On an early Sunday morning in July, Wendell Link of Coppell watched his neighbor’s house burn down. Link ran to his car and drove it out of the way of crews from three area fire stations.
Walking back, he noticed that embers from the fire were landing on his roof, as were massive amounts of hosed water. Heat was melting his windows, siding and gutter, too.
Link wasn’t overwhelmed with fear. As long as his house was saved, everything would be OK. He had insurance.
Turns out he didn’t have enough.
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Underinsured is common
He was underinsured, which is common. Among the ways insurance agents may try to win your homeowner’s policy business is by offering you in mailed flyers a lower premium than you may be paying with your current company.
How do they get the price lower? They may make the roof replacement deductible higher so you pay more out of pocket. Or they may underinsure your house. What a racket!
Let’s say your house was originally insured for $250,000. During the boom, its value rose to $325,000. Did you correct your policy?
Replacement costs are higher because of the increased value of labor and materials. Did you figure that in?
Link would learn he was underinsured. He had two other problems. A fire investigator ruled the cause was unknown. That uncertainty thwarted his claim. Plus, his neighbor’s company, Liberty Mutual, wouldn’t pay anything toward his claim with his insurer, Farmers.
Link’s damage repair estimate came in around $50,000. Farmers offered him $2,100. He contacted me, and I wrote back: “Sometimes, all they hear when you complain to them is ‘blah, blah, blah.”
“But if you hire a lawyer, you are elevated in their priority because they are trained to listen for that word — ‘blah, blah, blah, lawyer.’ Like a dog, their ears perk up.”
