By: Rachael Harpe
Buying home insurance is optional for most homeowners. However, many homeowners now realize the benefits of having one such policy.
With homeowners insurance, you get the help you need to recover from a disaster that damages your home or burglary where you lose some or all of your possessions. A home insurance policy also provides other benefits that make purchasing one worth it.
Home insurance is a significant investment, and you need to know everything about your policy. When talking to an insurance agent, ask the following ten questions:
1. Aside from fire, what other specific perils does my home insurance cover?
Your homeowners insurance policy covers any damage to your home brought about by lightning, windstorms, hail, explosion, smoke, and vandalism. The same goes for losses after a burglary.
2. You didn’t mention flooding and earthquakes. Doesn’t home insurance cover them?
A standard home insurance policy doesn’t have coverage for damage caused by flooding and earthquakes. You are going to need a separate flood or earthquake insurance policy for that.
3. Any other perils not covered by my homeowners insurance policy
Your homeowners insurance policy will not pay for intentional damage or loss. It also won’t compensate you in cases of neglect, power failure, war, or a nuclear explosion.
4. Does my home insurance have liability coverage?
Liability coverage is an integral part of a standard homeowners insurance policy. Should a visitor get hurt within your property and file for personal injury, your home insurance has you covered. The same coverage also applies when you or any member of your family damages another person's property, like your kid putting a baseball through your neighbor’s glass window.
5. When I file a claim, what am I going to get, replacement cost or actual cash value?
Whether your compensation will be for actual cash value or replacement cost will depend on what’s stated in your home insurance policy.
You’ll benefit more if your policy provides for replacement cost, which means your compensation will be equal to the amount needed to repair the damage to your house or replace the items you lost.
Actual cash value, on the other hand, means the payment you’ll receive will only match the depreciated value of your damaged or lost property.
6. Will basic homeowners insurance coverage be enough?
While basic coverage is fine, you might want to be eligible for higher compensation if the time to file a claim comes. There’s always a possibility that your dollar limits for claims won’t be enough to cover the damage or losses you suffered. Should this be the case, you will likely spend money out of pocket for repairs or replacements.
7. How much personal property coverage do I need?
Take a look at your dwelling protection, then peg your personal property coverage at fifty to seventy percent of that amount. That is at least what most insurers do. However, if you want your personal property coverage to be as close as possible to your possessions' value, do an inventory.
8. What is ALE?
ALE stands for additional living expense, and it’s a feature on standard home insurance policies. It kicks in when the damage to your home forces you and your family to stay at a hotel. ALE will also pay for your meals and other expenses for the entire duration of your stay outside your home.
9. Will my policy be cheaper if my home is old?
On the contrary, you’re likely to pay more to insure an old home than a new one. With the older structure and fixtures of a house that has seen some years, insurance companies will assume that it has a higher risk of sustaining damage, which will, in turn, trigger an insurance claim.
10. How do I file a claim?
Every insurance provider has processes in place to handle claims from policyholders. It’s important to know your insurer’s process for filing a claim long before your home sustains damage from disasters or becomes the target of burglars. Pose this question and other related inquiries to your insurance agent before buying a policy.
If you have more questions about your home policy, be sure to take note of them and ask them the next time you talk to your insurance provider’s representative.
About the Author
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.