Purchasing Home Insurance Knowledge
You Need Home Insurance
Homeowners need to purchase insurance to protect their homes and personal property. Tenants need insurance to protect their furniture and other personal property. Everyone needs protection against liability for accidents that injure other people or damage their property.
Decide How Much Coverage You Need
The better your coverage, the less you will have to pay out of your own pocket if disaster strikes. It is important to note that the amount of coverage you buy for your house, contents, and personal property will affect your cost.
The deductible is the amount you have to pay out-of-pocket on each claim and applies only to coverage on your house and personal property. Make sure when choosing a policy that you are comfortable paying the deductible if you make a claim. Remember, a policy with a $100 deductible will cost more than one with a $250 deductible. Higher deductibles may be available at a reduced price.
Replacement Cost or Actual Cash Value
You have the option to choose to insure your home and belongings for either replacement cost or actual cash value. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. It is important to insure your home for at least 80% of its replacement value. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.
Shop Around Before You Buy
You are not required to purchase insurance from the company your lender recommends. There are a number of unbiased sources available to find out what different insurers charge for identical products and services.
Ask Your Agent About Discounts
In some states, insurers offer lower prices for such things as insuring your home and car with the same company, installing deadbolt locks or alarm systems, or replacing the roof.
Basic Coverages Available
Whether you own or rent, there are different packages of home insurance offered to protect your home and belongings. Each package protects against a specified number of events that cause damage to property, such as fire, windstorm, and theft. In addition, each package policy usually contains four additional types of coverage: additional living expenses, medical payments, personal liability, and property damage.
Where to Shop
In addition to searching for local agents and companies online or in a local directory ask your neighbors, relatives, and friends for recommendations on insurance companies and agents. Remember to shop around to get the best price and service.
Read Your Policy Carefully
You should be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities, as well as those of the insurance company, are clearly stated. When you purchase home insurance, you will receive a policy. You should read that policy and make certain you understand its contents. Keep your policy in a safe place and know the name of your insurer.
Review Your Home Insurance Needs Every Year
Check with your insurance agent at least once a year to make sure your policy provides adequate coverage. The addition of a room, new insulation, or remodeling add value to your home and, therefore, may increase replacement cost.
If you have questions, please call Consumer Services at 803-737-6180 or your insurance provider.