Homeowner's Insurance Basics
If you're a homeowner, you want to protect your investment. But, that could be trickier than you may think. Homeowner's insurance requires a delicate and specific balance of coverage. A plan that encompasses everything that could potentially damage your home probably doesn't exist, and trying to insure for everything has the potential to increase your premiums dramatically.
With this in mind, how can you determine exactly what you need? The best way to start is by becoming familiar with what you already have and with the different types of coverage still available.
Know Your Home
If you aren't sure about exactly what kind of coverage you need, start by answering the following questions:
- How old is your home? Does it require an unusually high amount of maintenance? Do you anticipate needing to make more improvements?
- If your home is destroyed, how much would you need to rebuild it?
- Does the area where you live experience a high occurrence of severe weather?
- Do you plan to rent out your home or to host individuals who are not part of your family?
Your answers to these questions could help you narrow down some of your policy specifics. Take your time in answering them and try to be as objective as possible when forming your opinions.
Understand Exclusions
Exclusions are items that are not included in your home insurance policy. Exclusions will vary among providers and policies, so the only way to know what is covered and what is excluded is to read the fine print of your contract carefully. Some of the more frequently excluded events include:
- Mold
- Pet Damage
- Pollution Damage
- Damage from Professional Services
- Floods and Water Damage
- Earthquakes
If you feel adamant in obtaining a type of coverage that is excluded from your policy, you may be able to add it separately. As a general rule, though, you should find a policy that already includes most, if not all, of the coverage you want.
Cover the Essentials
Every homeowner has different needs. Consider the following important aspects of your coverage and keep them in mind as you shop:
- Replacement Cost. Insuring your home for 100% of its value means that, should a catastrophe claim your home, your insurance will provide the necessary funds to rebuild it.
- Personal Belongings. Your possessions should be included in the replacement cost of your home. To make an estimate of how much your possessions would cost to replace, take a thorough home inventory. Make a list of items and include their states of condition as well as your estimate of their values. You may even want to take pictures of your belongings to ensure a secondary level of proof regarding their worth.
- Temporary Expenses. If something prevents you and your family from being able to live in your home for any period, some of the cost for temporary housing arrangements should be covered by your policy.
Injury Liability. Should someone not covered by your policy be injured on your property, liability insurance can prevent you from having to pay heavy legal compensations.
