Transcript
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And Doug here we have the Limu Emu in its natural habitat helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural central ally, Doug Limu.
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Is that guy with the binoculars watching us.
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Cut the camera.
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They see us. Only pay for what you need@libertymutual.com Liberty Liberty Liberty Liberty Savings Very underwritten by Liberty Mutual Insurance Company Affiliates excludes Massachusetts.
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Happy Cyber Monday to you and welcome to the Clark Howard Show. You know, our mission is is to serve you with advice and information that empowers you so you make better financial decisions in your life. Hope you had an absolutely fantastic Thanksgiving holiday and spent time with people you love. Something many of us aren't loving, the cost of homeowners insurance. But there's something you may be overlooking and you're not going to like it. You may not have enough homeowners insurance. I'm going to add to your misery here in a minute. And also, do you have somebody on your holiday list who has a thing for luxury brands? Well, I want to tell you how hot it is now to buy luxury items cheap that aren't counterfeits. I'm going to fill you in on that later. So let's talk homeowners insurance. Why do you have homeowners insurance? Because you got to know that's not a good enough reason. Just because your lender on your mortgage says you got to doesn't mean that's why you have it. You have it because if your house has a catastrophe occur to it, catastrophic loss, you can't afford that. And that's what you have homeowners insurance for. Here's the problem, though, and this is why I'm pouring salt in the wounds. Because homeowners insurance premiums have gone up so much around the country and at the same time, huge percent of us are underinsured because the cost of rebuilding homes has gone up so much along with the cost of building homes. And insurers used to just cover you for whatever it costs to rebuild it, but not anymore. It's the rare insurer that says, don't worry about it, we got you covered. They only got you covered if you have adequately insured that home. And so I know what I'm saying that, I'm saying something that's so terrible to say that you're already paying this high premium. And if you peek at that policy, which most of us don't usually do, but if you got a written policy that comes to you, you have to look at it online, see what you're covered for for rebuilding it. If you know in your heart of hearts it's not close to what it would cost to rebuild your home, you got to contact the company or the agent you use and talk to them about increasing the coverage you have on that home. Now, 40% of people, there's never been a stat this high that I know of in modern times. 40% used to be 30. 40% of people right now own their homes free and clear, no mortgage. So if you're in that 40% and you're underinsured for the value of your home, what you can do is if you increase the coverage to make sure you're adequately insured, at the same time, you can raise your deductibles on the homeowner's insurance. And those two things should cancel out. So it means that if you do have a big claim, the first, so many thousands of dollars, whatever it is, you decide to self insure where you're your own insurance company, you're going to have to come out of pocket with that, you're going to have to cough that up. But the big money, that could be a major, major rebuild of a home or whatever it is you're fully insured for. But the problem with people being underinsured is quite large. Now, 60% of homeowners have a mortgage. Your mortgage company in the contract tells you how high your deductible can be. So you never want to raise the deductible if you have a mortgage above the limits the lender allows. But it's quite possible that even within those rules, you have your deductible below what they'll permit, raise it to what you're allowed to, and know that if you have a claim, you're hating me because you're having to come more out of pocket at the beginning of that claim. But then you know, you have peace of mind on the total size of the claim. And I know it's no fun what I'm saying to do, getting you to spend more money, but this is money well spent.