The most important things to consider when purchasing homeowners insurance are: what is covered in your policy and what is not covered. Policies are comprised of many separate clauses and are broken into two categories: the building and contents. You do not want to wait until disaster strikes to learn that you are not covered and that you’ll suffer great loss. Here are a few of the important things to consider before purchasing a homeowners insurance policy:
1: Replacement cost on your building. Make sure the policy covers the replacement value of all expenses for repairs and replacements. If the word, replacement value or cost are not in the policy, then your coverage will only include a base coverage and might fall grossly short of the actual expense for repairs or replacement, and you could suffer a great loss.
2: Content coverage. Don’t assume that the policy automatically includes content coverage in the premium because in many cases contents are not included and must be added specifically as add-ons. Again, make sure the content coverage is for replacement value and not at the base value or original price you paid for it. Since basic contents have high deteriorating values, you will only receive that value in cash which won’t be enough to cover your replacement costs.
3: Burglary Coverage. Make sure you add burglary coverage to both, your building and your contents, as this is not always an automatic coverage. Many policies require you to request this coverage as an add-on when applying for the insurance. This coverage applies to all your contents including ones you that are lost or stolen when they are not in the property such as a bike, laptop or jewelry.
4: Water damage. This is not always an automatic inclusion in the coverage but is usually an add-on clause to the policy. This is a crucial clause because water damage comes when you least expect it and usually does tremendous damage. This clause would cover damage to your home or contents caused by water such as pipes that break or even a waterbed that bursts and floods.
5: Sewer damage. Some policies automatically include this coverage in the homeowners insurance policy and others do not, but you should request it. Sewer backups happen when you least expect them and can destroy property and contents. Make sure this is included as part of the policy whether you own a new home or a very old home because you always need to be prepared for the unexpected.
6: Storm and weather damage. This option is really dependent on your geographical location and whether or not your insurance company will offer this coverage. For example, if you live in an area that is prone to frequent tornados or hurricanes that cause extensive damage to the neighborhood, many insurance policies will not offer this coverage in their homeowners insurance policy. In fact, in some areas the insurance policy will actually state that they do not cover such storm damage. It would be detrimental to you if you assumed you were covered and then learned that you weren’t. Make sure you inquire as to whether your policy covers this type of damage before you sign the insurance contract.
Make a List Before You Start
When you’re in the market for purchasing homeowners insurance, begin by drawing up a list of everything that you want covered and the amount of coverage for each, along with the premium amount you can afford. Present this to the insurance agent when you are inquiring of their services so you can be prepared in advance. Insurance coverage can be expensive but it’s really one expense that you don’t want to shortcut.