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RMC Insurance Services
Home Owners
Insurance > Questions
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.
Just the basics
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
- Ice and snow
- Windstorm/Hurricane
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's not covered?
Read your homeowners insurance policy to find out
exactly what is and is not covered. Do this before you
suffer a loss, so you won't be surprised. Most insurers
exclude damages caused by an act of war, nuclear
accident, flood, earthquake, and terrorism, although
you may be able to purchase special policies or
endorsements that will cover these events.
A diamond is forever. Or is it?
Most homeowners insurance policies limit coverage
for certain high-priced or hard-to-replace items.
Additional endorsements or floaters will be necessary
to protect items like engagement rings, watches, furs,
antiques, and other valuables. You'll need to have each
item appraised.
How much is enough?
Mortgage lenders require that borrowers purchase a
minimum amount of homeowners insurance (typically equal
to the appraised value or the purchase price of the
home). But this is often not the amount of coverage you
truly need. Instead, find out how much it would cost to
rebuild your home, and consider insuring it for that
amount.
You get what you pay for
Are you willing to pay more to have damaged personal
property replaced? If so, consider purchasing
replacement cost coverage with your homeowners
insurance. When it comes to valuing property, insurers
generally use one of two methods. The first, actual
cash value, pays you an amount equal to the replacement
value of the property, minus depreciation for the years
you owned the item. 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 item 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.
Sound the alarm
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. |
