Understanding the basic facts about home insurance is crucial to protecting your investment whether you are a first-time home buyer or an established home owner. Outlined below are some of the things you need to know and avail yourself with.
1. ARM YOURSELF WITH A COMPREHENSIVE LOSS UNDERWRITING EXCHANGE REPORT:
C.L.U.E.-Comprehensive Loss Underwriting Exchange-is a database that is owned by LexisNexis Risk Solutions that gives the insurer access to information on claims that have been filed against the property in the last five years. As a prospective buyer, you can't get a report from the company, but you can ask the homeowner, who can ask LexisNexis, for a copy of the report. According to LexisNexis, a growing number of buyers are requiring sellers to provide a copy of the report as a exigency for a purchase offer. The loss history will reveal problems that could make insuring the home difficult or expensive. Ask an insurance agent about the home's insurability and for an estimate of the premium.
2. FIND OUT WHAT A HOME INSURANCE POLICY COVERS:
A basic home insurance policy provides coverage for your home and belongings and also the liability of you or your pet causing injury to another person, perhaps, a visitor. It also provides Additional Living Expenses (A.L.E) if your house is inhabitable for the period of time you don't stay in your inhabitable home, possibly, due to repairs after it has suffered damages from a natural disaster for which you were insured for.
Remember, policies differ from state to state, so you will do well to find out from your State Insurance Commission what policies are allowed and available for your state. You also need to differentiate between Actual Cash Value (A.C.V.) and Replacement coverage. A.C.V. pays for the cost of replacement of a damaged household item, minus depreciation while Replacement Coverage will pay for the purchase of the said item.
3. FIND OUT WHAT A HOME INSURANCE POLICY DOESN'T COVER:
Basic home insurance policies do not cover natural disasters such as floods. In this case, you have to make sure that you purchase a separate policy for these kinds of disasters. If you live in areas that are susceptible to flood, you will be required by your lender to purchase insurance through the NATIONAL FLOOD INSURANCE PROGRAM or if you live in the coastal region, a standard home insurance policy does not include coverage from damage caused by wind, so if you have a home in the coastal area, you need a separate Windstorm Insurance Policy to cover the damage made by the wind. In earthquake-prone area like California, Earthquake Insurance is optional but recommended.
4. FIND OUT THE LIMITS ON THE POLICY YOU ARE INTERESTED IN:
It is highly recommended that you perform an inventory to know exactly the amount and value of your belongings. This is because, some policies put dollar limit on valuables such as jewelry, fine arts, furs, antiques, etc, so, endeavor to work closely with your agent and ask questions from time to time to be sure you have enough coverage. Remember, the more detailed you are, the more accurate your policy is going to be.
5. INSURE YOUR HOME FOR THE COST TO REBUILD IT AND NOT THE CURRENT MARKET VALUE:
Make sure that your home is insured for the cost to rebuild it and not for its current market value. This is because, the rebuilding cost does not include the value of the land. That amount could be much more or much less than the market value depending on factors and variables such as labour and costs of materials.
6. THERE IS BENEFIT IN SHOPPING AROUND:
Cultivate the habit of shopping around for companies and carriers that provide best coverage at the best price at the best service because they are not equally created. We live in a highly competitive world and every business is constantly competing with each other to emerge the market leader.
Conduct a search to find out a company's financial ratings and consult your state's insurance department website to get information on consumer complaints against a company.
7. UPDATE YOUR POLICY AS YOUR MAKE NEW ADDITIONAL STRUCTURES TO YOUR HOME:
For each additional structure or gadget added to your house, make sure you update your policy to cover said structure or gadget. If you fail to do so and a disaster you were insured for occurs, the additional structures or gadget will not be replace because you failed to upgrade your policy to cover the new additions.
1. ARM YOURSELF WITH A COMPREHENSIVE LOSS UNDERWRITING EXCHANGE REPORT:
C.L.U.E.-Comprehensive Loss Underwriting Exchange-is a database that is owned by LexisNexis Risk Solutions that gives the insurer access to information on claims that have been filed against the property in the last five years. As a prospective buyer, you can't get a report from the company, but you can ask the homeowner, who can ask LexisNexis, for a copy of the report. According to LexisNexis, a growing number of buyers are requiring sellers to provide a copy of the report as a exigency for a purchase offer. The loss history will reveal problems that could make insuring the home difficult or expensive. Ask an insurance agent about the home's insurability and for an estimate of the premium.
2. FIND OUT WHAT A HOME INSURANCE POLICY COVERS:
A basic home insurance policy provides coverage for your home and belongings and also the liability of you or your pet causing injury to another person, perhaps, a visitor. It also provides Additional Living Expenses (A.L.E) if your house is inhabitable for the period of time you don't stay in your inhabitable home, possibly, due to repairs after it has suffered damages from a natural disaster for which you were insured for.
Remember, policies differ from state to state, so you will do well to find out from your State Insurance Commission what policies are allowed and available for your state. You also need to differentiate between Actual Cash Value (A.C.V.) and Replacement coverage. A.C.V. pays for the cost of replacement of a damaged household item, minus depreciation while Replacement Coverage will pay for the purchase of the said item.
3. FIND OUT WHAT A HOME INSURANCE POLICY DOESN'T COVER:
Basic home insurance policies do not cover natural disasters such as floods. In this case, you have to make sure that you purchase a separate policy for these kinds of disasters. If you live in areas that are susceptible to flood, you will be required by your lender to purchase insurance through the NATIONAL FLOOD INSURANCE PROGRAM or if you live in the coastal region, a standard home insurance policy does not include coverage from damage caused by wind, so if you have a home in the coastal area, you need a separate Windstorm Insurance Policy to cover the damage made by the wind. In earthquake-prone area like California, Earthquake Insurance is optional but recommended.
4. FIND OUT THE LIMITS ON THE POLICY YOU ARE INTERESTED IN:
It is highly recommended that you perform an inventory to know exactly the amount and value of your belongings. This is because, some policies put dollar limit on valuables such as jewelry, fine arts, furs, antiques, etc, so, endeavor to work closely with your agent and ask questions from time to time to be sure you have enough coverage. Remember, the more detailed you are, the more accurate your policy is going to be.
5. INSURE YOUR HOME FOR THE COST TO REBUILD IT AND NOT THE CURRENT MARKET VALUE:
Make sure that your home is insured for the cost to rebuild it and not for its current market value. This is because, the rebuilding cost does not include the value of the land. That amount could be much more or much less than the market value depending on factors and variables such as labour and costs of materials.
6. THERE IS BENEFIT IN SHOPPING AROUND:
Cultivate the habit of shopping around for companies and carriers that provide best coverage at the best price at the best service because they are not equally created. We live in a highly competitive world and every business is constantly competing with each other to emerge the market leader.
Conduct a search to find out a company's financial ratings and consult your state's insurance department website to get information on consumer complaints against a company.
7. UPDATE YOUR POLICY AS YOUR MAKE NEW ADDITIONAL STRUCTURES TO YOUR HOME:
For each additional structure or gadget added to your house, make sure you update your policy to cover said structure or gadget. If you fail to do so and a disaster you were insured for occurs, the additional structures or gadget will not be replace because you failed to upgrade your policy to cover the new additions.
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