Home Insurance

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The Ins and Outs of Home Insurance

10 THINGS YOU NEED TO KNOW ABOUT PURCHASING HOME INSURANCE

Home Insurance is more than something highly recommended that you pay a month. It’s important to take time to search for the right protection whether looking for a budget friendly policy or one that is more towards affordable value in what protections home insured offers to you, your family, your property and your personal belongings.

Home insurance choices are important as it could be the difference of tailored coverage that will protect from a major financial loss in an investment like your home in the event of storms, fires, or other threats that can potentially destroy your house or property.

10 THINGS YOU NEED TO KNOW ABOUT PURCHASING HOME INSURANCE

You insure your car, you insure your phone, you hopefully insure your family. Why would a house be different?

Home Insurance is Vital

You need something in place to protect your home and property. Home Insurance also protects you from liability of accidents and injury that could occur to yourself or anyone in or around your home. Important to note that if you rent, renters’ insurance can protect your belongings from theft from a break in, fire or water damage.

Have a Figure in Mind for Home Insurance Coverage

Have a Figure in Mind for Home Insurance CoverageHave an amount in mind of coverage you think you need to cover a loss in property and/or personal belongings. If you have the option in coverage, you need to itemize your property belongings and the value of your home. The more coverage the better as it will be less to pay out of pocket to replace your home value and belongings. In most cases the mortgages lender includes their own insurance coverage or partnered with a home insurer to cover the cost of the house in cases of disaster. If you don’t have the option to decide on the coverage you need, one might be decided for you and most cases just the value of the home. However, if you want to have more value coverage to cover the loss of personal property, expect the quoted value for coverage might inflate the premium each month but have piece of mind that you can start fresh with the value of the home and loss of personal property. 

Compare Deductibles with Each Policy

Deductibles are what you pay out of pocket that applies to your house coverage and personal property. It is important to know how much you are paying out of pocket when you make a claim. I cover more on this on setting up an Emergency Fund as part of your three critical accounts to have easily accessible for use when needed. What is important to know is the less the deductible you pay out of pocket the more expensive the premium.

Example:

$500 deductible = More premium each month paid as opposed to $1500 deductible = Less Premium paid each month.

Where to Go to Shop

You can always check the newspapers, yellow pages or online with review sites like (Mentioned Home Insurer Review sites links). You can always call local agents to inquire about their company coverage especially if you are a potential new client, they will be eager to help answer any questions for you to help you decide. Just be warned that they will persuasive in trying to get you to commit to signing up with their coverage. Luckily for you I have included a list of my recommended home insurance companies that excel in both service and price for any budget. (12 Top Recommended Home Insurance Companies (link))

Shop Around Before You Buy

You aren’t required to use the home insurer that your mortgage company uses with your mortgage. You can shop around by doing some research using unbiased sources like state insurance departments online, public library resources with access to Moody, AM Best, Standard and Poor’s or Fitch. It doesn’t hurt to ask friends, family, neighbors or work colleagues on recommendations. Price and service are not difficult to decide on for Home Insurers if you have the resources to compare policies from various companies. A good source online would be to try searching online for your state insurance department to have assistance in selecting a policy as most online searches will yield a contact number to call and help all your questions be answered. If you missed that recommended list of 12 top home insurers, here it is again. (12 Top Recommended Home Insurance Companies (link))

Replacement Cost or Actual Cash Value?

You have a choice with home insurance to insure your home and personal belongings with replacement cost or cash value.

  1. Replacement Cost- it is the amount to replace, rebuild or repair damages with materials of similar quality without deducting for depreciation.
  2. Actual Cash Value- it is the amount it would take to repair or replace AFTER depreciation.

Be sure to insure your home for at least 80% or it’s replacement value. For more information, (see this related article for further information. LINK)

See if you Qualify for Discounts

You can always ask your current home insurer or when shopping around if discounts are offered and if you qualify. Most cases deals are offered for bundling insurance coverage of your car, boat, and home together. Another thing to note is if you have made improvements to the home such as additions to the home, replaced the roofing or adding value to the home in some way. Other means is preventive theft or damage to your home by having a Home security system, dead bolt locks, or fire alarms.

Basic Coverages Available

When selecting coverage with carful research, you can find different packages of home insurance protections such as fire, theft and severe storms. In most cases additional coverages are offered like property damage, medical payments, living expenses and liability.

Read the Fine Print of the Policy

Always take time to read the policy being offered. The policy is the legal document on what rights and responsibilities you are entitled to and as well as those of the insurance company. Before agreeing to the coverage, be sure to read and understand all content of the policy. Be sure to keep this in a safe location easily accessible. (For more information on keeping important documents together for emergencies, check out this article. LINK)

Review Your Home Policy each Year

Get with your home insurer or agent to review your policy each year if you have adequate coverage or qualify for a discounted premium. If you have made changes to your home that increases the value of your home, you need to increase the coverage so if anything, unfortunate occurs you the full value of your home. Even if you didn’t make improvements, the value of your home does increase if you are in a good neighborhood. Keeping track of this each year could save you money on the premium each month of assure you get a full value of the home if something ever happens. The replacement cost is important not to be forgotten to avoid loss of any money when you need it if you file a claim.

Risk Factors that Determine Home Insurance Rates

(10 Risk Factors for homeowner’s insurance policies)
https://www.curbed.com/2016/11/10/13587554/homeowners-insurance-basics-advice Home Insurance 101
https://www.thesimpledollar.com/home-insurance-guide/ Complete Guide to Home Insurance

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