HOME INSURANCE TIPS
To protect the investment in your home, your main line of defense is homeowners insurance. If you are a new homeowner, you’re likely in the market for insurance. If you are an existing homeowner, long-term coverage with one insurer may give you peace of mind, and you may also get customer loyalty discounts; however, it doesn’t hurt to look at your options. Doing some research may uncover a program that will save you substantial dollars, or at least identify coverage issues you may want to review with your current agent.
The basics. Most standard homeowners insurance policies will provide coverage for damage to your home (and many of the items in your home) caused by theft, fire, lightning, smoke and other suddenly occurring conditions. Homeowners insurance typically also provides coverage for liability claims, medical payments to third parties, and certain legal costs if a lawsuit is brought against you. Flood insurance and earthquake damage are not covered by a standard homeowners policy.
Get the coverage you need. Lenders require that borrowers purchase a minimum amount of homeowners insurance (typically equal to the appraised value of the home). But this is often not the amount of coverage you truly need. Instead, find out how much it would cost to rebuild your home, and consider insuring it for that amount. And then periodically review the coverage each year. Replacement costs may be automatically recalculated by your insurer; however, such adjustments may not address any special improvements you may have made and other special circumstances that could affect rebuilding costs.
Exclude the value of the land. The land under your house isn’t at risk of a damage or loss from theft, windstorm, fire and the other perils typically covered in a homeowners policy, so there is no need to include its value in replacement cost calculations.Where that land is located, however, will affect rebuilding costs.
Know what is not covered. Review the policy details to find out exactly what is and is not covered — beforehand. Don’t wait until you have a loss.In addition to floods and earthquakes, standard exclusions include acts of war, nuclear accident, mold and terrorism. In some cases, you may be able to purchase special policies or endorsements that will cover these events. If you buy a house in a flood-prone area, you’ll have to pay for a separate flood insurance policy through a federal program. Separate earthquake policies are available from most insurance companies.
Get extra protection when needed. Most policies limit coverage for certain high-priced or hard-to-replace items. Additional endorsements or floaters will be necessary to protect items like engagement rings, watches, furs, antiques, multiple computers and other valuables.
Pick a reasonable deductible. To save money, consider choosing a higher deductible. Doing so is always a gamble. If you have a loss, you will have more out-of-pocket costs; however, based on traditional claim rates, by saving money on the premium, your overall cost will be less.
Benefit from home upgrades. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, and alarm system. You may also qualify for a lower insurance premium if you live near a fire department or hydrant, own a newer home or get your auto insurance from the same company. Making your home more storm proof (for examples, installing storm shutters or using fire-resistant roofing materials) may also provide some savings.