HOME INSURANCE BASICS
Worried about buying the right type of homeowner insurance? Do you have enough or too much coverage?
Your home needs the proper level of protection, plus special provisions for valuables such as jewelry, your computer equipment and other possessions.
When you purchase a home, the lending institutions usually require mortgage customers to purchase homeowner’s insurance. The minimum levels are only designed to protect the house itself, but not necessarily your possessions. That’s why it’s important to check with your agent to make sure you have adequate coverage.
There are several types of home insurance policies. Beginning with a basic policy which covers your house and possessions against a few different peril to an extensive homeowner’s policy which covers damage from practically everything except specifically excluded events (like earthquakes, wars and floods). There are also special policies for renters, condominiums, older homes, landlords and mobile or manufactured homes.
THE APPLICATION PROCESS
Many factors play a role in determining your premium. Our insurance agents will ask you about everything from employment history to past loss history.
It is important for you to make a list of valuables and their worth, which will help the agent or insurance company determine how much it would cost to replace your home and many of the items inside. For more expensive property, such as jewelry and computer equipment, you might need special coverage in addition to the basic policy. After a discussion about your options, you will make the final decision regarding the type of homeowner’s policy you want, the deductible, and payment plan.
Many factors go into determining the premiums for a homeowner’s policy. The age of your home, materials used to build it, location, square footage, and the number of rooms all play a role.
How do you heat your home? What’s the overall condition of the house? How many people live in your home? How close is your home to the nearest fire station and fire hydrant? The answers to these questions also help determine how much you’ll pay for your homeowner’s policy.
HOW CAN YOU SAVE MONEY ON YOUR HOME INSURANCE?
If your home is equipped with an alarm system, smoke detectors and deadbolt locks, you could save money. If you have an in-ground pool or trampoline, you may pay higher premiums.
WHAT ARE DOLLAR LIMITS?
If you insure your home for $100,000, that’s the most you will get if it is destroyed, unless you ask for an expanded replacement cost rider. Talk to your agent to learn more about your policy’s limits. Don’t wait until you need to file a claim.
PERSONAL PROPERTY REPLACEMENT COST
What is the difference between “replacement cost” and “actual cash value”? Homeowners policies automatically cover household contents – furniture, appliances, etc.
What would happen if a burglar steals your six-year-old television set? With actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one.
MAKE A LIST AND CHECK IT TWICE.
Taking inventory will help you decide how much insurance you need, especially to avoid getting caught with not enough coverage after a storm.
To simplify claims, you should list each item, its value, and serial number. Photograph or videotape each room, including closets, open drawers, storage buildings, and your garage. Keep receipts for major items in a fireproof place and make sure to make copies for an offsite safe place.
ASK YOUR AGENT ABOUT OTHER SAFEGUARDS.
How about off-premises theft protection and unauthorized use of your credit cards? Make sure you understand which provisions are included and which might require that you supplement your policy.
Homeowners policies do not cover flood damage. The National Flood Insurance Program (NFIP) offers flood coverage in many areas. Princeton Agencies, Inc. (PAI) can sell NFIP flood policies and can tell you about the program in your area.
If a mortgage lender determines a home is in a special flood hazard area, the borrower might be required to purchase flood insurance.
EXTRA COVERAGE (ENDORSEMENTS)
Extra coverage endorsements expand or increase the coverage on certain items. Some of the most common endorsements cover jewelry, fine arts, camera equipment, coin or stamp collections, computer equipment, and radio or television satellite dishes and antennas.
OTHER THINGS TO CONSIDER:
- Personal umbrella liability insurance
- Higher deductibles, lower premiums
- Your credit rating – it could play an important part in lower premiums