WorldExecutivesDigest | 5 Tips for Finding the Best Homeowner’s Insurance | Your home is arguably one of the most expensive assets you will own in your lifetime. Getting the proper homeowner’s insurance is not a luxury. It’s a necessity to safeguard your home against any unfortunate events. Theft, fire, or a natural calamity can come unannounced and leave your house in miserable condition. Raising a claim under your homeowner’s insurance can give you financial assistance to carry out the necessary repairs.
Whether you are buying a new home and need a policy or simply want to explore your options for a new homeowner’s insurance policy, here’s what you need to keep in mind:
1. Increase Your Liability Coverage
Homeowners often miss looking for a policy that also covers liability insurance. Liability insurance is critical to protecting you from lawsuits due to injuries or damages caused by your house or property.
For instance, if your driveway is extremely slippery during winters and someone takes a nasty fall and sues you, you’d want to raise a claim under your home insurance policy. Liability coverage will help you pay for legal proceedings and settlements. So make sure to get enough liability coverage in your homeowner’s policy.
Keep in mind to pick a liability limit that provides you with adequate protection. A vast majority of policies in the market cap the liability limit at $500,000. If you need additional coverage, you can look for umbrella insurance that provides liability coverage for both home and vehicle insurance policies.
2. Buy a Policy That Will Cover a Surge in Home Repairs
Contractors can provide you with an estimate of what it would cost to carry out repairs. However, it may not always be possible to give the exact amount you will need to spend down to the last penny. Say, for instance, your house suffers damage due to a bad storm. The entire neighborhood may get affected, and you may have to pay more than you had initially accounted for, spiking your rebuilding costs significantly.
You may find your existing dwelling coverage amount insufficient to cover the event in such situations. Many homeowner insurers offer home insurance policies with extended or guaranteed replacement costs. These can help you absorb the additional cost incurred when needed. Also, ensure that your homeowner’s insurance includes an “inflation guard” feature that increases the coverage to absorb inflation in homebuilding costs.
3. Know How Much You Really Need
Previously, studies conducted by construction-cost estimator firm Marshall & Swift/Boeckh found that more than 60 percent of homeowners in the United States are underinsured.
A leading cause for remaining underinsured is the reluctance of homeowners to insure their homes to the total replacement value, which refers to what the cost of building your home would be as of the insured date. Given the inflation and price rise of building materials, rebuilding your house may cost a lot more than you had spent to purchase it. So make sure to tweak the coverage to match the replacement value. While it will certainly spike your insurance premium, it will also safeguard you from needing to pay thousands of dollars out of pocket if your house needs any major rework.
Before you reach out to prospective insurers for quotes, do your homework. Assess the square footage of your house, multiply it by the per-square-foot building cost, and get a rough estimate of how much money you would need to rebuild your house.
It’s important to remember that the replacement value of your house won’t be the same as its market value, which only represents the amount a prospective buyer is willing to pay. When deciding on your coverage, only keep the replacement value in mind.
4. Know Your Exclusions
When it comes to purchasing a new insurance policy, reading the fine print is vital. Every insurer will have their standard list of exclusions, such as earthquakes, landslides, mudflows, flooding, and a few others. Go through the exclusions carefully to know whether you will need to purchase additional coverage for an event or peril that is not covered.
The last thing you want is to discover the exclusions when raising the claim. Complete this exercise before you sign on the dotted line to enjoy peace of mind.
5. Always Compare Quotes and Dig a Bit Deeper
You don’t have to accept the first quote that comes your way. And since no two quotes will be the same—take your time to compare them and see which one best suits your needs. Select the same deductible for each quote you seek and keep the coverage limit as identical as possible. Keeping these factors consistent will ensure that you can better analyze the available quotes.
If you have a pre-existing relationship with an insurer for other insurance policies, such as auto or health, you may consider approaching the same company for your homeowner’s insurance. It is more likely to offer you a better quote as an existing customer. Alternatively, you can also approach the same insurer for multiple policies simultaneously and get them bundled at more attractive terms.
Lastly, who you pick as your insurer is also essential. You want a hassle-free claim process and great customer service support so that you can benefit from your policy. Shop around, ask your family and friends about their insurers, and read reviews online—there are several ways to find out more about your prospective insurer before you become a customer or even ask for a quote.
Did You Know a Home Insurance Policy Is a Must-Have If You Have Borrowed Money for the Home?
Before funding your home loan, proof of homeowners insurance is required by a lender. Until you repay the home loan in full, there is a lien on your property in favor of the lender. So you want to ensure that it stays insured while you continue paying the mortgage.
And in case you are looking for financial assistance for buying a new home, Solarity Credit Union can help. They offer a loan payment calculator on their website to give you an idea of how much loan you can borrow. You can also talk to loan experts who can assist you further. Get in touch with Solarity today.