Homeowners' insurance isn't necessarily a complicated concept. However, before purchasing a policy, it's important to get the facts right. With the right information, you can avoid costly mistakes like paying higher premiums or being underinsured. Here are some home insurance facts worth keeping in mind when you're purchasing your policy.
Once your home is damaged by a covered event, say a fire, you can file a claim for compensation. Your insurer will send an adjuster to assess the damage to your property. You'll be compensated based on the adjuster's report. If you discover a covered loss after receiving a check from your insurer, you may reopen the claim. Your insurer will send you another check if the claim is evaluated and deemed valid.
Standard home insurance policies cover hazards like fire, storm, or wind damage. They usually don't include flood or earthquake coverage. For protection against these perils, you must purchase separate policies. Also, these policies may not provide wind damage coverage in some coastal regions. Therefore, homeowners will have to buy additional coverage for such excluded hazards.
When insuring your residential property, it's always important to know the amount of financial protection you're getting from the policy. In most scenarios, the property's market value is usually less than the cost of rebuilding it. What if you want to rebuild your property after it is damaged in a covered event? In this case, you should cover your home for its total replacement cost rather than market value.
Making any structural modifications to your covered home may impact its market value or replacement cost. A new inground swimming pool can introduce liability risks not considered in your existing home insurance policy. These changes have to be added to your policy to provide complete loss protection. Still, such additions can increase your insurance premiums. Before implementing any upgrades or renovations on the insured property, discuss possible implications with your agent.
Once your home insurance claim is approved, you'll have to pay a deductible towards repair or replacement before your coverage kicks in. Often, you can reduce your insurance premiums by increasing your deductible to more than $1,000. However, most lenders would prefer that you don't assume enormous risks. They may limit your deductible amount to $1,200 or less to ensure you can afford the out-of-pocket repair expenses.
It's always best to keep track of any new personal belongings you buy and keep in your insured house. Expensive items like paintings, antique art, collectibles, or jewelry require an endorsement to be considered for coverage. Standard property coverages don't usually cover such belongings.
Like other types of insurance, homeowners' policies cover unforeseeable or unpreventable damages. Your insurer may deny a claim for water damage that could have been prevented by replacing old, rusty pipes. Similarly, you should fix your roof if it's leaking to prevent potential damages. Failure to do so exposes you to the risk of claim denial if your insurer assesses that the damage could have been prevented.
These are some important facts to help you understand how homeowners insurance works. If you'd like to learn more about protecting your home and personal belongings, contact our team at Humble & Davenport Insurance today!
