Chapter 14: Insurance Deep Dive

Chapter 14: Insurance Deep Dive

A Scene from Real Life

A storm hit. A tree fell on the roof. The insurer said: “Water damage from external flooding is excluded. You need separate flood insurance.” The bill: $18,000 from their pocket. They had never read the policy.

Policy Types

HO-3: detached homes (most common). HO-6: condos — covers only inside your walls. HO-5: broader, pricier, high-value homes.

Never Covered

• Floods: separate insurance needed.
• Earthquakes: separate insurance.
• Wear and aging.
• Mold from chronic dampness.

The Deductible

What you pay before insurance starts. Higher deductible = lower premium. But: pick one you can pay in cash anytime.

Flood Insurance

NFIP: via FloodSmart.gov. Forced when? High-risk zone + federal mortgage. $700-3,000+/year. Tip: 25% of claims come from “low-risk” zones — cost there is just $400-600/year.

Lower Your Premiums

• Raise the deductible.
• Bundle home + auto (10-25% off).
• Security devices = discounts.
• Shop yearly — 3 quotes.

Action Steps

• Read your policy fully: coverages, exclusions, deductible.
• Check your flood zone at msc.fema.gov.
• Enable autopay — never let it lapse.

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