Homeowners insurance policies are designed to protect your home and personal property against loss from the perils listed in your policy.
Homeowners insurance rates vary greatly depending on your geographic location. Areas prone to hurricanes, floods, hail, earthquakes, fires and other natural disasters will generally have higher rates. Even the distance to the nearest fire department or hydrant can impact your homeowners insurance rates.
Knowing your policy is very important
Property and Property Coverage
Liability coverage
Theft off premises
Additional living expenses
What can an owner do to be prepared?
What can a homeowner do to save money?
Property and Property Coverage
Damage to accommodation and contents could be the biggest unexpected disaster awaiting a homeowner who has less coverage than necessary. Most policies offer a stated maximum amount of cover for accommodation and another amount for contents.
Generally, home coverage is based on replacement cost, which means that in the event of a total loss, the policy will provide reimbursement, up to the policy limit, to replace the structure. Ideally, a homeowner should purchase enough insurance to completely rebuild the home, known as replacement value. This figure may not be the actual market value of the home or what the homeowner originally paid for the home. This is especially true in a depressed or inflated market or if the home is simply not replaceable to its condition before the loss. Replacement cost policies, which can pay over the policy limit to rebuild the home, may be available from your insurer.
To determine how much insurance to buy, an accurate appraisal of the home for replacement cost should be performed. Working with your insurance company is important in this process. Most insurers recommend or require that a landlord insure the home for 100% of its full replacement value. Some houses, very unique such as the national register types or the very elaborate ones, cannot be insured for the exact replacement, because certain features are not replaceable in workmanship, materials or practical cost. The insurer and/or agent is the best source for these issues.
Personal property coverage is different. Most policies provide actual cash value coverage for the contents which includes depreciation, or the full value of the contents without depreciation. Real cash value means that if an electrical surge blows out a 10-year-old TV, the owner should know what to expect. Unlike full value content coverage, which would essentially provide a new television, actual cash value coverage allows the insurance company to calculate the useful life of the item and then depreciate the item at the current value. A 10-year amortized TV would only be insured for a fraction of its original cost. A homeowner may want to consider replacement cost coverage to ensure the contents are properly insured.
In addition to ensuring contents are covered for replacement cost rather than actual cash value, owners should purchase additional coverage for items that would normally be subject to loss limitations. Virtually all policies cover loss of contents up to the policy limit for items that include furniture, clothing, toys, accessories such as lamps, and other items used for decoration. Explicit limitations are set in the policy for high-cost items such as jewelry, fine art, furs, electronics, collectibles, oriental rugs, and antiques. If a thief comes in and steals a two-carat engagement ring, it won't be covered well enough without what's commonly referred to as an estate rider to cover specific, expensive items. For more information on homeowners insurance, visit our specialist site below.
