How To Buy Homeowners Insurance
Just the thought of considering homeowner’s insurance will cause the eyes of many to glaze over. When you get down to it, though, it’s not that complicated. There are some basic things one needs to know about homeowner’s insurance. Start with these, and things will go much smoother throughout the process.
Unquestionably,
your home is probably the biggest single investment you will ever make. That being the case, insuring that investment is something to be considered and approached very seriously. Here is some important information every homeowner ought to know about insuring their home that will help you get the right insurance and even save some money along the way.
Comparison shop – when it comes to insurance (of just about any kind) the average person can save some money by taking the time to shop around. Get at least three different home insurance quotes. You may be surprised at how much variation there can be from company to company. It’s worth looking into.
Three types of insurance – homeowner’s insurance is actually a combination of three types of coverage: the structure, contents, and liability coverage. Structure, obviously, is intended to cover the actual physical structure and contents is for all of your property that is contained in the structure. Liability insurance is to cover you and you finances in case someone is hurt or injured while in your home or on your property and you get sued for damages (more on this below).
One other thing about content insurance; don’t assume that all of your belongings are automatically covered. If you own any items of particularly high value, such as jewelry, artwork, furs, some computer equipment, etc., these items may require a special rider to your policy in order to be covered. Be sure to check with your insurance provider if you have any questions.
Cash value vs. replacement value – Homeowner’s insurance can be either for cash value or replacement value. What does that mean? Cash value coverage will provide for you the cash value of the property at the time of loss. It accounts for the depreciation of value. Say you have a 10 year-old appliance that goes out. Cash value coverage will provide for you the cash value of that 10-year old appliance. It’s value will have depreciated and what you get certainly won’t cover the cost of replacing it. Replacement value coverage, as you may have guessed, does not take into account depreciation. Rather, it will pay out whatever it costs to replace the property lost.
Liability insurance – A typical homeowner’s insurance policy will include liability insurance. This protects your finances in case you are sued for damages if someone is hurt or injured in your home or on your property. Most homeowners don’t know this, but you are even liable for uninvited persons. In other words you are also liable for hurt or injury to trespassers.
Two kinds of liability coverage are needed. The first kind kicks in if there is an accident on your property and you get sued for damages. It covers the cost of your legal defense. The second kind kicks in if the injured person required medical attention and you are held liable for the accident. This covers the cost of medical expenses incurred.
Deductible – one last item for consideration that could actually save you some money is to consider lowering your deductible. The deductible is a set amount of money you must pay first on any claim before the insurance company will begin paying. The higher the deductible, the less expensive the insurance. Of course, you need to have the amount of the deductible set aside in case a claim is made.
