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Wednesday, February 19, 2014

Home insurance and why it's more than just preparing for a rainy day

Benefits of homeowners insurance policies
Clarify home insurance policy terms with an agent
Homeowners insurance can help protect your home and its contents, but it can also protect you from other perils.

A standard homeowner’s policy will protect you from common perils like fires, thefts and damage from fallen trees. It will also protect your possessions from theft and damage. This policy will also protect you from liability if a guest is injured on your property. 

Above all, and most importantly, very few things can come close to the peace of mind that comes from knowing that you, your family and assets are fully covered from anything that might occur in the future. 

What coverage do you need? 

Most homeowners start with a standard homeowner’s policy, which is also called an HO-3 policy. This provides protection for your home and possessions from theft and fire. If you live in an area that is prone to either earthquakes or floods, you will need to purchase additional coverage for these perils. You also may need to purchase additional coverage if you own works of art, valuable antiques or expensive jewelry.

How much coverage should you purchase?

Your standard homeowner’s policy should provide enough coverage that you could rebuild and refurnish your entire home if it is destroyed. Your premium will be cheaper if you choose a higher deductible. As a rule, it’s not a good idea to file a claim for anything under $1000.00, so your deductible should be at least $1,000.00. Homeowner’s insurance is offered at two different levels of coverage, actual cash value and replacement cost. While actual cash value coverage is cheaper, it will only cover the value of your possessions for their current worth. Replacement cost will cover you for the current cost to replace your damaged possessions.

Liability coverage

If a friend comes over and falls off your deck and breaks their ankle, they can sue you for liability. Your homeowners policy will help protect you in case this happens. Most policies offer at least $100,000 of liability coverage. You can also purchase supplemental liability coverage that will increase your protection to $1,000,000 or more. This coverage is also called an umbrella liability policy. It is a relatively cheap way to protect against any personal liability claims.

Know your policy

Your real estate insurance policy will provide a listing of the coverage and deductible amounts for your policy. It will also list all perils insured against and any exclusions to your policy. Read over your policy carefully and if there is anything that is not clear then ask your home insurance agent to clarify it for you. Keep your homeowner’s policy in a secure place and keep your insurance agent’s phone number programmed in your phone in case you need it.

Follow these simple tips and you will have the peace of mind that your home and possessions are protected in case of loss. Remember to review your coverage once per year so that you always have adequate coverage. You'll sleep better knowing that you, your family and home are covered in case something unexpected were to occur. 

Image license: US-PD