Why its Important to Read the Small Print on your Home Insurance Policy

If you own a home, it is important to have homeowners insurance to protect your home and possessions in the event of a fire, burglary or other disaster. But shopping for the best deal and best policy for you can be a confusing undertaking. Before you sign the papers for a policy it is important to read the small print.

Your agent may outline the major points of the policy but it is important for you to read the entire agreement so you know what is covered and not covered. You may need additional coverage if you have possessions that are over the value limit of the policy. This is typically common if you have expensive jewelry, electronics, antiques and other collections. Make sure you know what the dollar amounts are that you are covered for your possessions and repair costs for your home. Your policy may have a limit to the amount the insurance company will pay to repair your home. You may want to get bids from a builder or contractor to determine how much it would cost to replace your home to the way it was to make sure you have adequate coverage.

Another area many people may be uninsured is for floods or earthquakes. Typically, homeowners insurance policies do not cover damage by flooding or earthquakes. You will need an additional policy for these events. If your home is located in an area that is prone to these events, you may be required to carry additional insurance. Also, read the small print to determine the coverage in reference to water backup or sewage backup. Policies have different stipulations on coverage for damage caused by water backup.

When reading your policy, it may contain language that you are not familiar with. Be sure to ask your agent to clarify any questions you may have before signing the agreement. You will be paying a considerable of money over the years for the coverage and it is important to be assured that you are getting the coverage you are paying for.

Determine what will happen if your home is a total loss, due to a fire or other disaster. Will you receive market value or replacement costs? Make sure you have coverage that will pay for replacement of your possessions. In some cases they will take into consideration the age and condition of your items and you will receive that value. If you have new for old coverage, you will get brand new replacements of the items that were damaged or stolen. The premiums are higher for this coverage but it may be worth the additional cost if you have expensive items that will need to be replaced.

Shopping for homeowners insurance may seem like a  daunting task but it is important to read the fine print of the policy to make sure you know what situations and items are covered and which are not covered. There are some situations such as floods and earthquakes that you will need additional coverage.