Essential Concepts to Know When Buying Home Insurance
Before I became an Insurance Agent I was like everybody else and honestly didn't know much about insurance.
I felt it was something you had to buy because it was required by law and didn't really understand the value of it.
Granted, you don't need to know everything, but, as the old saying goes, knowledge is power.
I hope you find this information valuable and it helps you the next time you find yourself in the market for home insurance.
Homeowners insurance is designed to protect you and your home from losses caused by storms, fire, theft, and other events outlined in your policy.
There are five basic parts to a typical homeowners policy: Dwelling - the actual house itself, and detached garages, outbuildings and sheds.
Personal Property - furniture, clothes, appliances etc.
Typically 40% or 60% of the Dwelling amount.
Personal Liability - protects you against financial loss if you are found legally responsible for someone else's injury or property damage.
Starts at $25,000 and goes up to $500,000 & more Medical Payments - pays medical bills for people hurt while on your property.
It also pays for injuries that happen away from home, such as your dog biting someone.
$500 to $5000.
Loss of Use - pays living expenses if your home is too damaged to live in during repairs.
The most common policy pays up to 10%-20% of the dwelling amount.
Additional "endorsements" or additions to a policy cost extra.
Examples: Personal article floaters - provides additional coverage for specific items like wedding rings, musical instruments, gun or stamp collections etc.
Many people miscalculate the construction cost to rebuild their home or dwelling amount.
They typically think the tax appraisal or market value minus the land value is accurate.
Or even worse, they think the dwelling amount should be equal to their loan amount.
The dwelling amount is simply a guess at the cost to rebuild your home, in case of a complete loss.
You might call a few general contractors in your area to inquire what they might charge to build a home of similar size and compare that with what your insurance carrier is recommending.
* Most insurance carriers use Marshall & Swift, the defacto standard in the building cost industry.
Potential Homeowner Discounts: Security Alarms Deadbolt locks - can be certified by local police officer Sprinkler system - certified by licensed inspector Age of house (New homes sometimes qualify for discounts) Hail resistant roof Multiple policies with same company Senior citizen discount - people over 50 Higher Deductibles (ie.
2-5% of Dwelling amount) Replacement Cost versus Actual Cash Value is an important concept to understand here, especially regarding homeowners.
Tip - Inventory your personal property to be sure you have adequate coverage.
Plus, in the event of a claim, you'll have a much easier time with your adjuster getting what you deserve.
Check out the following website: http://www.
knowyourstuff.
org You can download free software that helps you document your household contents, room by room.
I felt it was something you had to buy because it was required by law and didn't really understand the value of it.
Granted, you don't need to know everything, but, as the old saying goes, knowledge is power.
I hope you find this information valuable and it helps you the next time you find yourself in the market for home insurance.
Homeowners insurance is designed to protect you and your home from losses caused by storms, fire, theft, and other events outlined in your policy.
There are five basic parts to a typical homeowners policy: Dwelling - the actual house itself, and detached garages, outbuildings and sheds.
Personal Property - furniture, clothes, appliances etc.
Typically 40% or 60% of the Dwelling amount.
Personal Liability - protects you against financial loss if you are found legally responsible for someone else's injury or property damage.
Starts at $25,000 and goes up to $500,000 & more Medical Payments - pays medical bills for people hurt while on your property.
It also pays for injuries that happen away from home, such as your dog biting someone.
$500 to $5000.
Loss of Use - pays living expenses if your home is too damaged to live in during repairs.
The most common policy pays up to 10%-20% of the dwelling amount.
Additional "endorsements" or additions to a policy cost extra.
Examples: Personal article floaters - provides additional coverage for specific items like wedding rings, musical instruments, gun or stamp collections etc.
Many people miscalculate the construction cost to rebuild their home or dwelling amount.
They typically think the tax appraisal or market value minus the land value is accurate.
Or even worse, they think the dwelling amount should be equal to their loan amount.
The dwelling amount is simply a guess at the cost to rebuild your home, in case of a complete loss.
You might call a few general contractors in your area to inquire what they might charge to build a home of similar size and compare that with what your insurance carrier is recommending.
* Most insurance carriers use Marshall & Swift, the defacto standard in the building cost industry.
Potential Homeowner Discounts: Security Alarms Deadbolt locks - can be certified by local police officer Sprinkler system - certified by licensed inspector Age of house (New homes sometimes qualify for discounts) Hail resistant roof Multiple policies with same company Senior citizen discount - people over 50 Higher Deductibles (ie.
2-5% of Dwelling amount) Replacement Cost versus Actual Cash Value is an important concept to understand here, especially regarding homeowners.
Tip - Inventory your personal property to be sure you have adequate coverage.
Plus, in the event of a claim, you'll have a much easier time with your adjuster getting what you deserve.
Check out the following website: http://www.
knowyourstuff.
org You can download free software that helps you document your household contents, room by room.