|
|
|
|
 |
Home Insurance
Advice |
|
| |
Buying a home is one
of the single largest investments that most people ever make. If
you need to protect that investment, your main line of defense
is homeowners insurance. Most standard homeowners insurance
policies will provide coverage for damage to your home (and many
of the items in your home) caused by: |
 |
Theft |
|
|
|
Fire and
Lightning |
|
|
|
Smoke |
|
|
|
Broken Pipes |
|
|
|
Ice and Snow |
|
|
|
Homeowners insurance
also provides coverage for liability claims, medical payments to
third parties, and legal costs if a lawsuit is brought against
you. The most common amount of liability coverage included in a
homeowners policy is $100,000, but you may need much more,
depending on your circumstances. |
 |
What
will not be cover by the insurance?
|
|
|
Is very important
that you read the homeowners insurance policy to find out
exactly what is and is not covered. Always do this before you
suffer a loss, so you won't be surprised. Most insurance
companies exclude damages caused by an act of war, nuclear
accident, terrorism, earthquake, and flood, although you may be
able to purchase special policies or endorsements that will
cover these other events. Most homeowners insurance policies
limit coverage for certain high-priced or hard-to-replace items.
However, additional endorsements or floaters will be necessary
to protect items like expensive jewelry, furs, antiques, and
other valuables. You will need to have each item appraised
individually. |
|
|
How
much should you pay?
|
|
|
All mortgage lenders
require that borrowers get a minimum amount of homeowners
insurance (usually equal to the appraised value or the purchase
price of the property). But this is not necessary the amount you
really need. Instead, do some research and find out how much it
would cost to rebuild your property, then consider insuring it
for that amount. Are you willing to pay extra by having damaged
personal property replaced? If so, consider purchasing
replacement cost coverage with your homeowners insurance. When
it comes to valuing your property, insurers generally use one of
two methods. The first, actual cash value, pays an amount equal
to the replacement value of the property, minus depreciation for
the years you owned the property. The second, replacement cost,
is more expensive, but it pays you the full value of the item
today, so that you can replace the old property with a new one. |
|
|
How deep are your
pockets? |
|
|
To save money,
consider choosing a deductible of $250, $500, or even $1,000. In
the event of a loss (e.g., water damage from a leaky roof),
you'll be required to pay this amount out of your own pocket
before your homeowners insurance takes over, but in the
meantime, you'll save on premium charges. Don't forget to tell
your insurer if you have a home security system (e.g., fire,
burglar, emergency). Most insurers offer discounts for such
safety features. You may also qualify for a lower insurance
premium if you live near a fire department or hydrant, own a
newer home, own a home built out of fire-resistant materials, or
get your auto insurance from the same company. |
|
|
Shop around |
|
|
Get quotes from
several insurance companies when shopping for homeowners
insurance. But remember, the lowest price does not always equal
the best deal. Compare the coverage each policy offers, and
check with your state's department of insurance to make sure
that each company you're evaluating has a good reputation in the
industry. |
