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What you Should Know about Your Home Insurance Policy

- Friday, August 16, 2013

With fires in the West, floods in the south and hurricane season in full swing, homeowners are contemplating their home insurance. Insurance requires you to think about bad occurrences. It may be pessimistic to dwell on what could happen, but you do need to protect yourself and yhour investment from ‘bad’ surprises.

When it comes to protecting your home, a homeowners insurance policy is not just about safeguarding against structural damage or theft—it’s just as much about feeling secure in where you live. If disaster strikes, your focus should be on reclaiming your sense of stability. The last thing you should worry about is money.

1. What It Covers

A typical policy will pay for damage to your property and your possessions in the event of certain storms, fire, theft or vandalism. They also provide liability coverage if someone gets hurt on your property and decides to sue. Homeowner’s insurance also covers shelter costs, so you don’t have to face crazy hotel bills if you’re temporarily displaced from your house.

Homeowner’s insurance can protect belongings outside the home, too, like if something is stolen from your car.

2. What It Doesn’t Cover

A standard policy has exclusions, including landslides, earthquakes, sinkholes, power failure, war, nuclear hazard, government action, faulty zoning, bad repair or workmanship, defective maintenance and flooding. Windstorms are typically covered, including tornadoes, although insurance companies exclude tornadoes or hurricanes in some high-risk areas.

Water damage is tricky. As a rule of thumb, water from above (rainwater or a burst pipe in an upstairs apartment) is usually covered, but water from below (backed-up sewers or ground flooding) generally isn’t. If your region is prone to floods and earthquakes, you should consider supplemental coverage.

3. Why You Should Shop Around

Before committing to a policy, take the time to research an agent whom you trust—preferably one with good reviews online or via a personal recommendation.

Bottom line? Don’t just shop for a policy. Make sure you also select the best agent.

4. Which Preventive Actions Can Reduce Premiums

A working smoke detector might also help you land a lower insurance quote. The same goes for a burglar alarm. You can reduce your premium by about 5% if you install something as a simple as a deadbolt, and up 15-20% for a burglar alarm system.

5. How Replacement Coverage Differs From Market Value

Know these two key distinctions: “replacement cost” versus “market value.” Replacement cost covers repairing or replacing your entire home. Market value is how much someone would pay to buy your home and accompanying land in its current downtrodden condition.

When you’re considering the type of coverage to take out, a policy that’s based on market value is typically less expensive.

6. Why You Shouldn’t Wait to File a Claim

Make sure to ask about time limits to report a claim, and then abide by them! If you wait too long, you may not be eligible for benefits, especially if waiting has made the problem worse.

7. Why You Should Write Everything Down

Many claims are denied because people don’t keep good enough records. Homeowners must document everything that occurs during a loss, do as much as possible to mitigate the loss, and document such mitigation.
In addition to saving receipts, contracts and appraisals, document phone calls by writing down who you spoke to and when.

8. How Jewelry Is Covered

When signing up for homeowner’s insurance, note the limits on jewelry. Most people don’t realize that things like wedding rings aren’t usually covered by the basic limits in their policies. You can get an appraisal at your jeweler, and then consider buying a supplemental policy to cover it.

9. Why Good Maintenance Matters

Insurance companies would rather pay as little as possible to repair damage, so they prize early detection and prevention.

10. How to Save by Bundling

One way to save money is to bundle your homeowner’s insurance with other policies that you already own.

For more information or for a review of your policy, contact TriState Insurance.

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