Homeowner Insurance Tips from a Home Inspector
To protect the investment in your home, your main line of defense is homeowners insurance. If you are a new homeowner, you’re likely in the market for insurance. If you are an existing homeowner, maintaining long-term coverage with one insurer helps give you peace of mind and may even lead to customer loyalty discounts on your annual premiums; however, it doesn’t hurt to periodically look at other options.
Doing some research may help you discover a different policy that will reduce your premiums. Or you may identify gaps in your coverage that need to be addressed with an insurance agent. In any case, get quotes from several insurance companies before making a decision. Keep on mind, your home’s location, claim history, and even your credit rating will have an impact on the premium you’ll pay.
Here are some helpful tips that could save you some money – or at least help ensure you get the coverage you need.
The basics. Most standard homeowners insurance policies will provide coverage for damage to your home (and many of the items in your home) caused by theft, fire, lightning, smoke and other suddenly occurring conditions. Homeowners insurance typically also provides coverage for liability claims, medical payments to third parties, and certain legal costs if a lawsuit is brought against you. Flood, windstorm and earthquake damage, however, are not covered by standard homeowners’ policy.
Get the coverage you need. Lenders require that borrowers purchase a minimum amount of homeowners insurance (typically equal to the appraised value of the home). But this is often not the amount of coverage you truly need. Instead, find out how much it would cost to rebuild your home, and consider insuring it for that amount. And then periodically review the coverage each year. Replacement costs may be automatically recalculated by your insurer; however, such adjustments may not address any special improvements you may have made and other special circumstances that could affect rebuilding costs. Coverage for cyberattacks and identity theft are now being included in some basic policies.
Exclude the value of the land. The land under your house isn't at risk of a damage or loss from theft, fire and the other perils typically covered in a homeowners' policy, so there is no need to include its value in replacement cost calculations. But keep in mind, where that land is located will affect rebuilding costs.
Know what is not covered. Review the policy details to find out exactly what is and is not covered – beforehand the next theat. In addition to floods, windstorms and earthquakes, standard exclusions such as acts of war, nuclear accident, mold and terrorism are excluded in all basic policies. In some cases, you may be able to get endorsements or purchase a separate policy to cover some of those risks. If you buy a house in a flood-prone area, you may be able to get an endorsement to your basic policy, but most homeowners will have to pay for a separate flood insurance policy through a federal program.
Get extra protection when needed. Most policies limit coverage for certain high-priced or hard-to-replace items. Additional endorsements or floaters will be necessary to protect items like expensive jewelry, watches, furs, antiques, computers and other valuables.
Pick a reasonable deductible. To save money, consider choosing a higher deductible. Doing so is always a gamble. If you have a loss, you will have more out-of-pocket costs; however, based on traditional claim rates, by saving money on the premium, your overall cost will be less. A higher deductible also means you may be less likely to submit a claim. That will help with renewals and future premium costs, as the more incidents reported to an insurer the greater the risk of being dropped or having to deal with a significant premium increase.
Benefit from home upgrades. You may be able get a lower premium if you failed to mention safety or security features present in the house when you first got coverage under a policy, or have since added features such as dead-bolt locks, smoke detectors, and security lighting and alarm systems. You may also qualify for a lower insurance premium if you live near a fire department or hydrant, purchase a newer home or get your auto insurance from the same company. Making your home more storm-proof (for example, installing storm shutters or using fire-resistant roofing materials) may also provide some savings.
Here are some fire safety tips from the Consumer Product Safety Commission.
Note: These tips are only general guidelines. Since each situation is different, contact a professional if you have questions about a specific issue. More home safety and maintenance information is available online at www.housemaster.com.