« »

Wednesday, June 19, 2013

Home insurance FAQs

Home insurance premiums are influenced by location, behavior and security equipment
Protection from personal liability claims is possible through homeowners insurance
 By Kelli Cooper

For most people, the home is going to be the greatest asset, and it is in our best interest to try and protect that asset  and its contents as best we can. This is where a home insurance policy comes in.  Extreme weather events, a fire, theft or a lawsuit could put your home and the equity you have built in serious jeopardy. If you are currently shopping for a policy, here are some frequently asked questions to help guide you in the process.

What affects premiums?


Obviously, insurance companies are all about assessing risk, and the higher the risk you may need to file a claim, particularly a more expensive claim, the higher your premiums will be. The features and characteristics of the home will be a major factor, such as the type of home it is, the type of siding, wiring, the roof and the age of the home are just a few examples. The location is also a significant factor; whether you live close to a fire station, the rate of theft in your neighborhood and whether your area is prone to severe weather events such as tornados, hurricanes or earthquakes. The presence or absence of protective devices, your credit and personal factor such as whether you smoke are also considered.

How much would it cost to rebuild my home?

When determining the amount of coverage you need, one of the most important calculations is the amount of money you would need to rebuild your home. First off, do not consider what you paid for the house as being equivalent since that also included the plot, which is not going to get burned down by a fire or completely obliterated by a tornado. You would need to consider the size of the home, local construction costs, the type of house, any special features it may have and how many bathrooms and bedrooms  to name a few. Once you have a policy, it is important to review it periodically to make sure the amount of coverage is still appropriate; if you made any additions to your home, for example, you would want to factor that into how much money you would need to rebuild.

What coverage do I need for personal belongings?

A home insurance policy is designed not only to protect your actual home, but everything inside it as well. When deciding on coverage options, you have two: replacement cost and actual cash value. The former will reimburse you what you paid for the item without considering depreciation, while the latter will only pay what the item is currently deemed to be worth. If you have items that are particularly expensive, you may need to get additional riders to cover the full value as a standard policy will have limits.

What is umbrella coverage for personal liability?

Homeowner’s insurance can also protect you from personal liability claims—say if someone gets injured on your property or your dog bites someone. But, in this day and age of massive lawsuits, the coverage offered by your standard policy may not be enough to cover judgments against you. While you may think the amounts of money awarded are totally disproportionate to the injury, the jury may think otherwise. Umbrella policies can supplement your standard coverage so you have greater protection against these suits.

About the author: Kelli Cooper is a freelance writer who writes about various insurance topics; if you are looking for insurance in the US, she recommends you visit www.kanetix.com for more information and quote comparisons.

* Image license: Royalty and attribution free