What to Look for When Buying a New Home Insurance Plan
By Your home is probably the most valuable asset you will own, and protecting it is a must. How efficiently you do that depends on the coverage offered by your home insurance policy. Here are a few things you should take into account when buying a new home insurance plan.
Ensure that You Can Rebuild
A Homeowner 3 policy is the most sweeping coverage you can buy (some states even offer deluxe HO-2000 policies). Look for a guaranteed replacement clause that covers rebuilding costs. Insurers will generally cap coverage at 120% to 150% of your house’s value. If you believe the insurer’s appraisal is low, go ahead and purchase extra coverage, especially if your home has expensive features like handcrafted cabinetry. For houses more than 20 years old, check if your policy will cover the costs of upgrading to current building codes. Additionally, remember to review your policy every time you make significant improvements to your home.
Ensure that You Can Cover Rent
Rebuilding or repairing your home can take months and sometimes years. Look for a loss-of-use clause that covers your living expenses over and above normal costs. This coverage is typically capped at 20% of your home’s coverage, but some insurers will let you raise this figure.
Ensure that You Can Protect Your Valuables
Coverage for the things you own inside your home is generally calculated at 50% of your home’s value. Luxury items such as art, jewelry, and electronics are subject to replacement limits of $1,500 to $2,500 each, so opt for a personal-property rider if you own any.
Ensure that You Guard Your Assets
If you’ve got a swimming pool, a home-based business, teenage children, or dogs, the $300,000 liability protection provided by a typical standard policy will not suffice. You may need to purchase more.
Ensure You Take Care of Business
People who work from home will need a home business endorsement, which will cover both equipment and liability.
Ensure that You’re Prepared for A Natural Calamity
Homeowners’ policies will not offer you protection from damages caused by floods or earthquakes. You may need to buy flood insurance from FEMA at an average of $372 a year. This will be higher if you live in a flood-prone area. If you live in Alaska, Arkansas, California, Hawaii, Idaho, Illinois, Kentucky, Missouri, Montana, Nevada, Oregon, South Carolina, Tennessee, Utah, Washington, and Wyoming, consider buying earthquake insurance from private insurers.