Q: I recently changed insurance agents. My last one was more elusive than Big Foot. The new one is telling me I am over-insured because my land or lot is also insured and doesn’t need to be.
He said there is a new law in Illinois that doesn’t require the land to be insured because you are only replacing the house. I can’t find any information to support this new law, and am wondering what you think.
Do I need the land insured because of water, landscaping, concrete or should I drop it from my insurance. My fear is he is just trying to be better than the last guy and may steer me in the wrong direction. Thanks so much for being there. It’s so nice to have someone like you to get answers from.
A: Without dealing with the legal issues that might be raised by your letter, your new insurance agent is generally correct.
You generally don’t need replacement coverage for land, but you do need other types of insurance coverage. If the lot you own has some improvements to it, you could insure them. However, given that you described those improvements as landscaping and concrete, you aren’t describing much that can be insured, or, we should say, may generally be covered under most homeowners’ insurance policies.
You’d have to consider the kind of casualty that would cause damage to your concrete and to the landscaping. You’d also have to consider the deductible you have on that policy.
For example, If a tornado destroyed the landscaping and ripped up the concrete, how much would it cost you to replace the landscaping and fix the concrete? If the number is small and your insurance deductible would be high, it might not be worth it for you to have insurance coverage for those items.
You should, however, have liability insurance coverage. This coverage would protect you in case someone falls and hurts himself on your lot and then sues you.
It does not seem unreasonable that your new insurance agent might try to save you some money on some of your insurance coverage, but the real issue is to understand what insurance coverage you had before and then make sure you are protected in case of a calamity.
If your old agent had you pay for insurance coverage on a lot with what the agent thought was $50,000 of improvements that don’t exist, you shouldn’t have to pay for that type of coverage. Have a further discussion with the new agent about the old policy and his new recommendations, and then decide whether his advice is sound.