Whether you are a first time home insurance buyer or a seasoned pro, here are a few basic home insurance policy guidelines. While these may not be specific enough for your exact situation, these questions and answers will give you a sense of the key things we’ll chat with you about to get you the full protection for your situation. Your peace of mind and protection is our priority. If any questions arise, please don’t hesitate to reach out to your trusted team at Weedin Insurance Agency.
1. Is replacement cost better than actual cash value?
Yes, for most people because actual cash value subtracts depreciation value, or the reduction in value. However, it varies from situation to situation
2. Does my policy cover actual cash value or replacement cost value?
Policies commonly with replacement cost: HO3, HO4, HO5, HO7
Policies commonly with actual cash value: HO1, HO2
3. How much homeowner’s insurance do I need?
Follow the 80% rule, that you should pay for at least 80% of your home’s total value
Basically, you should have enough coverage to:
- Replace your belongings (personal property)
- Reimburse your for additional living expenses in the case of an insured loss (ie. temporary relocation costs)
- Cover liabilities (damage or injury on the property)
4. How much would it cost to rebuild my home in the event of a total loss?
Factors that contribute: age, square footage, house shape, house style, features and finishes (such as a well kept roof) and fixtures (such as cabinets, countertops etc.)
You can calculate this number on your own or use an online calculator. But the best and most accurate way to measure this number is by connecting with your agent or an independent appraiser.
5. What is personal property coverage and how much do I need?
Coverage for your stuff (furniture, electronics, clothing) in the event of a fire or theft.
The best way to learn how much coverage you need is by creating a home inventory AND it will make requesting a claim easier.
Items to include in your inventory: Furniture, Appliances, Home decorations, Cookware + dishes, Silverware, Linens, Clothing, Computers, Electronics, CDs/DVDs/vinyls, Photography equipment, Sports equipment, Outdoor equipment, Power tools, Jewelry/watches
You should consider purchasing additional personal coverage for items such as: guns, fine furs, jewelry, fine art, collectors items, cash, instruments and specific electronics
6. What is liability protection and how much do I need?
Coverage in the case of property damage or bodily injury that your household is legally responsible for (includes: medical bills, legal costs, lost wages etc..).
The minimum is for most policies 100k for liability coverage, but if you can then you should buy between 300k-500k. Of course each situation is different, so talk with an insurance expert to assess your individual risks given your unique circumstances. For example, if you own a rental property with tenants, standard liability coverage is not likely to be enough to cover major claims that could be filed. Specific umbrella insurance is ideal for owners of rental properties among other insurance packages.
7. What are liability limits?
The maximum amount that an insurance company will pay for the injury of one person.
Is flood insurance included? If not, do I need it?
NO it is often not included and YES you definitely need it!
8. Should I have earthquake insurance?
At least half of American homes are at risk of being damaged by an earthquake, but there are a lot of exclusions on earthquake insurance.
It typically covers: the dwelling, personal property, additional living expenses and other structures
If you should at least consider it if you live in: California (it’s required by law), Washington, Utah, Tennessee, Oregon, South Carolina, Nevada, Arkansas, Missouri, Illinois
9. What is the easiest way to reduce my monthly premium?
Make your home disaster resistant: add storm shutters, reinforce your roof, modernize your heating, plumbing, etc..
- Improve your home security: add a smoke detector, burglary system, add deadbolt locks, etc..
- Raise your deductibles
- Buy home and auto from the same insurance company
- Review your policy at least once per year
- Do your discount research
10. Which homeowner’s policy is right for me?
The most common is HO3, the second most common is HO5.
If you can then you should go for HO5. Click here to see our blog on the differences between these policy types.
11. How do I file a claim?
Follow these steps:
- Report to the police, if necessary
- Document everything, take a lot of pictures
- Contact your insurance company
- Fill out the forms
- You may be required to provide documentation, allow for an inspection, provide a statement, etc..
- Make temporary repairs and keep receipts
- Consider hiring a public adjuster
12. When should I file a claim?
Rule of thumb: do NOT file if the deductible costs more than the cost to repair OR if it is a maintenance or wear and tear issue
When the cost to repair is more than the deductible
Significant damage or total loss
It’s your first claim in three years
13. How can I make the process of a claim easier?
Simple, keep a home inventory, file ASAP and do not make permanent repairs
14. What are the basic areas of coverage?
Additional living expenses
Replacement value vs. actual cash value
15. What is commonly excluded?
This is a longer topic to cover. We’ve got the details in this blog.
16. How much does all this cost?
$35 per month for every $100,000 of home value
The average American pays $1,445 per year and $120 per month but it varies by state laws, home location and cost to rebuild
17. What discounts are there?
You can save the most with:
- New home
- 5 year old home
- Bundled home and auto
- Upgrades to electrical, plumbing or heating
- 10 year old home
- Fire restrictive construction
- Superior construction
- Roof upgrade
- 10 + day advance purchase
- 7+ day advance purchase
- Loyalty of 10+ years
18. What is a personal umbrella policy?
An insurance policy that adds extra liability coverage
19. What other considerations should I be thinking about?
That all depends on your unique situation. No list or set of recommendations can cover all situations. As human beings life changes from day to day. What we own, what we do, where we go and how we interact with the world. Having the right insurance is all about being protected against the unthinkable, unpredictable and unfathomable.
20. What if my mind is simply blown by this article and I’m even more confused.
Don’t worry, that’s a common experience. That’s why we’re here. We take a complicated and often confusing, sometimes dry, and boring topic and make it relatable to you in your world. That’s why we have a whole host of licenses, certifications and training across our team to make you and world as protected as possible. That’s our drive, passion and purpose. Give us a call or make an appointment so we can support you.
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