Having an insurance policy as a homeowner is essential in cushioning you from losses when a disaster strikes.
Unfortunately, some people feel like they are getting a raw deal from their carriers especially when the damage involved is substantial. The probability of disagreeing on the value of the loss is high when your claim is substantial.
It is common for insurance companies to transfer risks to the insured. Most home insurance carriers have stopped covering properties in areas prone to hurricanes, or they demand high premiums for such homes. Some use insurance jargon to evade paying some claims where possible.
Therefore, you should be sure of what to look for in home insurance before selecting a policy.
Below are critical considerations to make when buying insurance for your home.
1. Find a Reliable Insurance Firm
The fundamental aspect which defines a good insurer is the handling of claims. Some insurance companies are dependable than others in dealing with customers’ claims. You can weigh the chance of having disagreements with a firm by evaluating its damage estimates.
Customers feel cheated when they receive a meager settlement for evidently considerable damage. Therefore, you must research in-depth to define a list reliable home insurers who won’t disappoint at your time of need.
2. Insure Your Home Sufficiently
A significant percentage of home owners end up underinsuring their homes. For this reason, they receive a smaller settlement for their loss than its real value. The cost of rebuilding a house can be overwhelming especially the original home is destroyed.
The market value of your home does not always match the cost of replacement of the house. Your insurance should be able to cover the price of building materials and labor for constructing the home from scratch.
Homeowners need to understand the available coverage to ensure that they pay for the right insurance. Some typical forms of homeowner insurance policies are as follows.
HO-2: The policy protects the insured against 16 perils outlined in the policy
HO-3: It protects against all perils apart from those excluded from the policy.
HO-5: A premium policy which protects newer, well-maintained homes against all perils except the ones excluded by the policy.
HO-6: A policy for condominiums which includes liability coverage, personal property, and coverage for improvements to the owner’s unit. Insurance for the structure is usually through the association.
HO-7: Same as HO-3 policy, but covers mobile homes.
HO-8: Similar to an HO-2 policy but for older homes. It covers actual cash value only.
Your insurer can customize a home replacement package for you which includes the size of the building, its features, and age. The coverage should also incorporate the cost of adhering to the prevailing building code. Remember to review the estimate periodically.
3. Compare the Offers of Various Companies
Most mortgage lenders expect you to secure a homeowners insurance cover. They may also require you to purchase extra cover form natural disasters like floods. However, they won’t demand that you buy the insurance from a given carrier.
To get the best deal, compare the extent of coverage from various dealers, their prices, and reputation. Some states publish the rates of different insurance companies for standard coverage. You can study such reports and establish the carriers with the most favorable prices.
Then you can contact them and request for custom quotes according to your requirements. However, you should give priority to value, not the price. Look for customer reviews to judge the kind of handling you can expect from the carrier in times of disaster.
4. Understand the Homeowners Insurance Jargon
The terms used in insurance may not be as straightforward as the natural language. Ensure that you understand the terminology applied in your policy of choice. Here are some of the words and phrases you are likely to encounter when buying home insurance.
Premium is the amount you pay to the insurance company. The payment is usually made monthly or annually.
The word deductible in insurance means the amount of money you have to pay before your carrier contributes. A higher deductible means a reduced annual premium.
Also known as the contents of your home, these are the tangible items in your home. Examples include furniture, clothing, and household electronics.
Liability coverage is a policy which pays medical or legal fees is a person gets hurt within your property.
Actual Cash value
This type of cover offers the current monetary value of your home or personal property taking depreciation into account.
The settlement for replacement cost pays for the total amount for replacing your home or personal property to a maximum dollar amount. Homeowners should be sure that the maximum amount achievable under their policy is enough for their property.
Some people own items of high value which may not fit the standard cover for regular household things. Riders are policies which enable you to cover items valuables like jewels, antiques, and chinaware, for example. Holders of HO-8 policies can consider additional riders for expensive features of their homes like air-conditioning and ventilation systems.
5. Control Your Risks
Your home’s exposure to risks contributes to the amount of money you spend on premiums and deductibles. Therefore, it is prudent that you reduce your risks where possible.
Fire is one of the leading causes of the highest claims. You can get more discounts if you install fire-resistant roofing materials. Keep a fire extinguisher in your home to arrest fires as soon as they start.
Materials like asphalt, metal, and concrete can also protect your property from damage from debris and hail. Involve construction experts while erecting your home to come up with a disaster-resistant building.
Insurers give discounts to people whose homes have burglar alarms, smoke detectors, and deadbolt locks. Employing such measures diminishes not only your premiums but also reduces the chance of experiencing the related damages.
What to Look for In Home Insurance – Final Thoughts
Homeowners need to invest in insurance to gain protection against the consequences of a disaster. When considering what to look for in home insurance, do not forget that disagreements can arise after filing your claim. Part of the reason is that the insurance company wants to limit its expenditure.
You can prevent disputes with your carrier by providing evidence to support your claim. Financials documents, receipts, and photographs can help you to present a convincing argument. Most importantly, take risk control measures to safeguard your home from disaster in the first place.
If you’re interested in insurance cover, reach out to us to get a quote.