5 things you must fully understand about your homeowner’s insurance policy

Insurance is security. It allows you to secure what matters such as assets, finances, health, and even your loved ones. Insurance companies offer you the coverage that protects you against life’s unpredictable circumstances and events such as natural disasters, theft, or a decline in health. There’s really no doubt, having insurance is absolutely imperative.

Insurance is your security blanket and safety net for the really bad days. Imagine you save up to get that dream car and then one day out of nowhere you meet with an accident. Without automobile insurance, you would lose everything. But with a good insurance policy, you will at least be able to cut your losses.

Insurance policies are especially important if you have a family. Have you ever thought of what would happen to your family if something happened to you? While there are many policies out there, picking the right one can be tough. That’s because insurance is seen as complex. Folks worry that they may not know exactly what they are buying. In this blog, we will attempt to help you understand your insurance policy better. 

Picking the right limit in your homeowner’s policy 

The usual standard when it comes to homeowner policies is for natural or manmade disasters such as fire, stormy weather such as damage in a hail storm. If you live in high-risk areas which are prone to floods or earthquakes, you would need that coverage. Consider all the possible scenarios which could require a rebuild of your home, and ensure that your limits are high enough to recover these costs. Remember that your rebuilding costs may differ from your current market price. So, if you’re setting your limits based on your mortgage, then you may not be able to recover the entire costs of rebuilding. While it is the responsibility of providers to recommend an appropriate coverage limit while factoring all these scenarios in. 

Jewelry and homeowner policies 

Would your jewelry be protected? That depends on the details of your policy. Usually, the homeowner’s insurance will cover these assets only if they are damaged or lost, under special circumstances. There are several cases under which your jewelry can be insured. Theft is one such case in which your jewelry will be insured – sometimes even for just a part of the value. Similarly, vandalism, damage from weather conditions such as snow or ice, water heater cracking, and fire damage are some of the common perils stated. 

The deciding factor when it comes to rates

There’s a range of factors which will affect your premium for the homeowner’s insurance. Some of these could be the age of the building, the number of units within the building, the construction itself, the different uses of the building, and even the proximity of the structure from the fire station!

Replacement cost Vs Actual cash value

Replacement cost coverage refers to the cost of replacing an item without the depreciation being deducted. Actual cash value, on the other hand, refers to the cost of replacement of an item, minus the depreciation value. Replacement cost coverage is something that you can add to your homeowner policy.

Living in a flood zone

Flood insurance is something you want to consider, especially if you are living in a flood zone. It is not always included in a homeowner policy so you may have to seek to add it if needed.

Adding earthquake coverage to your policy

While the East Coast is not thought to be at risk from earthquakes, if you own property in places like California then you may want to think of protection. Although direct damage caused by an earthquake is not covered in the usual homeowner’s policy, it can usually be added as an endorsement. Such endorsements can cover landslides, mudslides, volcanic activity and other such dangerous movements of the earth.

Consider add-ons for valuables

If you want to secure items of exceptional value in your home, such as antiques, fine art, silverware or technology, consider getting a personal articles floater. This essentially protects all of these items. Think about the limits of the policy, umbrella policies provide additional liability coverage which pushes the limits of primary insurance policies.

The stance on legalities 

If you are ever sued, a standard policy covers the legal expenses after factoring in the details and circumstances. If you want better protection, it makes sense to purchase an umbrella policy which will take care of legal expenses that may go over the standard homeowner policy.

As you can see, there’s a lot to take in. But really, there’s no question that you must fully understand any insurance policy before you accept it. You must do your homework. It helps to choose a company that is transparent. Such a company will help you make smart financial decisions and may also offer great rates.

We know that insurance policies can be a touch intimidating, but they don’t have to be. If you can take a step back and understand the needs of the company with regard to yours, everything should be smooth sailing. That’s what our customers tell us, anyway!