My lender said I needed to increase my monthly escrow payment by $500 a month!

Like many people, our home and auto premiums have doubled and tripled over the years, so I did some research. I learned a lot about my coverage and my risk and I'm sharing it with you in case it is applicable to your situation.

Texas is one of the higher risk states for natural disasters, with 20 severe weather events last year and a combined cost of more than $20 billion. 

When I tried to get our homeowner's policy reduced, multiple companies would not insure us because our properties in both Travis and Hays counties back up to green space with numerous trees. We are now considered a wildfire risk. Both of these homes are in subdivisions!

Since I couldn't get a new homeowner's policy, I changed just our auto policy carrier and saved $2800 a year. The savings froom switching carriers was more than the multiple policy discount if I'd stayed.

We didn't have enough coverage to rebuild our home.

We were underinsured on both our primary home and our investment property. The cost of building has increased such that we'd be unable to rebuild the same quality of home with our current coverage. One insurance broker I spoke with recommended dwelling coverage of at least $250/ft. A local Austin builder recommended $275 -300/ft. If you have high-end finishes, updated windows, metal roof, wood floors, upgraded kitchens and baths, etc., you should consider a higher price per sq ft than the average price to rebuild.

You may not be covered if you run an Airbnb.

I learned that if you have a separate structure on your property that you use as an Airbnb, such as a detached garage apartment or a casita, you are not automatically covered under your homeowner's policy if something happens while you were renting the property. Our insurance company said we would be covered if we were renting out our main house on Airbnb, but we would not be covered if it was a detached structure. If it is the main house, they assume it is your primary residence and you are renting it out on rare occasions. If it is detached and you don't live in that space, they assume you are running a full time rental and have multiple people coming and going on the property, which is a higher risk for them. Airbnb provides some coverage but what if I can't prove the guest was liable for the damage? Check with your agent if you are renting any part of your primary home

Why would you need flood insurance if you aren't in a flood plain?

When it comes to water damage, there are all kinds of categories, exceptions and limits.

• A homeowner had an HVAC leak that ruined their beautiful wood floors. Because the leak was ongoing (past a certain number of days), it wasn't covered. Insurance companies will cover water damage as long as it's not caused by negligence or a lack of maintenance.   

• Flood damage is not covered by a standard insurance policy. A neighbor experienced water coming up through her living room floor after torrential rains caused a nearby natural spring to overflow. She did not live in a flood plain so she didn't have flood insurance and she was not covered. 

• When I tried to increase my sewer backup coverage, they told me there was a $10,000 limit. That doesn't seem like enough to repair flooring and drywall if a septic or sewer backs up into my home. And it isn't available at all for our rental property/landlord policies.

• They have a $5000 coverage maximum for foundation water damage. Again, that doesn't seem like it will cover much. Check your policy, it may offer more.

• They won't cover water damage from an outside sewer or drain but you can add coverage. 

• Increasingly, homes flood even when they aren't in a flood zone. As a result, Travis County is updating their flood plain maps. You can learn more about it here and check whether your home is affected. Just know, you can buy flood insurance even if you aren't in a flood zone.

Helpful Tips and Information

• Work with an independent agent who works with many different insurance companies to find the best deal. Watkins Insurance Group is one recommendation I was given.

• Raise your deductible or change your coverage type based on your needs.

• Look for discounts from affiliations like military, first responders, or alumni groups. There are also student discounts for good grades.

• Pay out of pocket when possible, rather than file smaller claims.

• Consider climate risk when choosing where to live.

• Mitigate risk when possible against severe weather. For example, when replacing a roof, choose a reinforced roof that can survive a hailstorm.