For people who own their own home, having the house and property insured is a fundamental necessity. Without insurance, you run the risk of suffering a severe financial setback if something happens. Before signing a policy, you need to be aware of exactly what type of protection you’re getting. Following are a few pertinent facts about house and property insurance.
Replacement Value Compensation Is Recommended
There are two basic methods of insuring your house and property: actual value and replacement value. With actual value coverage, compensation for any damage to your home, property, or possessions will be figured on the basis of its value less the amount of depreciation since you purchased it. On the other hand, replacement value coverage will provide financial reimbursement for an amount equal to the present retail price of a comparable product.
Outbuildings Need to Be Insured
When you insure your home, you need to be sure you’re adequately covering all the outbuildings that may be on your property, including their contents. If you have a shed that contains tools, a lawn mower, a snow blower, or other things you use to maintain your property, you would suffer a financial setback if the building caught fire and you weren’t adequately insured.
Cover Your Home’s Contents
One of the most important aspects of homeowner’s insurance is financial protection for the contents of your home. If you were to sit down and list all your contents and assign a price to each item, you would no doubt be surprised at how expensive it would be to replace them. In fact, this is exactly what you should do, so you’ll be aware of precisely what your possessions are worth, and what it would cost to replace them.
You Need Ample Liability Coverage
Another thing that is of utmost importance when deciding how much insurance coverage to take out is the extent of liability coverage you need to carry. It should be enough to protect you from any conceivable lawsuit that could be brought against you if someone is injured while on your property.
Homeowner’s Coverage Provides Emergency Housing
In the event that your home is damaged by storm or fire, you may need to have a place to live until repairs can be made. In most instances, your homeowner’s policy will include a clause that will provide money for you to rent another home or stay in a motel until your home is made livable again.
Special Disasters Require Special Coverage
Most homeowner’s policies will not provide coverage for natural disasters, such as floods or earthquakes. If you want to be sure you’re protected against these things, or if you live close to an area that is prone to landslides or avalanches, you will have to carry additional coverage over and beyond traditional insurance.
You May Need a Rider for Expensive Items
If you own expensive jewelry, or have a collection of rare stamps, comic books, or additional items that are extremely valuable, you will need to carry a rider, or umbrella policy, to make up the difference between your traditional coverage and the cost of those items. Otherwise, you won’t be compensated if they’re lost or damaged.
Review Your Policy Periodically
It would be a very good idea to make sure you’re carrying the right amount of insurance. You don’t want to carry too much coverage–you’d be wasting money. On the other hand, you don’t want to be underinsured–if something dreadful happens and you need to file a claim, you may end up without enough compensation to replace what you’ve lost. In order to avoid being over or under insured, you should review your policy from time to time. You may have sold off items or purchased new ones since the time your policy was written. If you added a room or installed security equipment, your policy will need to be reviewed and rewritten.
High Deductibles Save on Premiums
A good way to save money on your monthly premiums is to carry a high deductible on your policy. The higher your deductible is, the lower your payments will be. Keep in mind that you’ll need to have money available to pay the deductible, because the insurance company won’t cut you a check until that deductible is paid.
Shopping for the Best Price Saves Money
A sound bit of advice when you’re considering any major purchase–and homeowner’s insurance definitely qualifies as a major purchase, because you’d be devastated without it–is to shop for the best price. Gather quotes from various insurance companies, and then pick the company that will provide you with the best coverage at the best price.
Guest post from Marley Lane. Marley writes for HouseInsurance.com.