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HOMEOWNERS INSURANCE
HOMEOWNERS INSURANCE MONEY SAVING TIPS
Deciding On Coverage & Deductible Amounts
Insuring your home and other valuables has become more expensive in recent years. Not only has the cost of homes and other property risen, but insurance companies have increased premiums and deductibles for catastrophic coverage like hurricanes, earthquakes, etc. While expensive, obtaining proper coverage is important to ensure that the financial impact of any loss incurred is minimized. The first step in achieving this objective is to understand the types of coverage available. Be sure to discuss with your insurance agent what is the right coverage for you.
1. Standard homeowners insurance generally provides coverage for the following financial losses:
a. Loss or damage to the physical structure of your home and other permanent structures on your property.
b. Loss or damage to your personal property, such as furniture, clothing, electronics, appliances, utensils and tools. In many instances, this coverage will also cover loss, theft and damage to personal property that is temporarily away from your home, such as when you are on vacation.
c. Living expenses (up to 24 months) if your insured home suffers a loss and you have to live elsewhere.
d. Losses due to personal liability exposures that arise from being a homeowner, such as accidental bodily injury or property damage for which you are responsible. This coverage may also cover you for actions while away from home (excluding automobile accidents) resulting in personal liability.
e. Medical expenses for injury to others resulting from liability claims. This
coverage may also cover you while away from home for non-
2. Renters insurance generally provides coverage for the following financial losses when you are renting your home from others:
a. Loss or damage to your personal property, such as furniture, clothing, electronics, appliances, utensils and tools. In many instances, this coverage will also cover loss, theft and damage to personal property that is temporarily away from your home, such as when you are on vacation.
b. Losses due to personal liability exposures that arise from being a renter, such as accidental bodily injury or property damage for which you are responsible. This coverage may also cover you for actions while away from home (excluding automobile accidents) resulting in personal liability.
c. Medical expenses for injury to others resulting from liability claims. This
coverage may also cover you while away from home for non-
3. The coverage provided by standard homeowners insurance (and renters insurance) covers losses up to the specified limits for the type of loss in question, less any applicable deductibles. However, most policies have many limitations and exceptions that limit coverage for certain types of losses. In many instances, additional coverage in the form of endorsements can be purchased to minimize these types of losses. Check with your insurance company.
a. Sometimes, because of inflation and local building costs, the cost to rebuild
your home exceeds the insured value. An endorsement often called “Replacement Cost
Plus” can provide additional funds up to 20%-
b. The cost to rebuild your home can also be impacted significantly due to building codes that must be followed when the home is repaired or rebuilt. If your home was built prior to the enactment of these building codes, the cost to follow these new building codes when rebuilding will increase the overall cost, sometimes by as much as 25% or more of the total cost. This increased cost is not covered under the standard homeowner’s policy. An endorsement is required to cover any costs incurred because of new building codes in effect. In other words, if your home is insured for $200,000, and the cost to rebuild the home is $190,000, but $40,000 of this cost is due to new building codes that must be followed, the insurance company will only pay you $150,000. To protect against this type of shortfall a special endorsement is required.
c. Loss or damage to personal property is only covered up to the actual cash value
of the loss. Wear and tear and depreciation are deducted from the value to determine
actual cash value. In other words, if the personal property damaged or lost is not
brand new, the settlement you receive from the insurance company may be less than
it will cost to repair or replace the personal property. To avoid this exposure,
you will need to purchase a “Replacement Cost Coverage” endorsement. With this endorsement,
you will receive the full un-
Note: This website has FAQs and more information on the different types of home insurance.
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