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Home/Condo/Renters - Knowledge

November 13, 2009
Tips on Homeowners Shopping and Coverage

Shopping:

In most instances, “you get what you pay for”. It is always a good idea to “shop-around” for an insurance policy that best fits your individual needs. Keep in mind that price is not the only thing that makes a policy the best fit. Insurance policies differ from company to company and an insurance professional can guide you through the process of choosing coverage that is right for you. There are many insurance companies to choose from and I prefer those that have the financial prowess to be there for you in a claims situation. These companies usually have an A- rating or better.


How much coverage should I purchase on my Dwelling?

You should insure your home for at least the insurance value. Many homes in the US are underinsured and according to a professional valuation company about 58% of homes in 2006 are not insured to the proper value. Most insurance professionals have access to valuation software to assist you in choosing the correct amount. The amount is derived from entering data such as square footage and anything that makes the home unique such as hardwood floors, upgraded kitchens and upgraded bathrooms. Most times, if this amount is less than your mortgage amount, the mortgage company requires the home be insured for at least the amount in which you are mortgaging.

 

What about my Personal Property?

This coverage is automatic and on most insurance policies it is 70% of your dwelling amount. I would suggest that you do a personal inventory of what is in your home and the costs associated with replacing the items. If you take pictures or video, it’s a good idea to keep in your safety deposit box or in a fire-proof safe. For high-valued items (ie. jewelry, fine arts, etc) most insurance carriers will require appraisals and schedule these items separately on your policy.

 

Personal Liability?

More than likely, your homeowners policy provides coverage for personal liability. Occasions may arise when you are held responsible for injury you cause to another individual or their property. When choosing your limit keep in mind that you should buy coverage for at least what you have acquired in assets.

 

Replacement Cost vs. Actual Cash Value:

You may know that a loaf of bread or a gallon of gas does not cost the same as it did years ago. The same is true with building materials, labor and your tv, furniture and other home items. If your policy does not provide Replacement Cost you could be in for a shock at the time of a loss. Insurance companies will depreciate the value of your home and personal belongings if you have Actual Cash Value on your policy. For example they will reduce the payment on your items by the age and sometimes wear & tear.

 

Discounts:

Most insurance carriers offer discount on homeowners insurance.Here are a few examples…

• Consider increasing your deductible.
• Alarm systems
• Smoke detectors
• Fire extinguishers
• Deadbolt locks
• Consider insuring both your auto(s) and home with one company

 

 

Watch how you pay your premium.

Most carriers charge between $3-$5 per month for monthly billing. It creates more administrative work for them, meaning more cost to you. Paying every six months is ideal, but if you must pay monthly, do an auto-pay via a credit card or checking account as these charges will be less.

 

Improve your credit.

If you have poor credit, you are likely to be placed in a high risk tier with your carrier. If your credit has improved since you opened the policy, be sure to contact your carrier and have your credit reviewed.

 

Additional information:

Along with having a qualified insurance professional, the following webpage is a good source for information. http://www.ins.state.pa.us/ins/lib/ins/consumer/brochures/Home_2005.pdf


This article is for informational purposes only. It is suggested you speak to a licensed Agent or Broker with any questions or concerns.

 

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