Home Insurance Basics
Protecting your home is critical. Your home is likely the most expensive purchase you will ever make and homeowners insurance is the way you can keep that investment safe in the case of problems.
Most home insurance policies protect you from a variety of possible issues with coverage for damages to your home, and often the contents of your home. Standard homeowners policies provide coverage for theft, fire and lightning, frozen pipes and ice and snow damage.
Homeowners insurance also provides coverage for liability claims, third party medical payments, and legal costs if you are sued. Standard homeowners liability coverage is $100,000, but depending upon your circumstances, this may be not at all adequate.
You should carefully read your homeowners policy to understand what is not covered by the terms of your policy. Be certain that you know what is not covered, so that you are not surprised by uncovered damages. Flood, acts of war, nuclear accidents, acts of terrorism, and earthquakes are commonly excluded from homeowners policies.
It is also important to know if coverage for certain valuables is limited in the terms of your homeowners policy. Some policies may only cover high value items to a certain limit, or may not cover hard to replace items like your engagement ring, furs, or antiques. Additional coverage is available for these items, although an appraisal will likely be required.
How can you know if you have enough home insurance? Your mortgage lender likely requires enough to cover the purchase price of your home; however, this may not be adequate. You should aim to have adequate coverage to rebuild your home should it be required.
You may also wish to consider replacement coverage for your personal property. Some coverage types pay actual cash value of items with depreciation factored into the equation, which may leave you lacking necessary funds in the case of damage or theft. Replacement value is more costly in terms of premiums but also provides more thorough coverage.
You can reduce your homeowners insurance premiums by choosing a policy with a higher deductible. Higher deductibles may leave you paying more of your own expenses, but will also save you on your premiums over the duration of your insurance policy. Should you suffer a loss, like water damage, you will be responsible for your deductible, whether it is $250, $500 or $1000. A higher deductible may even leave you paying all of your damages if they are less than your home insurance deductible.
Take advantage of possible insurance discounts. You may receive a home insurance discount if you have a home security system. You can also qualify for discounts for newer homes, for additional safety features, and for location in relation to fire services, including the fire station and hydrants. You may also be able to save on your homeowners insurance by buying all insurance policies, including home and auto from the same insurance company.
Taking the time to shop around for home insurance coverage can really help you save. Avoid taking the first quote you get. Home insurance costs can vary widely. Make certain that all quotes are for the same level of coverage, with the same protections, and compare quotes from several insurers. An independent insurance agent may be able to help. Your state's department of insurance can help you to check the reputation of any insurer you are considering.
