Ten Things to Consider When Getting Homeowners Insurance
You’re buying a home, and that is a significant investment. It’s probably the most important investment you’ll make in your life. What’s the second most considerable investment? Buying homeowner’s insurance. There are so many options for homeowner’s insurance, so you must choose insurance that best suits you and your specific needs.
Before you start decking out the man cave or adding an apiary to the backyard, think about what you’ll need to cover loss, damages, or damages to others in and around your new home. There is an equal number of homeowner policies to think about as there are different types of homes and living situations. To make things a bit easier, here are ten things you should think about when planning your homeowner’s insurance purchase.
Buy the right insurance
You’ll want to look for coverage in four key areas.
- The physical structure of your home.
- Your belongings.
- Your liability to others
- Your living expenses if you’re somehow forced out of your home.
If there is a disaster, you’ll want to be able to rebuild your house and replace everything in it that you’ve lost. You’ll also need enough liability coverage in case someone gets a wild hare and wants to sue you. As for living expenses, they should cover the cost of making your house liveable post-disaster or cover your costs while you’re living elsewhere while the house is repaired or rebuilt.
Get replacement value insurance
This isn’t about open market prices or “fair market value”; you want to be able to replace everything you’ve lost with similar new items. It’s not a flea market, and you don’t want to haggle. Ensure that your policy clearly indicates that both your home and all the contents of that home are covered by replacement-value insurance.
When it comes to the actual house, look for extended or guaranteed replacement value coverage. This type of insurance will cover up to 100% of your home’s value, plus a certain percentage to cover rebuilding the home in the current market.
Know the claims process
Some policies will offer coverage similar to another, meaning the same amount of coverage, but they can be significantly different when making you whole after a disaster or loss. Make sure your agent explains precisely how claims are handled and pay close attention to what the timeline is for writing the check. It’s a good idea to ask these questions,
- Do you receive the entire claim upfront?
- Do you receive a fraction at a time, and if so, what is the fraction and timetable?
- Does the claim pay for all the items you’ve lost, or is it held to just the things you replace?
- Do you get paid the cash value of what you’ve lost immediately, or do they expect you to make the purchase, and then they will check the receipts for proof?
- How long do you have to make replacements? If the disaster or loss just happened, is there adjustment time, or are they expecting an immediate replacement before you’re paid?
Knowing when and how much you’re going to be paid can ease some of the stress post-loss. Know the rules.
There are two steps to filing a claim; proving you own particular items and verifying their worth. This is even easier now in the age of smartphones with state-of-the-art cameras and video capabilities.
Make a sweep of your home with your video camera, go carefully room by room, and get everything you own on video. Check the attic, basement, closets, off-site storage areas, every single place where you might hold or store items, get them all recorded. Just make sure you record, in some way, all the items you own.
Now, make copies of any video, pictures, or lists and put a copy with your policy in a safe deposit box. If you decide to keep all of this at home, still make copies and leave them with a trusted friend or family member that doesn’t live with you. Also, send copies of everything to your insurance agent immediately.
Some policies limit the amount you can claim on big-ticket items like large flat-screen TVs, computer equipment, jewelry, furs, or even fine collectibles. These policies will pay out only a fraction of the replacement value. If this happens to be the case, you’ll want to pick up a special policy known as a “floater” or “endorsement” for each of these unique items.
If the item is new, save the receipt with your inventory, as mentioned above, and send a copy to your insurance agent.
If the item is older, like an heirloom, have it appraised and get the appraisal on paper; then, make a copy, put one copy with your inventory, and send another to your insurance agent.
Stay up on inflation
This is vital when it comes to your homeowner’s policy. It may have cost you $200K to build your new home ten years ago; however, it could cost $250K to rebuild it now. When it comes time for a policy renewal, have a chat with your agent and make sure your coverage amounts are in step with the time and the market. Inflation is going to be a significant factor in this case. If or when you make improvements to your home, be sure to add those to the total.
For those who own a condo or a co-op
If you’re a condo or co-op owner, protect your property. Make sure your condo board has a policy covering all common areas and get a copy of that policy.
You’ll also want to check the bylaws carefully so you know what portion of the condo you must cover. The terms are usually from the drywall in but, make sure you know going in so you’re not caught unawares or lacking coverage.
Consider flood and earthquake insurance.
This, obviously, is specific to certain areas of the country that are more prone to floods and earthquakes. You should know that most policies do not cover these particular natural disasters. However, if you’re looking for flood insurance, you should contact The National Flood Insurance Program and, if you’re in California, you can get earthquake insurance at the California Earthquake Authority.
As we said, most policies do not cover these natural disasters so, if you’re living in a prone area, you’re going to want to carry insurance for these.
Take out an umbrella policy
This sort of policy is all about liability insurance. This type of coverage will pick up the tab if someone gets hurt on your property or gets hurt due to one of your family members’ actions. On most homeowner’s policies, this tops out at about $300,000. However, in reality, no one ever sues for $300,000; they usually start at one million dollars.
If you have assets you want to protect, an umbrella policy will give you extra liability coverage on your home and auto.
Umbrella policies are usually cheap and start between $200 and $350 per year.
Life-changing events? Call your agent
Marriage, divorce, a death in the family, kids finally moving out or, kids suddenly moving back in these are life-changing events, and they can change the amount of insurance you may need or even the items you want to be covered. All of this changes over time, so you want to stay on top of it and keep your agent notified. It’s also wise to keep your inventories up to date.
It’s your home. This is where memories are going to be made, family grown, and life will take place. It’s precious and unique, and you want to keep it safe. You want to keep everyone safe, your family, friends, neighbors, and even the strangers walking by. Your home is a significant purchase, and you want to give it the insurance it needs. Talk to the good folks at Revere Homes, and ask them for any and all advice they can offer when it comes to homeowner’s insurance. They’ve been building beautiful semi-custom homes for a long time, and they have plenty of experience to pass along. Protect what you love, and it will last a long, long time.