What Do You Need To Know About Homeowners Insurance?
Homeowners Insurance is necessary as well as difficult to understand. This is a tough combination. Here are a few tips for current policy holders as well as those shopping for a policy for the first time.
Buy the right insurance
Know your options before you take the plunge. Look at your insurance coverage in four key areas: the structure of your house, your belongings, your liability to others and your living expenses if you’re forced out.
Get replacement value insurance
In the result of a disaster, you want to know that you will be able to replace everything you lost with similar, new items. And make sure your policy spells out that both your home and its contents are covered by replacement-value insurance.
In terms of replacing the home itself, look for extended or guaranteed-replacement-value coverage.
Understand the claims process
Two policies can promise the same amount of coverage, but they can be vastly different when it comes to making you whole after a loss.
Questions to ask before writing any checks:
Do you receive your entire claim upfront, or just a fraction?
Does the company pay you for all the things you’ve lost, or only those things that you replace?
What is the timetable on replacement? How long do you have to replace your things?
Do you have inventory of your possessions?
Decide how much coverage you need
The better your coverage, the less you will have to pay out of your own pocket if disaster strikes. In some cases, your lender decides how much coverage you need and may require you to buy a policy that covers at least the amount of the mortgage. It is important to note that the amount of coverage you buy for your house, contents and personal property will affect the price you pay.
Keep up with inflation
Your home may have cost you $100,000 to build 10 years ago, but it might cost $120,000 to replace it today. Many companies have inflation guard, which covers the increasing cost of rebuilding. When your policy comes up for renewal or you are purchasing a policy for the first time, verify that your coverage amounts are still realistic. And if/when you make an improvement or remodel your home, add it to the total.
Find Calm Before the Storm
Different locations provide different weather related disasters. Earthquakes in California are just as commonplace as snowstorms and ice blockage in Wisconsin. Depending on where your home is located you may want to insure your home with a certain type of special coverage.
Review Your Home Insurance Needs Every Year
Check in at least once a year to make sure your policy provides adequate coverage. The addition of a room, new insulation or remodeling add value to your home and therefore may increase replacement cost. It’s always good to stay on top of things and your homeowners insurance is no different.