Top 10 Questions To Ask About Your Home Insurance
Unless your home is financed through a mortgage, purchasing homeowners insurance is optional and not a requirement. However, if you consider all the exceptional and peerless benefits homeowners insurance offers, it’s easy to see, it is a smart and practical investment.
Come to think of it, life can sometimes be unpredictable. Your home can be in the path of disaster or can become the target of burglars when you least expect it. A home insurance policy can help ensure you are protected in the aftermath of both, and then some.
When purchasing home insurance, you need to ask the right questions to choose the policy that will suit your needs best. Below are the top 10 questions you should ask about your home insurance policy:
1. What is homeowners insurance?
Essentially, a homeowners insurance policy is a type of property and casualty insurance that protects and covers the home and its contents in the event of disaster and loss. If there are aspects you want to understand better, don’t think twice about asking your home insurance agent about it. The agent can address any questions and concerns you have and explain them thoroughly.
2. Are all insurance policies the same?
If you have been shopping around for homeowners insurance, you likely know not all insurance policies are the same. For instance, basic policies cover normal loss activities and are the most affordable.
For those that are still in the process of building up their insurance portfolio, investing in a basic policy is a good idea. If you want to increase your coverage or safeguard your property from perils beyond what’s typically covered, you can either purchase add-ons or choose a higher level of insurance.
3. Will the insurance cover all types of disasters?
Let’s set something straight: homeowners insurance won’t be able to protect homeowners from every disaster brought about by human error or natural disasters. Typically, homeowners insurance only covers specific types of perils. This will depend on the scope and level of the policy. Basic coverages often include damages and losses from hail, vandalism, explosion, theft, and windstorm.
4. How much personal property is deemed ideal?
Ensure you have ample coverage to replace personal property such as furniture, appliances, and clothes if they get destroyed during a fire or other disasters. Typically, insurance companies provide personal property insurance that’s at least 50 to 70 percent. To identify the apt amount of personal property coverage, doing an inventory is the best way to go.
5. Is it ideal to increase the additional living expense coverage?
Additional living expense or ALE is a provision in typical home insurance policies. This portion of the policy covers the temporary living expenses homeowners need to stay someplace else when there’s severe damage to the property.
Ideally, the ALE coverage covers meals, hotel bills, and other expenses beyond the routine living costs. Although the additional living expense varies from one company to another, most policies provide coverage of at least 20% of the dwelling coverage.
6. Will the insurance policy cover flooding and earthquakes?
While homeowners insurance protects common perils, most standard policies exclude flood and earthquake coverage. Fortunately, homeowners have the option to purchase flood or earthquake insurance separately.
It is crucial to remember that insurance policies have broad limitations. In other words, apart from flooding and earthquake, nuclear explosion, power failure, and damages from war are also not covered.
7. Is there a way to minimize the monthly premium?
If you want to minimize your monthly premium, you need to also increase your deductible. Some insurers may offer notable credits for alarms, plumbing, modern electrical systems, and other safety installations, so you should discuss it with your insurance provider.
8. How much liability insurance is ideal?
Liability coverage safeguards against lawsuits for property damage and bodily injury that you, your family members, or pets can cause other people. The liability insurance will also pay for legal expenses, including any awards by courts. The liability insurance also covers the medical bills in case someone gets injured in your property.
9. Will my policy cover actual cash value or replacement cost?
If damage to the home is attributed to covered perils, they will compensate for the actual cash value or the replacement cost. However, most policies cover home replacement or repair at replacement cost and personal property in actual cash value.
10. Am I qualified to get discounts?
Many providers give discounted premiums to students, seniors, and retirees. The provider may also provide discount offers that are not advertised, so it always pays to ask.
Not all homeowners insurance policies have been created equal. That said, the cheapest policy or the first one that’s offered to you may not always be the one that will best suit your needs. Thankfully, asking the right questions can help ensure your search for the ideal homeowner insurance can get off to an exceptional start.
About the Author
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.