Purchasing a new home is a significant financial risk, so you want to ensure that your investment is protected by having the right insurance coverage. Homeowners insurance can shield you from the financial burden of repairing or replacing your home in the event of a damage-causing disaster.
Unfortunately, homeowners often don't take the time to fully understand the insurance process. This lack of understanding can lead to mistakes that might prove costly when you need to file a claim in the future.
1. Don't choose a policy that pays out based on actual cash values.
It's important that you review the terms of home insurance policies carefully before signing on the dotted line. When a claim is filed, you can be paid out based on the actual cash value of damaged items, or on the replacement value of damaged items. You should always opt for a policy that pays the replacement value.
Actual cash value policies provide reimbursement based on the current market value of your items. An older sofa, bed frame, or section of carpeting might have very little value on the current market. When you have a policy that pays the replacement value, you will be guaranteed adequate coverage to replace any items lost due to damage within your home.
2. Don't forget to check the exclusions.
Every home insurance policy contains a section that outlines exclusions. These exclusions exempt the insurance company from providing coverage in certain circumstances. If you want to know that your home is fully protected, you need to identify the exclusions that are listed in each policy you consider.
Common exclusions can include damage caused by flooding, earthquakes, mold, or insects. If you live in an area where the threat of these excluded events affecting your home is high, you will need to add specialty supplemental insurance policies to your homeowners insurance for maximum protection.
3. Don't get a policy for the wrong type of occupancy.
Real estate purchases are used for a variety of purposes. Some purchases are vacation properties that are only occupied during limited seasons. Others serve as rental properties to generate income. The type of occupancy can affect the type of home insurance you need to purchase.
Each occupancy types comes with unique risks. As a result, insurance policies that are designed specifically for primary residences, rental properties, and vacation homes exist. Work with your insurance agent to secure a policy that covers your intended occupancy type.
Share12 March 2018
About a year ago, I started thinking more seriously about choosing different insurance. I was focusing on all of the different aspects of insurance, and it was really interesting to me to see how much I could save by switching services. It was a lot to process, but before I knew it, I was able to completely overhaul my insurance coverage, and it made a tremendous amount of difference for me. This blog is here to help other people to know what to look for in insurance coverage so that they can enjoy a happier tomorrow. Check out this blog for more information.