Everyone knows that it is important to have adequate homeowners insurance, but what specifically should you look for when you are choosing a policy? Everyone’s situation is different, so you should think about what exactly you need to be insured against before purchasing a policy.
#1 Thing to Know: Know what you have and whether or not it is covered.
The most important thing to know about your homeowners insurance is what is and isn’t covered by your policy. You should obviously make sure that the structure of your home is covered, but it is equally as important to ensure that the items inside the home are covered.
You will also want to make sure you have liability insurance in case someone is injured on your property. Medical expenses can add up quickly and you will not want to be personally responsible for these costs.
Another often overlooked factor is whether or not your living expenses will be covered if your home is damaged and you are unable to live in the house while it is being rebuilt or repaired.
#2 Thing to Know: The market value of your items and the replacement value are not the same thing.
You will want to double check that your policy covers the replacement value of all of your belongings. This is an important distinction since the market value of an item is not necessarily the replacement value. You will want to be able to replace your household items and other possessions without combing the classified section for deals on second-hand furniture and used clothing.
Make sure that you have an accurate, up to date estimate of the value of the items in your home. Underestimating the total value of your home’s contents is an expensive mistake that can easily be avoided with a little bit of careful planning.
#3 Thing to Know: How your claims will be processed.
Just because two policies have the same amount of coverage does not mean that they are completely equal. Learn how claims are processed and what documentation you will need to back up your claim. Some policies will simply write you a check for the value of your items while others will require you to submit documents detailing the actual cost of the replacement items you purchase. This delayed reimbursement can be problematic for some families, so make sure that you know what you are signing up for when you take out a homeowners insurance policy.
#4 Thing to Know: You can save big by bundling your policies.
Most people have multiple insurance policies. For example, you probably have a car insurance policy in addition to your homeowners insurance. In many cases, you can save money on both policies by bundling them together. Your current insurer should be your first stop for a quote, but it is a good idea to shop around each year and see if a competitor is offering a better value. Your individual situation changes each year and this could trigger changes to your insurance policies.
Insurance prices can vary greatly by city, county, and even neighborhood. I am experienced in the area of homeowners insurance and would be happy to walk you through the process and share my insights. If you are in the market to buy a new home, contact me today! I’d love to hear from you.