Homeowners Insurance Tips

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Nearly every homeowner will take out an insurance policy to protect their home, safeguard against structural damage and theft, and obtain a sense of security. When disaster strikes, homeowners insurance should allow you to reclaim your sense of stability, putting worries of money aside. However, countless homeowners are met with the devastating shock of denied claims after years of paying sizable premiums. Still others may be lulled into a false sense of security, believing they are covered for events which their insurance does not in fact protect against.

  1. Understand what your insurance covers–all homeowners should thoroughly read their policy and speak to their insurance agent to gain a full understanding of what their insurance covers. Though policies will vary, a typical policy will pay for damage to your property and possessions in the event of fire, storms, theft, or vandalism. It also provides liability coverage if someone is hurt on your property. Your policy may also cover shelter costs, allowing you to avoid massive hotel bills in the event you are temporarily displaced from your home. Homeowners insurance can also protect items which you are traveling with, such as a lap top or camera.
  2. Understand what your insurance does not cover–most standard insurance policies will exclude power failure, faulty zoning, earth movements, including earthquakes, landslides, and sinkholes, war, nuclear damage, government action, defective maintenance, bad workmanship, and flooding. In high risk areas like Florida, most policies will additionally exclude hurricanes. Windstorms may be covered. It is vital that you review your policy and gain a complete understanding as to what is not covered. You can purchase supplemental coverage, for flooding and hurricanes for instance.
  3. Shop around–take your time and thoroughly research not just the best policy but the insurance agent as well. Often, you can find reviews of agents online or via personal recommendation. A trustworthy insurance agent can mean the difference between delayed or even denied benefits and easy, full coverage of damages. The bottom line–shop around for both policies and agents until you find the one you trust the most to handle your important insurance needs.
  4. Preventative actions can reduce your premiums–you can reduce your premiums significantly by taking certain preventative actions. Obtaining a burglar and fire alarm system, for instance, can decrease your premiums by about 10-15%. Other measures, such as installing smoke detectors and pool fences or covers, will also have effect. Insurance companies will price your premium based on the risk they foresee, accordingly taking smart preventative measures can reduce your liability risk. Consider the risks on your property and work to minimize them.
  5. Replacement cost vs. actual cash value–every homeowner should know the distinction between replacement cost and actual cash value. Replacement cost covers the repair or replacement of your home and damaged property. Actual cash value is the price your property is worth when you take into account the depreciation of the property. A policy based on actual cash value is generally less expensive but you will not likely recoup as much in the event of a loss. For instance, say a homeowner who sustained water damage to his kitchen cabinets as a result of a supply-line failure. The insureds kitchen cabinets were over ten years old. However, the homeowner had a replacement cost policy, which provided full coverage for the kitchen cabinets at a replacement cost value. Therefore, he was able to recuperate sufficient funds from the insurance company to replace his damaged kitchen cabinets with brand new kitchen cabinets. Had the insured had an actual cash value policy instead, we would have recuperated far less funds because the insurance company would have discounted ten years worth of depreciation from the kitchen cabinet’s value.
  6. Do not wait to file a claim–be sure to ask what the time limits are for reporting a claim when you are purchasing a policy. Windows to report can be as short as a few days. Further, waiting to report the problem can make the property damage worse. One example would be a homeowner who waited to address water damage until mold set in. When the insured finally filed a claim, it was denied because it was outside the time limits.
  7. Keep meticulous records–document everything related to your claim. Save receipts, appraisals, and contracts. Document phone calls. The more evidence you have of your actions to mitigate the damage, the better your chance of full coverage.
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