Whether you’re a third homeowner or a first there is a long list of things to take care of to ensure that your new house will be a home.
On that list should be INSURANCE!
It is an easy thing to forget about when you’re dealing with the real estate agent, the bank, your family, and of course packing!
To help you get ready to buy insurance for your house we put together 5 pieces of advice to consider before you talk to your agent.
There are different types of homeowner’s insurance policies available depending on what your situation looks like. In short, the coverages vary based on what kind of perils (causes of a loss) to insure against. To put this in non-insurance terminology, a basic coverage policy will only insurance against the “common” causes that are named/listed, broad coverage will extend the basic coverages and include more causes, and special coverage will be an open peril, meaning that it will cover anything except what is specifically excluded. Homeowner’s insurance is available for those who own a house, rent an apartment, and there is a policy for condominium owners too!
Back to the house fire that destroyed the whole house… think how much money it would cost to replace EVERYTHING that you had. Unless you add an endorsement to your policy the replacement will be on an actual cash value, meaning that the current replacement cost minus the depreciation equals the actual cash value that the company will pay for the items. Think about dishes, couches, TV’s, video games, clothes, tables, artwork, etc. When you purchase a homeowner’s policy you automatically receive 50% of the coverage limit you have for your house to replace the items you own. The limit may be decreased or increase depending on which policy type you have (different limits for homeowner vs. renters).
It is important to be sure that you have the proper amount of coverage to replace your items, because if you have too little coverage then you might be stuck with the bill for replacing the rest. Something to note about personal property coverage is that whatever is owned or used by you is covered ANYWHERE in the world. There are special limits for property at a second residence, like a vacation house, and for certain items such as guns, artwork, jewelry which your policy will describe further.
There are apps for your devices that will help you log everything in your house. Read more about those apps here. If you have an inventory of your belongings it makes the claim process easier and faster if you have a loss occur. Plus, when going through all your stuff you might find it a good time to get rid of junk you forgot you had! Or maybe find something precious that you haven’t thought about in a while!
There are many add-on’s to the coverages that come with homeowner’s policies. For example, a very common add-on is the personal property replacement cost. With this add-on you change the coverage from actual cash value to a replacement cost basis. Certain types of items will not be covered by this endorsement unless they are scheduled, such as fine arts. Other add ons include; earthquake coverage, scheduled personal property, home day care coverage, or water backup . Of course it is best to discuss what extras you can add on with your agent, remember each company is different and their options may vary.
We all love to hear DISCOUNT especially when it comes to insurance! The safer your home is the more discounts you are likely to receive. Some examples include;
These tips are only intended to help you get started thinking about Homeowner’s Insurance. We suggest talking over decisions with your agent and asking questions you may have.
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