For most people, their home is their biggest investment, as well as it is the roof over you and your family’s head – two big reasons you want to protect it and all that’s inside. Choosing the right insurance coverage is important in order to make sure that what you need to be covered is covered, and at the right amount, so that if anything should happen, you are properly and fairly compensated so that you can make the right repairs or have the items replaced. Before you choose a home insurance company or coverage plans, there are things every homeowner should know. So here’s what you need to know about homeowner’s insurance.
Coverage for the structure of your home is the most important aspect of your homeowner’s insurance policy. It is the part of the policy that will cover any damage done to the home due to a disaster. Disasters come in way of storms, fire and other types of disasters. If it is beyond repair, such as in a fire that causes it to burn to the ground, it would cover the rebuild of the entire structure, however, you would need to carry a policy for 100% of what a total rebuild cost would be so that you receive the total funds to do so.
One way to figure what the amount would be to rebuild your home, should you ever need to, is have a builder give you an estimate, or you can use online building cost calculators, to determine the cost. One thing to keep in mind is that basic disasters do not include floods, earthquakes or wars, including nuclear. For flood coverage, this is a separate option and coverage that will need to be discussed with the insurance carrier. Outside of the main dwelling structure, home insurance will also cover other structures on the property, such as your shed or separate garage.
Coverage for the contents of your home is insurance that covers the replacement of your belongings, should be lost, stolen or damaged in a disaster that is insurable. Most insurance companies offer the standard coverage, which is a limited amount of 50% of the value of the value of the structure of the home. This breaks down to this example: The value of your home is that it will cost $300,000 to replace your home (rebuild) due to a disaster, then your belongings would be insured and reimbursed at $150,000.
Your insurance company will most likely want you to take pictures of, and list everything that is valuable in your home. These should be kept in a safe deposit box for safe keeping. Things that are typically listed on insurance policies are all appliances, furniture, valuable paintings and décor items, tools, jewelry, clothes and other valuables. There is also home inventory software you can use to itemize the content of your home. When you have a detailed list and pictures, in cases of emergencies, this can be very helpful and make the process of filing a claim much simpler.
Doing your homework and checking around with different insurance carriers is an important part of the process in choosing a company to carry your policy. You will want to choose the best coverage and policy for your needs, especially since many companies limit their amount to 10% of the total coverage you carry on your belongings.
How insurance policies cover you
Insurance policies are built to cover the insured in three different ways and they breakdown like this:
Liability is the part of the policy that covers you in the invent that you are responsible for damage to someone else’s property or someone is injured while on your property. An example would be that if someone’s car was damaged at your home by your child throwing a rock at the automobile while visiting and decides to sue, your liability coverage would cover the court costs along with the court awarded monies to the plaintiff.
Reimbursement for other living expenses
If you experience a disaster, natural or otherwise, you will need to stay somewhere else while repairs or a rebuild is done. Having a disaster happen to your home may also cause reason to need to rent a car, eat at restaurants and a number of added expenses. Insurance policies will typically cover expenses such as rental cars, restaurant meals, and hotels. Most insurance policies will provide coverage that is equal to approximately 20% of the coverage of your home. If the payout to rebuild your home is $300,000, you will receive 20% of that amount for the additional expenses.
When it comes to personal belongings, most insurance companies will limit the coverage to between $1,000 and $2,000 on a standard policy. It is recommended that you retain a separate insurance policy to get more coverage on them. This also applies to flood insurance. If you live in an area that is known for flooding, many lenders require that you carry additional flood insurance on your home.
Tips for purchasing
1. Shop around
Before you dive into a policy and sign the papers, it is always wise to shop around from company-to-company and get rates from multiple ones to see what types of coverage and policies they offer, along with their rates and deductibles. You can also check with references to see what other customers think about the companies you are interested in and see how satisfied they are with their service. It is also a wise a idea to do a background check on each company.
2. Choose a high deductible
The higher your deductible, the better your rates. This means that if your deductible is $500 compared to $1,000, your rates will be less with the higher premium. Many people want the smaller deductible but chances are that most people won’t be filing a small claim so the bigger the deductible, more sense it makes to keep your rates down.
3. Ask about discounts
Many insurance companies offer discounts for certain types of upgrades or disaster proofing techniques you’ve done to the homes, such as smoke detectors installed, alarm system, and fire retardant roofing materials used. This helps to ensure the safety of your home against certain disasters and situations that would cause your insurance company to have to payout funds on a claim so they offer discounted rates. It lowers your risks and they appreciate a low risk consumer.
When it comes to home insurance companies and your policy, the bottom line is that you want a company who is going to give you good coverage for a price you can afford, and they respond in a timely manner when you need them, to cover the costs of your damages so that you aren’t left hanging without the funds to repair, rebuild, replace, or operate your life away from your home after an unfortunate disaster happens.