7 Things to Consider When Evaluating Homeowners Insurance
When you’re shopping for homeowner insurance, remember that policies can vary widely. It is not the commodity that TV commercials have led you to believe. Some coverages may be included, and others may be available for additional premium. Here are 7 key points that you should be aware of when looking at your options.
Is my home covered for full replacement cost? This is one of the key distinctions between homeowner policies, and you’ll want to know the answer. If your home is covered only for its current market value – or worse, your loan amount – you are likely underinsured and would not be able to rebuild the home to its current state in the event of a loss.
Make sure the insured value takes into consideration all of your home’s features. The cost to rebuild is likely to be significantly more than the current market value or your loan amount.
How much is the deductible on my policy? The deductible is the amount of a loss that you pay. If you can afford a high deductible with savings or other resources, you can usually reduce your premiums. Make sure you don’t have any surprises like a separate deductible for wind and hail damage to your home.
Does my policy include earthquake coverage? Not all policies do. If yours doesn’t, you may be able to obtain earthquake coverage for additional premium. Don’t assume that you don’t need it – remember, the New Madrid fault is the most active seismic area east of the Rockies.
How much coverage do I have on the contents of my home? Contents coverage is usually a percentage of the insured value of the home. Some policies automatically provide contents coverage of 50 percent of the value of the structure, others provide 70 or 75 percent. And, you may be able to increase the amount of coverage for additional premium. Try to think of what it would cost to replace everything, even your socks.
Does my policy insure against water damage from sewer backups, sump overflows or water pressure from below the ground surface? Most standard policies do not provide coverage for these losses, but you can obtain coverage for additional premium. Do you have a finished basement? Lower areas are the first to sustain significant damages should something like this occur. Without this coverage, you would pay to remove the water and repair the damages completely out of pocket.
Does my policy provide any coverage for disappearance of jewelry or silverware? While a policy may provide a specified limit of coverage for theft of these items, “mysterious disappearance” of these items may not be covered. If this is a need, make sure you have clarification.
Does my policy provide any liability coverage for slander, libel, defamation of character, invasion of privacy or identity theft? Some homeowner policies automatically cover these items while others may require an extra premium. Know before you buy.
We can help you evaluate your needs and your situation so that you have no surprises should you have a claim. Remember, insurance is a lot like toilet paper – In order to avoid a rough experience do not purchase solely on price.
Thanks for reading!