By: Lisa Broadbent-DiOssi

Don’t wait until a loss and file a claim to become the “expert” in homeowners insurance – it’s then usually too late to make sure you’re properly covered and you may have your claim denied or not fully paid. DON’T ALLOW THIS SURPRISE TO HAPPEN TO YOU. Your home is one of the single largest investments you’ll ever make and your homeowners insurance is your main line of defense to protect this investment!

Can you answer the following 5 questions?

1. Where would your family go if you had to leave your home for 3 months following a fire?
2. How would you pay for an injury to a child at your property for which you may be negligent?
3. How would you pay to repair hail damage to your backyard shed?
4. Are you adequately protected if an accidental fire destroyed your home?
5. What would you do if your suitcase were stolen while on vacation?

If you’re not so sure – now may be a good time to reach out to your insurance agent.

The Basic Coverage:

Most standard homeowner policies will provide coverage for the exterior and interior items in your home due to damage from:

• Theft
• Fire / Lighting
• Smoke
• Frozen Pipes
• Ice / Snow

You may not realize that your homeowner insurance will provide coverage for liability claims, medical payments, and legal costs associated with lawsuits. How would you handle a lawsuit due to your child pushing another child at the local playground and injuring them? What would you do if you accidentally hit someone with a shopping cart and caused injury? These are just two examples of what your homeowner policy will cover under the “Personal Liability” and “Medical Pay to Others” section.

How Much Is Enough?

Recently, the most frequent question asked is, “Why do I need to keep my coverage this high, when the housing market is in a “slump”?” Remember, your insuring the house – not the current market. In other words, it would still cost the same, if not more today, to rebuild or repair your current house. Beware, most insurance companies put a “cap” or limit the amount that they will pay (over the stated insured amount) in the case of a full loss to your home – even when your purchase a “replacement cost” endorsement on the policy. When purchasing a home, most mortgage lenders only require you purchase the appraised value or purchase price of your home, so make sure to ask your agent if this is enough to rebuild your house. In other words, make sure you have enough dwelling coverage or you could wind up paying the difference if you encounter a loss.

What’s Not Covered?

Read your homeowner’s policy carefully to find out what is and is not covered. Most insurers exclude damages due to an act of war, nuclear accident, flood, earthquake, identity theft or terrorism. However, many companies allow you to purchase special endorsements, such as a separate flood policy or identity theft endorsement, to cover some of these exclusions.

How Much Is Your Jewelry Worth? Art work?

Most homeowner’s policies limit coverage for expensive, hard to replace jewelry. Additional endorsements can be purchased to protect valuable items such as jewelry, furs, artwork and antiques. You’ll need to have your items professionally appraised but the additional coverage is most times worth it.

You Usually Get What You Pay For:

Ask yourself, “Am I willing to pay more in premium to have my damaged personal property replaced at the current replacement value?” If you’re willing, then consider purchasing replacement cost coverage on both exterior and interior property. When it comes to valuing property, insurance companies usually use one of two methods. The first, actual cash value, pays you a depreciated amount of the original value of the item. The second, replacement cost, is more expensive, but pays you the full value of the property at today’s cost. Basically, this allows you to replace the older item with a newer item of like value, without any depreciation.

Did Someone Say, “Discount?”

Don’t forget to tell your agent if you have a home security system, how close you are to a local fire department, or own a newer home. Other possible savings can occur from not having previous claims – Be sure to ask when purchasing a new home because a previous owner may have submitted a recent claim on the property that could show up under the new owners. A discount may also apply if you have your automobile policy with the same company.

How Much Are You Willing To “Shell” Out?

Another way to save money is to consider choosing a deductible ranging from $250 to as high as $2,500. You will save on annual premiums by choosing a higher deductible but remember to see just how deep your pockets are because you will be responsible to pay the deductible chosen before your homeowner’s policy kicks in and takes over.

Finally:

Get quotes from several insurance companies when you start your shopping but remember, the lowest price doesn’t always equal the best deal. Compare the coverage from each policy, the reputation and strength of the insurance company and the reputation of the agent you intend on dealing with – how long they’ve been in business, do they have the staff to properly service your account, can I make a claim 24 hours a day / 7 days a week and the normal business hours of the agency are all things to consider when making your final decision.