If you’re like most people, your home will be the biggest investment of your lifetime and your most valuable asset. You made sure that your new home is in good shape by having a quality home inspection performed; now it’s time to protect both that home and what it contains.
Having adequate homeowners insurance to protect your home and its contents is imperative; if disaster strikes, you won’t have to spend your life savings, or go into debt just to get your life back to normal. Before you start shopping for a great deal on your policy, you need to understand what homeowners insurance is worth and how much you’ll need. First, calculate accurate replacement costs for your home and all your personal property, so you’ll be well prepared to compare policies. Most experts recommend insuring your home for at least 80 percent of its current value.
What Homeowners Insurance Will Cover
A basic homeowners insurance policy covers damages caused by fire, smoke, thunderstorms, lightning, burglary, defacement of property, volcanic eruptions, vehicles or aircraft and civilian chaos. More comprehensive policies include damage from earthquakes, floods, ice and heating and air conditioning units in their coverage. If you own a condominium rather than a traditional home, your condo association should provide insurance against structural damage, but you’ll still need a policy to cover your personal belongings.
Primary Types of Home Insurance Payouts
If you want a policy that pays for your property or personal belongings at the time of loss, choose an actual cash value coverage policy. Keep in mind that this type of insurance takes the age and depreciation of your belongings into account. Replacement cost coverage pays enough money to replace lost items or pay for damaged property with new items at cost. Most policies have set replacement cost limits for expensive items like jewelry, valuable artwork and antiques. If you own many items that fall into this category, talk to your insurance agent about purchasing individual riders for additional coverage.
Liability and Living Expenses
Be sure that your insurance policy includes adequate liability coverage. If someone sustains an injury on your property and sues you, your liability insurance should cover the settlement and your legal fees. You should also consider adding living expenses to your policy. If your home is damaged by a natural disaster or fire and is unlivable, this insurance will pay for you to live in a hotel or apartment while repairs are made. Be sure to read the fine print to determine what exclusions and limits apply.
Tips for Getting a Good Deal on Home Insurance
As with shopping for any important item, it’s wise to compare different brands. Get quotes from multiple insurers before making a final decision. Compare your coverage options carefully; don’t ignore the fine print. Be sure to let your insurer know if you’re eligible for any special discounts. Your home may qualify for a lower rate if you have installed smoke alarms or anti-theft devices, or you’ve recently renovated. You can also reduce premiums by raising your deductible.
Keep Accurate Records
Always keep updated, itemized records of your household contents and their value. For even more protection, photograph or videotape them to demonstrate their worth. Whenever you make home improvements or the market value of your home increases, update your records accordingly.