11 Tips Every Home Owner Needs to Know About Insurance

Ellen Derrick, certified financial planner with LearnVest Planning Services, offered insight into the 11 things that everyone homeowner needs to know about homeowner’s insurance. Most importantly, homeowners need to know exactly what their policy covers, and what it does not, so they know whether the need to purchase supplemental coverage. In addition when looking to buy a policy, homeowners should shop around, not just for the right policy, but for the right agency, so they can find one they trust, preferably one with good reviews or who has been personally recommended. The inclusion of preventive measures, such as working smoke detectors, installing a deadbolt, or even adding a burglar alarm system, can help reduce insurance premiums as it reducing a property’s liability risk, which insurance companies base the premiums on. Homeowners need to be aware of the difference between “replacement cost,” the cost to repair or replace an entire home in its proper condition, and “market value,” the amount someone would pay for a damage home. Though the premiums for the latter are typically less expensive, a homeowner doesn’t recover as much in the event of a serious disaster, while the “replacement cost” policy covers more, but tends to have a higher deductible. Homeowners also need to consider what their policy’s claim-reporting time limits are, to make sure that they will still be eligible for benefits, and, according to Senen Garcia, a lawyer in Coconut Grove, Fla., “Homeowners must document everything that occurs during a loss, do as much as possible to mitigate [the loss]—and document such mitigation.” He notes that, in addition to saving appraisals, contracts, and receipts, homeowners should document phone calls by writing down who you spoke to and when. Homeowners need to take notice of the coverage limits their homeowners’ policy has on jewelry, and should get their jewelry appraised and consider buying supplemental insurance to cover the cost of the jewelry. Good maintenance and monitoring of usage can lead to the early detection of problems, which insurance companies appreciate, as along with prevention, it helps reduce the amount that the insurance company might have to pay to repair damage. One way to save money is for homeowners to bundle their homeowner’s insurance with other policies that they already own, as long as they are not buying coverage they don’t need simply in the name of savings. Lastly, homeowners need to remember that while it is beneficial for them to file a claim if they are unsure whether their policy will cover them, they need to not file frivolous claims as those can increase their premiums. | Read More