Please understand this is a LOT of information, catered to educate you on everything you need to know about your Homeowners Insurance.

Homeowner Checklist

60% of homes are underinsured. This couldn’t have been more prevalent than when lumber went up 364% during the pandemic. 

You need to understand the difference between market value, loan value and replacement cost.

The Replacement Difference

Market Value

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What the home will sell for…..The only thing your real estate agent cares about.

Loan Value

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What you borrow on the home …..The only the your mortgage company cares about.

Replacement Cost

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The amount it costs to rebuild your home from scratch, including the price of labor and materials, in the event of a covered loss. What you should care about.

The Difference Between
Open/All Peril vs Named Peril

Named Peril

Term for a specific type of damage or cause of loss, called a peril, that is listed by name on an insurance policy

Open/All Peril

Means that damage or loss from all potential perils will be covered unless specifically excluded in the insurance policy.

All Peril covers everything unless specifically excluded. Named Peril coverage only covers it if it’s named specifically. Named Perils: wind, hail, fire, tornado, etc.

What’s the difference?  If you had a dinner party at your house and someone spilled red wine on the carpet, with an All Peril policy, you would pay your deductible they would replace the carpet. With named peril. It would have to be wind blowing a tree into the roof, causing the wine to spill….. drastically different coverage.

Most of your advertising carriers do not offer all peril policies by definition they’re twice as comprehensive, and the premiums are similar.

Having backup of sewer and drain as well as service line coverage on a finished and non-finished basement is imperative. 

The basement as well as the furnace and in some cases the washer and dryer are down there as well. Also, the cost to clean up in the event it happens. Even if there’s a sump pump, damages have already occurred. More than 500,000 sewer backups occur each year.

You should also take a step further by adding service line coverage for later lines etc. The average cost for repair is around $10,000.

If you have a finished basement the only coverage you truly have is backup of sewer and drain coverage. That said even if your basement is not finished you should still add backup of sewer and drain coverage because in most cases you store things in the basement.

Client Case Study

Insurance doesn’t have to be expensive, but it DOES have to be accurate.

Meet Craig, a homeowner from Illinois who, like many of us, wanted to ensure his most significant investment – his home – was adequately protected. He had been with a homeowners insurance company using an HO3 policy, which typically covers specific named perils, and his coverage was valued at around $750,000.

But Craig had concerns, and that’s when he turned to us. We conducted a thorough replacement cost analysis of his home and discovered something that would have been a major shock: his home’s estimated replacement cost was approximately $1,100,000. That’s nearly $400,000 more than his current coverage!

Imagine the worry and financial strain Craig would have faced if a disaster had struck his underinsured home. Fortunately, he made the wise choice to seek our expertise.

We took action to ensure Craig’s peace of mind and financial security. By switching him to an all-peril HO5 insurance policy, we not only boosted his coverage to match the actual replacement cost of his home but also managed to save him over $700 annually on his premiums.

The Side by Side Proposal

Yes, that’s correct, a 55% increase in coverage, and still SAVING money.

Ready To Get The E3 Difference?

Replacement Cost On All Personal Property/Contents

It protects possessions like televisions, furniture, and more. It covers the cost to fully replace your personal property if it is damaged or destroyed by a covered loss.

Without this endorsement, it gets paid on an ACV basis. ACV actual cash value is the replacement cost value minus depreciation. Meaning the year, you purchased the item minus depreciation for every year you owned it…. You get what’s left over. 

For example, say you bought a couch for $3,000 five years ago, and now it’s worth $1,500. If it’s damaged in a claim, here’s what you’ll get: Actual cash value: You’ll get $1,500 because that is your couch’s actual value after five years of depreciation.

Other Structures

Homeowners insurance only gives you 10% of other structures coverage automatically.

This protects structures on your property not physically connected to your home, such as a detached garage, storage shed, or gazebo 10% for patio, pools, etc.

So, if your home is insured for 250k you would have 25k of coverage.

In most cases this needs to be raised.

home pool

Roof Coverage Explained

If your roof is older than 15 years, it would be paid out on actual cash value not replacement cost.

Actual Cash Value (ACV)

Actual cash value (ACV) roof coverage means that your insurance company agrees to pay you for the value of your roof in its current state. Essentially, depreciation is factored into your claim settlement. Depreciation is calculated by a claims adjuster, who will inspect the roof to determine its replacement cost, review its current condition and estimate its remaining lifespan.

Replacement Cost

Replacement cost is full coverage without depreciation.

For example, a comparable brand-new roof might cost $20,000 and have a lifespan of 20 years. This would mean that it loses 5 percent of its value each year. If your roof is 10 years old, it has lost 50 percent of its value, meaning the actual cash value of your roof is now $10,000. Additional depreciation may be taken out based on the condition of your roof. Some 10-year-old roofs may still be in great condition, while others could be impacted by unrepaired wind or hail damage.

Earthquake Insurance

Earthquake insurance can sometimes be added to homeowners, but also can be purchased as a standalone policy, but what most people don’t recognize is, if you don’t have earthquake insurance, you have no coverage in the event of an earthquake. The other misleading part of earthquake insurance is the standard earthquake deductible is 20%. That means 20% of the coverage of your home.


9 out of 10 times earthquake and flood are standalone policies. Meaning not automatically included in traditional homeowners’ insurance.

If your home is insured for 350k with a 20% earthquake deductible you would pay 70k in
order for the coverage to be used. With a standalone earthquake policy sometimes you can go as low as
10%, 5% and even 2% deductible, which makes earthquake insurance usable and more affordable in the
event of an earthquake.

Close-up Of Flooded Floor In the living room From Water Leak

Flood Insurance

Flood insurance is typically only used when the home is in a flood zone. However, it can be purchased in areas that are not designated as a flood zone, but has a high potential for water. People usually mistake flood insurance for having a pipe break or backup of sewer coverage.

Flood is any water that is coming from the outside to the inside.

Flood insurance is not inexpensive but the only option if you are concerned water has a likelihood of coming in.


Now that you have the tools for success, what will you do?

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