What to Ask Before Buying Homeowners Insurance
- What will it cost to rebuild?
- How much is personal property worth?
- How much additional living expenses is needed?
- How much liability insurance is needed?
- Are you eligible for discounts?
Homeowners should be informed and ask important questions before purchasing homeowners insurance. Our home is our most prized possession and, most likely, the most expensive transaction we’ll ever make in our lifetime, and you want to know it’ll always be protected. Homeowners insurance offers protection against some of the most common perils and ensures the home can be repaired or replaced if necessary. Having the wrong kind or insufficient homeowner’s insurance can be almost as damaging as not having any at all. Here are 5 questions to ask before purchasing homeowners insurance.
What will it cost to rebuild?
We know how much we paid for our home, and we know how much insurance we have on the home in case of a total loss. Is the amount sufficient if the home was totally lost? The cost of building a home increases every year. It’s important that the homeowner’s insurance coverage reflect those increases. Ask the agent what it would cost to rebuild the home from scratch if it were totally lost. Some homeowners mistakenly insures homes for the appraisal value or the assessed value. The homeowner’s insurance should cover the amount needed to totally replace the home and everything inside.
How much is personal property worth?
Despite realizing how expensive things are today, we still tend to underestimate the value of what we do own. We seldom realize how many possessions we actually have until we have to replace them. Keep in mind that if a fire destroyed your home, the insurance on the home will only pay to rebuild the home and not the personal belongings inside the home. Most insurance companies also insure personal property for a certain amount. Often this amount is 50% of the amount of the home coverage. Ask your agent what they offer and what they recommend based on what you own.
How much additional living expenses is needed?
If your home were totally destroyed and you had to live elsewhere, do you have any idea what it would cost to live elsewhere? In most cases, it costs a lot when you factor in lodging, utilities, food, transportation costs if you’re now further from work or school. Most insurance companies also offer additional living expenses coverage, but the amount they cover varies as well as the duration in which they offer the coverage. This is important information to have. Some companies offer 20% of the home’s insurance as additional living expenses. Be sure to find out what the company that you’re considering offers.
How much liability insurance is needed?
Unfortunately, this is the day and age of lawsuits, and liability insurance is necessary. If someone comes to visit and falls down and breaks a leg, this individual could sue you. You could be sued if your dog bites a visitor or a neighbor. There are a number of reasons why people get sued, and it’s important to have sufficient liability insurance. Liability insurance covers the homeowner not just at home but when they’re away from home as well. Your agent should be able to advise you as to what type and amount of liability insurance you’ll need added to your policy.
Are you eligible for discounts?
When compared to other insurances, such as health or auto insurance, homeowners insurance is relatively inexpensive, especially when you consider what it all covers. The total cost of homeowner’s insurance can add up over the course of a year, so you’ll want to keep your premiums as low as possible without sacrificing coverage. Taking advantage of discounts the insurance company might offer can be beneficial and cost-effective. Ask the insurance company what kind of discounts they might have for you. Insurance companies often give discounts for no claims, retired, multi-policies, auto-pay, paying annually or having safety devices like alarm systems and smoke detectors.
Related Resource: 10 Great Ways to Save on Homeowners Insurance
With so many insurance companies around all vying for new business, homeowners should have little trouble finding the right insurance company. The Insurance Information Institute advises homeowners to not only read through their policies but also speak with experts on what types and amounts of homeowners insurance they need.