Purchasing homeowners’ insurance is second only to purchasing a home in terms of important investments. Homeowners’ insurance protects not only your home but also your belongings and other assets. Therefore, it is important to know what to look for when purchasing homeowner’s insurance.
Purchasing homeowner’s insurance should not be decided solely on the cost of the policy. There are pertinent areas you need to make sure are covered and fully explained; they are the structure of the house, your belongings, your liability to others, and expense reimbursement should you be forced out of your home.
Coverage for the structure of your home should be guaranteed-replacement coverage, although this is getting more and more difficult to find in today’s market. Guaranteed replacement coverage replaces your home no matter what the cost to do so. Today’s market tends to offer extended replacement-value coverage which pays you up to 100% of the value of the home plus a percentage of the cost of re-building in the current market. Losing your home is devastating enough; you don’t need a lack of ample coverage to cause you more grief.
Homeowners’ insurance also covers your personal belongings. However, it is up to you to know the value of your belongings and choose ample coverage. Here again, you want replacement-coverage as inflation will typically have made replacing your belongings cost more than when originally purchased. Before purchasing a policy, create an inventory of your household furnishings and all personal property. Be sure to include jewelry, electronics, and other high ticket items. Once you have a total, check with the insurance agencies you are considering to determine if there are limits on certain items such as computers, furs, jewelry or silverware. If so, you may want to look into purchasing floaters or endorsements to your homeowners’ insurance policy. You should also make sure your agent has a copy of any appraisals or receipts for high tickets items so you don’t have to try and find them should disaster strike.
Read your policy options carefully. Does your coverage include flood or storm damage? Most homeowners’ insurance policies do not cover flood damage, flood insurance is purchased separately. If you live in an area prone to storms, does your policy cover damage from lightning or hail? Make a list of questions and have your agent go over them one by one and get your answers in writing. You don’t want hail to damage your roof only to find out it wasn’t covered by your policy.
Homeowners’ insurance includes liability insurance to protect you from accidents. These accidents can be on your property or as a result of your actions not occurring on your property. In today’s litigious world, attorneys have found ways to sue your homeowners’ insurance for just about any event involving you or even your children. Homeowners’ insurance liability typically has a limit around three to four hundred thousand dollars. Considering most lawyers start lawsuits at one million dollars, you should also look into an umbrella policy to cover being sued for large amounts.
Should you need to file a claim, your homeowners’ insurance should cover living expenses if you are unable to stay in your home. Check your policy to find out how these claims are handled. Are you required to pay first and then be reimbursed or are you cut a check for a specific amount. Paying out of pocket could be a hardship on your family’s finances. Ask if there is a timetable for replacing items that were destroyed. These questions and knowing how your company handles claims goes a long way in determining where to purchase your insurance.
Your homeowners’ insurance policy should also list any additional structures that are covered and the items inside, such as a storage shed that houses your lawnmower. If your policy doesn’t cover structures other than your dwelling, you should consider floater or endorsements.
Finally, you should revisit your homeowners’ insurance policy annually to compare your present policy with the replacement costs of the current market and to add any newly purchased items to your inventory list. Homeowners’ insurance is as necessary as health insurance; make sure you are covered roof to floor in every aspect.