an "aggressive breed" on the premise.
McClintock said insurance companies consider trampolines a "nightmare" because of the injuries they can cause.
"(Kids) will put a yard sprinkler up underneath the trampoline and the canvas will get all wet. They can slip and fall or break an arm or fracture their skull," he said.
He recalled an incident where a neighbor kid of one of his clients lost two teeth when they became caught in a trampoline spring. He said the insurance company might pay for the dental bill, but then cancel the policy or decline to renew it if the trampoline remains on the property.
Installing a net around the trampoline might satisfy some insurers, but McClintock said that can be problematic, too.
"The net just catches people and hangs them up," he said. "They'll be jumping around with a hoodie on and those strings get caught and someone gets choked."
ARE MY VALUABLES COVERED?
Insurance policies provide limited coverage for jewelry, money, antiques, guns, sporting equipment and artwork.
Collectables such as Precious Moments, McClintock said, require an appraisal in order to schedule them under a homeowners policy.
"Those are endorsements added on to provide better coverage," he said. "For example, a situation where you've got a diamond wedding ring that's worth $5,000, there's only a certain amount of coverage for theft under your homeowner's policy."
If the stone falls out while you're working in the yard and the ring isn't a scheduled item under your policy, McClintock said stone replacement won't be covered.
McClintock urges clients to take photos and videos of all of their possessions to store in a safety deposit box.
"It's amazing how many people after a fire or a tornado will go, 'What was on that wall? I know I had something on there,'" he said. "When you're going through trauma you don't remember everything off the top of your head."
