You may think that homeowners insurance is a boring subject. However, for most people, a house is the biggest investment and asset that they will ever own. It is also a central focus of family life, and it can be a source of security. Your house also probably contains all of your valuable possessions. When a house performs all of these functions, doesn’t it make some sense to concern yourself with the way you protect it?
A home insurance policy is typically a bundle of coverage. When you buy your policy, you are actually buying a variety of different types of coverage. This makes it more complicated, but it is important to understand the whole package so you can be sure you select the right type and amount of coverage for you and your family. Good coverage can make the difference between a minor inconvenience and a catastrophe! You insure the building and other structures on your property. This is the part of the policy that most people concentrate on. Your building policy pays to repair or rebuild your home in case it gets damaged because of one of the listed hazards. If your roof gets damaged by high winds or a vandal breaks windows, they will be covered under the building clause of the policy. How do you decide how much building coverage to buy? The price you paid for your home may not be the same as your rebuilding costs would be. If you purchased an older home, you probably spent a lot less than the rebuilding costs.
However, if you live in an area where land is very expensive, the sales price may have been much higher than the rebuilding costs. You need to figure out the average building costs in your area. A good insurance agent or real estate professional can help you. Your homeowners policy also contains liability insurance. If a visitor to your home decides that your negligence did some harm, he or she may decide to sue you. In today’s society, this is more common than you think it is. If you do get sued, it will be comforting to know that an insurance policy has your back! The insurer will not want to pay a damage claim, so they will help you defend yourself.
Beyond your actual property and liability, you also insure the contents of your home. This coverage is very important, but many people overlook it. They underestimate the value of the possessions that they own. But events that could do damage to your actual property are also likely to do damage to the contents of your home. When you value your possessions, make sure you estimate the replacement cost. This is very different from the actual value. You may only be able to sell your bedroom set for $50 at a flea market. But if you had to go out and purchase a new dresser, bed frame, and mattress, you may have to hand over several hundred dollars. Since you probably purchased your possessions over time, you probably underestimate the value.
Taking the time to assess the real replacement value of the things you own, and then making sure you have enough coverage, can save you a lot of money if you ever have to make a claim. Be sure and take an inventory. Include current replacement values with a description and photos of the most valuable things in your house. You should keep a copy of this somewhere outside your house too. You could put the document in your safety deposit box. You can even find online home inventory systems that make it simple to make sure the contents of your home is well documented.
Do you live in a flood prone area? In the US, most homeowners insurance policies do not include weather related flood damage. If your pipe breaks, that is probably covered. But if you suffer damage because of melting snow or a hurricane, that may not be covered. Instead, you need to purchase a another flood insurance policy. These are actually backed by the National Flood Insurance Program. But even though they are backed by the US government, your local agent can probably help you get a policy.
Is your current home insurance policy too expensive? Rather than reducing coverage, you might be wise to raise your accident deductible. A deductible is the amount you pay out of your own pocket before the insurance starts to contribute. The difference in premium between a $500 deductible and a $1,500 deductible can be quite a bit. Just understand that you will have to pay that difference when you do need to make a claim. This works out well for people who are disciplined enough to put some of their savings in the bank for an emergency. You may save money by shopping too. The homeowners insurance business is as competitive as any other type of insurance business. Call agents or use an Internet form to compare insurance rates.