Homeowner’s Insurance: Ask the Right Questions, Get the Right Coverage
The average homeowner’s insurance claim in 2011 was $8,077 for noncatastrophic damages and $7,553 for catastrophic damages, the Insurance Research Council recently reported. Paying homeowner’s insurance each month can be a drag, but you’ll sure appreciate it if something unexpected happens and you don’t have to foot an $8,000 bill for it. If you’re shopping for homeowner’s insurance, make sure you ask the right questions and get the right amount of coverage.
If you have a mortgage, you’re required to have homeowner’s insurance. The mortgage holder will have guidelines to the level of insurance you must have. The National Association of Realtors says homeowner’s insurance can be broken down into three levels:
- Protection against fire, theft and some liabilities
- Protection against broken pipes, ice and snow weight, and broken water heaters
- Protection against natural disasters
About Homeowners Insurance Deductibles
This is the out-of-pocket expense you have to cover at the beginning of a claim. If you have insurance with a $1,000 deductible and a tree limb falls on your roof, you’ll pay the first $1,000 of the repair bill, and the insurance company will cover anything over that.
Some insurance companies are tying to minimize their financial risk by making adjustments to the deductible based on the cause of damage, according to Consumer Reports. For example, in areas prone to heavy wind damage, you may have a standard deductible and a special, inflated deductible for storm and wind damage claims. When shopping for homeowner’s insurance, understand what the deductible will be in all claim cases.
Know What’s Covered
This is not so straightforward, so be sure to walk the property with your insurance agent and the policy in hand. Ask questions about each area of the home, including several “what if?” scenarios.
For example: You buy homeowner’s insurance that covers water damage. If a water pipe bursts in your basement and floods it with water, you can file a water damage claim. However, if a city water pipe bursts outside your home and the water makes its way through your yard and into the basement through a window, the damage won’t be covered unless you have flood insurance.
Understand each term in the policy, so you’ll know exactly what is covered and what isn’t.
Always ask for discounts. AARP partnered with The Hartford to offer price breaks to those over age 50, and almost all agencies offer a multi-policy discount.
A standard homeowner’s policy covers the contents of the house up to certain limits. If you have expensive items in the house such as jewelry or cameras, you’ll likely want to purchase additional coverage that specifically names those items.
If you maintain an office at home or run a home-based business, you will likely require additional coverage. For example, if you have a home-based jewelry business, you may have expensive stones or diamonds in your house that aren’t covered under your standard insurance policy. If a client trips on your front porch and injures himself, that wouldn’t be covered by standard homeowner’s insurance; that scenario requires liability insurance for a home business.