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Smart homeowners assess insurance needs

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Flood insurance can be important even if your lender doesn't require it. "It's not just a risk for someone who lives next to the [Chesapeake] Bay or a creek," said Beth Sammis, Maryland's acting insurance commissioner. Water-main breaks in Baltimore and near River Road in Montgomery County caused expensive flood damage last year, which wasn't covered unless residents had flood insurance.

You can get the maximum $250,000 coverage in a preferred-risk area for as little as $348 a year. Similar coverage can cost about $1,500 in a moderate-risk area, or more than $2,600 in a high-risk area. A few insurers, such as Fireman's Fund and Chubb, provide excess flood coverage beyond the NFIP's $250,000 limit.

You can buy federal flood coverage through your insurance agent, or you can find a local agent at http://www.floodsmart.gov, which also has tools to help assess the flood risk and premium for your address. The federal flood insurance program's congressional authorization has temporarily expired, and the program probably will not be reauthorized until Congress returns from recess in the middle of this month. Insurance agents are still writing policies, but such coverage is on hold until Congress acts.

Shop around

Homeowners insurance prices can vary widely. You can get a list of sample premiums for several insurers from your state insurance department (find links at http://www.naic.org) and can find an independent insurance agent at http://www.iiaba.org.

An independent agent generally works with several companies and may know from experience which ones are likely to offer the best deal and coverage for your situation. That can be particularly valuable if you live in a higher-risk area such as a coastal community at higher risk of storm damage.

Sheila Gibbons Hiebert has lived in Colton's Point, on the Potomac River in St. Mary's County, for 22 years and had homeowners coverage through Allstate. But Allstate notified her in 2007 that it was no longer selling new policies in the area. She could keep her current coverage but would have to find another insurer if she moved to a new home nearby.

"It had to do with risk management across the country," said Allstate spokeswoman Debbie Pickford. "Looking at studies, if a hurricane came up the Chesapeake, it would cause enormous damage." The company stopped selling new policies in coastal areas around the Chesapeake Bay and nearby rivers and in the Norfolk and Hampton Roads area as well as parts of the Northeast.

When Hiebert moved to a new home in Colton's Point a few months ago, about 120 feet up a gentle slope from the Potomac, she asked Brad Reeves, an independent insurance agent in Leonardtown, for help finding a policy.

Reeves works with several insurers, but some won't cover homes within 2,500 feet of the Chesapeake Bay or the Potomac River. But he still found a few options for Hiebert, who bought a policy from Brethren Mutual, which offered good rates and a low deductible to cover her house and barn. (Many insurers charge a special windstorm deductible of 1 to 2 percent of the insured value for waterfront homes.)

Bill Howard, who insures a lot of homes in Old Town Alexandria, generally chooses Fireman's Fund or Chubb for historic homes because of the companies' claims service and reputation for care when dealing with historic architectural details.

Boost your deductible

Increasing your deductible from $250 to $1,000 can reduce your premiums by as much as 25 percent and will prevent you from filing small claims that could cause an insurance company to drop you. In Maryland, insurers can't refuse to renew your policy for weather-related claims unless you have three weather-related claims in three years. But they can drop you earlier if weather isn't the cause.

Check the home's record

Before you buy a home, see if its history of insurance claims will make it more expensive for you to insure. Your homeowners rates are based on your own claims, as well as other claims connected to the home. The previous owner's claims could add an extra $80 to $100 to your premiums, says Jamahl Johnson of Johnson Family Insurance in the District. Ask the seller for a copy of the home's Comprehensive Loss Underwriting Exchange report, or CLUE report, which lists the claims record. You can look up your home's CLUE report at http://www.choicetrust.com.

Kimberly Lankford is author of "The Insurance Maze" (Kaplan, 2006).


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