Homeowner’s Insurance is a MUST

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Uncategorized

Homeowners’ insurance is a must, something every property owner should have. If you have a mortgage, your lender will require that you have coverage — and if your lucky enough to have a home that is mortgage-free, than you should have coverage regardless.

But not all insurance coverage is the same. Policies and protections differ, and so do costs. In essence, you want the most protection for the least amount of money.

Homeowners’ insurance generally comes in standardized packages. For instance, the most basic form, HO-1, offers protections against such instances as fire, theft, and certain types of liability. HO-2 is more comprehensive and includes protection against damage from broken pipes, the weight of ice and snow, and broken hot water heaters. HO-3 gives you even more protection: It generally includes just about everything and excludes only earth-shaking events such as earthquakes, floods, nuclear accidents, and wars.

To determine which policy is best for your situation, and to find out about other policies, make a list of valued possessions and the types of coverage you’d generally like to have — then sit down with an insurance broker to review what’s included (as well as excluded) from each policy form. You may find all the coverage you want in a general form, or you may determine that you need special coverage. Real estate brokers, attorneys, fee-only financial planners, and CPAs can recommend local insurance brokers.  Here are a few  questions you should ask in order to get you started:

• What form works best in your situation?
• What is included under the form you select — and more importantly, what is excluded.
• Do you have a personal office at home? If yes, what is covered?
• Do you have a home-based business? If yes, you may require additional coverage specific to the type of business you operate. In this case, think in terms of clients dropping by, business equipment, inventory, etc.
• Do you have antiques and jewelry? What coverage are you getting? What coverage do you need?
• How much personal liability protection will the policy provide? What is the cost of additional coverage? What about an “umbrella” policy?
• If you have a loss, will coverage be for actual cash value or replacement cost? Have the insurance broker explain the difference between the two.
• What is the policy deductible?
• How will the policy be paid?
• Is your home an historic property? If yes, what special coverages are required?
• When a policy says it covers “personal property” what does that term mean? What does it include and exclude?
• How can you reduce policy costs? For instance, if you buy auto and home insurance from the same source will your combined expenses decline?
• What home improvements can you make that would result in lower premiums?
• How are claims handled if you have a loss? For your protection, it’s a good idea to photograph or video your home and special possessions — and then keep such photography in a safe deposit box.