Your home is often your most valuable asset so the more you know about home owner’s insurance, the better off you are. Protecting your home and its contents in the event of a natural disaster, theft, fire or other emergency is the number one priority for home owner’s insurance. But even though most homeowners have insurance, many don’t fully understand their policies, which can be dangerous and costly.
Here are four things homeowners need to understand about their insurance policies:
How Much Coverage Do You Have?
Homeowners need to make sure they have enough insurance to cover the home’s structure, contents and liability issues. However, having too much coverage can be costly. Homeowners should review their policies or call their agents. Here are a few things to review:
Home structure coverage:
In most cases, it’s important to have insurance to cover 100% of the cost of rebuilding a home. To get a rough estimate of what it would cost to rebuild a home, multiply the square footage of the home by the local building costs. Homeowners can find local building costs by calling an insurance agent, appraiser or local builders’ association.
Home contents coverage:
The standard policy limits coverage to 50% of the value of the structure of a home. Homeowners should make a list of the contents of their home and their estimated value to determine whether their policies offer enough reimbursement.
If someone gets injured on your property you are going to need liability insurance. Most policies provide a maximum of $300,000 in liability protection, which may not be enough for those with significant assets. Most homeowners will want to get enough liability coverage that would take care of the total value of their assets; some homeowners may need to purchase an additional umbrella policy to ensure they have enough coverage.
What’s Typically Not Covered?
Homeowners must understand not only the amount of insurance they have for the structure and contents of their homes and their liability protection, but also what’s not covered by their policy so they can plan accordingly. Flood and earthquakes aren’t covered… even if you live in California. Usually, homeowners who live in regions with high probability of flooding or earthquakes need to purchase an additional flood/earthquake policy, as the standard policies won’t fully cover such damages. Plus, homeowners must be sure to protect their items of high value. Many times those with valuable items such as jewelry, furs or artwork may need separate policies to protect those valuables, as the standard home contents coverage won’t cover them. People who own a condo, co-op or townhouse should make sure that the building has an insurance policy to cover the common areas; individual homeowner’s policies typically do not cover this.
When potential homeowners calculate their mortgage payments they should include the costs of monthly insurance premiums. Mortgage payments often cost homeowners significant portions of their income, making it especially important for them to pay a fair rate for their homeowners insurance. Homeowners who have had their policies for a long time and haven’t checked comparative rates recently may want to do this to ensure they’re paying fair rates. In order to find the best rates on insurance, homeowners and home buyers can compare homeowner’s insurance prices with a few different services online; just search for it. Homeowners can also call policy providers (companies such as Breathe Easy Insurance Solutions, Farmer’s, Liberty Mutual and Geico) and get quotes for the amount of coverage they currently hold. There may be rates that are significantly lower on over policy holders, so you may want to switch or at least take the lower rate to your provider to see if they will match the rate. Also, saving money can be as easy as asking your provider how you can save money on your policy. Some insurers will lower rates if homeowners install an alarm system or if the homeowner also buys car insurance from them.
Homeowners have to pay a certain amount of money out of pocket if something were to happen to their homes before their insurance begins to cover costs. This sum is called the deductible. For example, a homeowner who has a $1,000 deductible and incurs $10,000 of damages on his home would pay $1,000 to repair the damages, and then the insurance company would take care of the remaining $9,000. Homeowners must know what their deductibles are and have this amount of money set aside in case the worst should happen. Remember, the lower the deductible, the higher the insurance premium. The premium is the monthly payment the homeowner makes to continue insurance coverage. Homeowners should change their deductible/premium amounts to best meet their financial needs. Some can afford to pay a higher monthly fee for their premium and keep the cost of the deductible down, but unless you live in an area where there is high chance of something happening to your home, it may be a good idea just to have a little higher deductible and save some money on the monthly. Consult your provider for a better idea.
For more information on homeowners insurance and for a free quote, call 866.822.7755.
At Breathe Easy, insurance is this easy.