A home insurance policy represents peace of mind. It is a legal contract between the home owner and the insurance provider that sets out the rights and responsibilities of each party in the event of a claim. There is nothing worse than finding out at the time of filing a claim that your policy does not cover such an event. A home insurance policy can provide many benefits provided the coverage is selected carefully.
Most insurance providers have a set of standard home policies or forms they offer to home owners. The cover you choose depends on the type and extent of benefits you want. A home insurance policy usually has two components, property and liability protection. Property insurance protects your dwelling or home against fire and lightening, smoke, theft, and water damage. Liability insurance covers medical payments and living expenses. Understanding what is covered under each will help you to get the maximum benefit from your home insurance policy.
Insure Your Building and Contents for Replacement Value
It is best to insure your dwelling or home based on replacement value. This means that if there is structural damage to your home, you are entitled to receive funds to repair or rebuild your home to what it was previously.
Your mortgage provider will require you to obtain insurance based on the appraised value or purchase price of your property. However, you may decide on a different value depending on the location and age of your home. If your house is near a coast or in a low lying land, find out whether additional insurance can be obtained to cover against floods. Some insurers provide flood cover. Others will refer you to the National Flood Insurance Program.
Having your property insured for replacement value does not by default mean that the contents of your home is similarly covered. Insurance providers normally quote “cash” or fair market value for contents. In the event of a claim, you receive the initial price you paid for the item after providing for depreciation or wear and tear. For a higher premium, most insurers will change the cover for contents to replacement value. Even then, there will be a limit placed on the amount you can claim against contents damage.
If you have high value items such as jewelry, furs, or special collections, include a special endorsement to protect them. Your insurer will require a list of such items along with their value supported by an appraisal or purchase receipts.
Other Benefits Included In a Home Insurance Policy
The liability insurance included in your home insurance policy provides legal protection against injury or damage caused to another person or property by you, other family member, or pet. No-fault medical expenses cover is beneficial for instances when some one outside your family, such as a friend or care giver, is injured in your home. Your insurance provider will pay the medical bills of the injured person. If you have to vacate your home and live in another place while your home is being repaired, then the cover for living expenses or loss-of-use included in your home insurance policy can benefit you. Note that your insurance provider will place limits on the liability and living expenses you can claim.
Ensure Your Premium is Affordable
To ensure your premium is affordable, shop and compare quotes provided by different providers (https://www.insureme.com/home-insurance-quotes-html). You can also reduce your premium by combining your home and auto policies. If your house has a security system or fire alarm and is located close to a fire hydrant or fire station, these factors can lead to a lower premium. Having a good credit score is another plus. Living in a crime-free neighborhood will also help to lower your premium. If you agree to a higher deductible, the amount you will spend with your own funds before insurance becomes effective, this too can lead to a lowering of your premium. The savings in premiums can be placed in a “deductibles” fund.
Choose a Reliable Insurance Provider
The benefits of a home insurance policy ultimately depend on the solvency and stability of your insurance provider. Inquire from your state insurance department whether your provider is licensed to operate in your state. Ascertain whether any complaints have been filed against this provider.
For more resources on home insurance, including state insurance departments, contact the National Association of Insurance Commissioners (www.naic.org). To ascertain how your insurance provider is ranked, refer to A.M. Best Company. The higher the ranking, the greater the financial standing and ability of the provider to honor your claims.
Make sure you understand how claims are processed and that you maintain a detailed list of the contents of your home in a safe place away from your home. Review and revise your home insurance policy periodically to ensure you get the maximum benefit for the premium you pay.
Saving Money on Homeowner’s Insurance: https://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.htm