Buying homeowners insurance can be confusing. If you are in the market to protect your home and possessions, you may want to do some research before committing to a policy or one specific insurance company. Ask questions and find an agent you trust that works with a company that has a good reputation for keeping their clients happy.
Your home is your castle and your possessions represent not only your past, but your present as well. You have worked hard to be able to live in the fashion you have become accustomed to, so it is in your best interest to make sure things can be replaced if a tragedy or accident occurs. When buying a policy make sure you know what it will cover. Some policies may focus more on the replacement value of a house or specific possession instead of its actual cost. Knowing the difference between these two amounts will affect how much you will want to ensure the property for and how the much the premium for the policy will be. For example, a 2 story, 4 bedroom home may be valued at only $65,000, but to build the exact same home at today’s prices, the replacement value may exceed $100,000. It will be up to you what you decide to insure the property for. If you would replace your home with a smaller one that would cost less to build then insure the property for its actual value. If you want a house similar to what you have now, bit the bullet and insure for the replacement value.
Many homeowner policies cover a variety of things including roof and fire damage, theft and various forms of liability. Liability can be anything from your dog biting the mail man to you cat Skippy tripping the neighbor lady as she walked to the front door to trade the daily dose of gossip. Most insurance policies have liability clauses that cover all types of accidents that occur on your property.
A family’s possessions can also be replaced if an itemized list of valuables is included within the policy. The contents of the home that have considerable value, such jewelry and works of art, should be listed in great detail within the body of the policy.
One of the biggest areas of confusion when purchasing a homeowner’s policy is the phrase “Act of God”. Many policies claim that “acts of God” are not covered. This can include damage to due ice and wind or other natural disasters. In recent years, people have discovered that water damage caused by flooding can sometimes be a gray area when it comes to insurance. Most companies offer a “Flood Insurance” rider that is attached to the policy and covers several types of water damage.
Never buy insurance without reading the fine print. Know what you are signing up for and what a policy will cover. Making sure you have the answers to help you make an informed decision is the best way to cover your assets in this type of situation.
