A home insurance policy covers several risks and it is important that the insured goes through the policy to understand exactly what is covered. Some insurers would package different policies differently so it is always a smart thing to shop around before deciding on which insurance policy to purchase. Apart from natural disasters such as earthquakes, hurricanes, flooding etc, most home insurance policies would basically cover the following;
This is usually insured for an amount up to 50% of the coverage of the house structure. It is however important to note that insurance companies will most likely put dollar limits on some items such as silverware, coin collections, jewelry, stamps and furs. It would be wise to insure such items separately on a rider policy or any other appropriate additional insurance from the insurer. The additional insurance policy independently protects items against damage, theft or any other loss in or outside the home. Every individual needs to know that before insuring any expensive item it must be appraised by professionals in order to qualify for the insurance under a rider, floater or additional insurance.
The most common adequate coverage amount for a house is normally placed at 80% of the total replacement cost of the house. Sometimes when the cost is not object, the house will be insured for 100% of its replacement cost. It is however good to remember that when buying a house a homeowner usually pays for more than the building structure. When buying a house you would normally be paying for the cost of the land where the house stand and the cost of putting up the foundation. These two cannot be destroyed in a fire or natural disaster and so calculating the cost of replacement of your house structure should exclude cost of land and foundation.
Most homeowners tend to prefer to insure their homes for the mortgage balance and as common as it is, it is also an unwise decision. This is because the value of a home increases every year and as the owed amount decreases, the homeowner’s potential for loss goes up. A homeowner should always consider getting a 100% replacement cost policy because in most instances the difference between that and the 80% replacement cost policy is minimal. It would be risky to take a less than 80 % replacement cost policy.
Trees and plants that surround your house would normally be covered up to 5% of the total cover of the building structure. A home owner may choose to attach additional insurance for the landscape but also be keen to limit the expectations of getting the exact replacement of trees in the event of loss.
This insurance is normally meant to protect a homeowner against a risk that could affect him/her financially. These could include a lawsuit filed by a visitor who slips in your compound or house. This cover would also be useful in the event that a tree falls and causes damage to a neighbor’s house or property.
This is cover that will protect you in the event that you are required to temporarily move out of your house. The insurance should then move and pay all or some of the extra cost.
In all events it is important that a homeowner bears in mind that an insurer will only pay damages to the homeowner up to the limits of the policy so once again it is key to read and understand a policy before you purchase it.
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There is without a doubt a lot of information that is out there in regards to insurance