While trying to save money on your home insurance, you still want to be sure that you have the coverage you need to protect yourself against a major loss. After all, your home is probably your biggest investment – and it could also be your biggest loss if not properly covered. There are several things you want to be sure are on your homeowner's policy to enable you to get both the lower cost and still have the good coverage you want.
Consider Rebuilding Costs When Selecting Your Coverage
Major disasters are not going to affect the land itself, so you only need to cover your home and any other buildings or equipment you have there. Regardless of what you paid for your home, you need to consider how much it will cost you to actually replace it – if it should be destroyed.
Insufficient coverage will not allow you to rebuild your home in the same size as your original home, and many people only learn this after a disaster has taken place. You will need to determine the actual replacement cost, consider inflation, and then buy home insurance accordingly.
Replacement Value Coverage Is Better Than Actual Value Coverage for Content
Homeowner's insurance allows you to choose between actual value coverage and replacement value coverage for your home's contents. This means that whatever you have inside your home, your possessions, will be covered in one way or the other.
If you choose actual value coverage, then the amount of depreciation will be considered in everything you lost in the disaster. For older items, this means you will not be able to replace them at all because you will be getting only a small fraction of the cost. Replacement value, on the other hand, will give you an item of similar value – even if it costs the insurance company more to do so. Of course, replacement value is the costlier option – but it is also the better deal.
Get All the Right Kind of Insurance Coverage for Your Home
Reviewing your policy to make sure that you have the right kind of coverage is very important. This is especially important if you are in an area that is subject to frequent disasters, such as tornadoes or hurricanes, floods, or earthquakes. Each of these types of coverage will have to be obtained separately and it will be expensive, but you will certainly want it if a disaster of this type occurs.
When buying this type of coverage, be sure to look into the actual payout record of the insurer before buying. Some companies are notorious for offering coverage and then making very few actual payments to those who lost their homes. You can find this information on your state's Department of Insurance Webpages.
Learn About Discounts for Better Protection and Lower Costs
Just like auto insurance, you can get discounts in your home owner's insurance costs if you have certain features on or in your home. Insurance discounts are given if you have an alarm system, smoke detectors, dead-bolt locks, and storm shutters. You may also get a discount if you have fire retardant roofing material, or if you are over 55.
Special Insurance Coverage Is Needed for Costlier Possessions
If you have costlier items in your home, or unique items, you may need to get special coverage for them, too. An insurance policy (actual value or replacement value) will not give you the value of certain items in your home, such as antiques, collections, jewelry, electronics, musical instruments, guns, etc. Business equipment may also need special coverage, too, because policies typically place a limit on such things up to about $2,500.
Insuring your most valuable possession properly will certainly pay off if you ever need it. Check into the insurers carefully, too, before you buy to get the best deal on your homeowner's insurance coverage.
Coverage for Additional Living Expenses
When you experience a disaster of some kind, and you need to move out, you will want to have your homeowner's insurance company pay for your living expenses. These expenses can be very costly, especially if you need to live elsewhere while repairs are being made – or until a new home can be built. This coverage can enable you and your family to enjoy the same standard of living while you wait.
Ellen Cho writes for InsuranceSwami.com, a service provider of online homeowners insurance quotes.