Whether you’re insuring your first home or your fourth, it’s a good idea to ask a few questions to ensure you select the right homeowners insurance policy that matches your current needs. While it’s probably important to you that the monthly premium is affordable, it helps to know what sort of protection you have in advance of a disaster. Your insurance agent can help you decide how much coverage you need and provide answers to the following Homeowners Policy Top Ten Questions list.
Does my policy cover actual cash value or replacement cost? If your home is damaged, the out-of pocket deductible is all you need to pay to repair it under a replacement cost policy. An actual cash value policy will factor depreciation into the claim payout. This means you might have to pay both the deductible and some additional cash to restore it in today’s market. It’s generally worth the additional premium cost to ensure your home can be restored to its former glory with only your deductible as your payout. Often, home repair or replacement is covered at replacement cost while personal property such as your furniture, appliances and clothing are replaced at actual cash value. It’s often possible to upgrade your policy to have your personal property insured at replacement value as well.
Is my diamond necklace fully covered under my homeowners insurance policy? Many policies place a limit on claims for luxury items such as fine jewelry or art. Ask about your policy limits to see if you need more coverage.
Am I covered no matter how my home is damaged? Flood damage is not covered in a standard policy. Other natural disasters may not be either. If you live in or near a flood zone, you should add flood insurance to your portfolio. While overflow water damage may be covered in your policy or in an endorsement, ask your agent if flood insurance is a necessity for you.
What are endorsements, and do I have any on my policy? Endorsements are used to make your standard policy a little more specific to you. This is where you can specify special coverage for that heirloom jewelry or fancy electronics. Even identity theft coverage can be added to your policy with an endorsement.
Am I fully covered if someone is injured in my home?
The maximum amount the insurance company will pay in legal bills and damages if you are sued is shown in the liability coverage section of your policy. If a visitor slips and falls in your home, make sure you have enough coverage for potentially extensive medical bills and legal bills. Your agent can help you determine the right limit of liability to purchase.
What’s the easiest way to reduce my monthly premium? Determine the highest deductible you can afford to pay out-of-pocket in the event of a disaster. Just like car insurance, the higher your deductible, the lower your premium. You can also save money through other credits the company may offer, such as for alarms which protect your home, non-smoker credits, and retiree discounts. Check with your agent to see what credits your company may offer.
Will it cost less to insure a newer home compared to an older home? Due to more modern construction techniques and improved safety features, newer constructed homes usually carry a lower rate than older homes. If you own an older home, bringing the home up to current building codes or doing renovations can help to lower your premiums.
Are all home policies basically the same? There are many homeowners insurance programs offered by insurance companies. Of these, the HO3 policy is the most common because it provides coverage for normal loss activity, such as fire, theft, and water damage. It’s a great place to start when building your insurance portfolio.
What can I expect when I have to make a claim? Your insurance company should be there for you 24 hours a day, 365 days a year. Ask your agent to detail the claims process for you and make sure that you will have access to a claims professional when you need it.
What can I do to make the claims process easier? One of the best ways you can make the claims process flow smoothly is to provide your insurance company with a home inventory. If you have good documentation of your personal property you’ll speed up the claims settlement time considerably.