Talk about money: Homeowners’ insurance no carton of milk

Summertime, and the living is easy in Santa Cruz County. But as our green hills turn yellow, homeowners are reminded that we’ve had some destructive fire seasons in recent years.
In 2008, three major fires scorched the county: the Summit Fire near Corralitos, the Trabing Fire along Highway 1 in Larkin Valley and the Martin Fire that burned 520 acres and destroyed three homes in Bonny Doon.
Then came the summer of 2009, with the Lockheed Fire that burned 7,817 acres and destroyed 13 outbuildings, again in the Bonny Doon area.
This summer, we got a reminder of how devastating wildfires can be when the Waldo Canyon Fire near Colorado Springs burned more than 18,000 acres, destroyed 347 homes and killed two residents.
Which brings me to a subject most people don’t like to think about: homeowners insurance.
“Your home is probably your biggest investment,” said Laureen Yungmeyer, an insurance agent in Santa Cruz. “You need insurance. But many people buy homeowners insurance as if they’re buying a carton of milk. They’re doing themselves a great disservice by not doing enough research.”
If you are buying insurance for the first time, a good place to start is asking friends if they know an insurance agent they trust. If you already have insurance, you should periodically review your policy.
In either case, make sure the company you deal with is solid. The California Department of Insurance offers tips through its website — www.insurance.ca.gov — including a record of complaints. It also has a telephone hotline, 800-927-HELP (4357).
Another key step is deciding how much coverage you need. That means estimating how much it would cost to rebuild your house if it burned down.
The National Association of Insurance Commissioners says the land under the house isn’t at risk from fire, theft and other dangers covered by homeowners insurance, so don’t include its value in deciding how much insurance to buy. If you do, you will pay more than you should.
An agent or online insurance quote service can give you an idea of how much a policy will cost.
Companies that sell homeowners and auto insurance will give you a discount of 5 to 15 percent if you buy two or more policies from them. But make certain the combined price is lower than buying coverage from separate companies.
Buying a policy with a high deductible is another way to cut costs. The deductible is the amount you have to pay out of your pocket before the insurance company will cover the remaining costs.
Most insurance companies recommend a deductible of at least $500, says the National Association of Insurance Commissioners. The association says raising your deductible to $1,000 may save you as much as 25 percent. Raising it to $2,000 would save even more.
Yungmeyer also prefers policies with high deductibles. She says that means you don’t call your insurance company if your fence is damaged; you call if your house burns down.
“You need insurance to cover catastrophic losses, not inconveniences,” she said.
– Mark Rosenberg is an investment consultant for Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 439-9910 or

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