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What to Know About Your Home Insurance

Whether you are new to your home or want to make sure your existing policy has covered you, here is the information you need

A home insurance policy is one of the financial documents that can have frightening finesse. Once you have logged out, it is tempting to put it somewhere deep in the filing cabinet and rejoice that you can check it from your to-do list.

But your home insurance is not something you want to cancel and forget about. If you experience theft or a natural disaster, the last thing you want to do is dust off the policy and find out that you do not have sufficient coverage. We spoke to a home insurance expert who told us what you should know about your insurance and make sure you are protected.

In this article:

A basic home insurance policy does not usually cover floods and earthquakes [19659008] The terms of home insurance policy may vary from company to company. In general, a basic home insurance company pays to repair or replace your home and belongings if there is damage caused by such risks as fire, wind, tornadoes, hail or lightning.

Floods and earthquakes are not usually included as a covered hazard; instead, you must purchase a separate policy for these events. Michael Gulla, head of underwriting at Hippo, a real estate insurance company based in California, says assessing risk based on where you live.

If you live in Los Angeles, earthquake insurance may be a good idea. If you live on a mountaintop, flood insurance may not be a priority. However, if you live in high-risk coastal areas of Florida, Texas or Louisiana, flood insurance is not just a necessity – lenders may actually require you to have it.

The Federal Emergency Management Agency (FEMA) also warns. Floods can happen anywhere, even if you live in a low-risk area, so you may want to talk to your insurance agent about what additional coverage is available. According to FEMA, just one inch of water can cause $ 23,635 in damage to a 2,500-square-foot one-story house and $ 3,172 in personal property damage.

Although the government may come in with help, this support may not be enough to cover the damage. FEMA reports that grants offered for disaster relief average $ 5,000 per household. Another relief option is disaster relief loans, but you have to repay these loans with interest.

Your coverage should be sufficient for a complete remodel, but is often not

As with, yes, life insurance, part of having home insurance is considering the worst case scenario. In this case, it would mean that you lost your home completely during a natural disaster. If this happens, your housing coverage is the part of the policy that would pay to rebuild the house as long as the damage occurs due to a covered event. Unfortunately, this is where many homeowners are underinsured.

"Most homeowners in the United States end up underinsured for some time on the value of their home," according to Gulla. This is because the cost of building materials can increase every year, and most insurance companies do not increase your reconstruction cost to meet that demand. Instead, they can add inflation of 1% or 2%, but natural disasters in recent years have driven construction costs far up, says Gulla.

Also keep in mind that you may have upgraded the surfaces in your home, which may mean that your coverage is no longer sufficient to protect your investment. A good rule of thumb is to calculate the cost of rebuilding and talk to your agent when making major changes to ensure you have adequate coverage.

Of course you are probably wondering: How can I calculate the cost of rebuilding?

Good question.

An insurance company can help you determine the cost of rebuilding your home, or you can hire an independent appraiser. Remember that the cost of rebuilding your home may not be the same as the market price of your home, so being insured for the estimated market value you are looking at, says Zillow or Trulia may not give you the right amount

Insurance offers only limited coverage for certain valuables [19659008] We have talked about your home structure, but we can not forget what you have in the home. Home insurance also protects personal accessories – such as your furniture, clothes, etc. – from theft or disaster.

There's still a good chance you've collected things after turning your house into a home. If you've bought brand new laptops, TVs or bedroom furniture since you last updated your policy, you may not have enough coverage to replace your new belongings.

In the case of valuables such as gold, artwork, jewelry, antiques, you may need to set an additional recommendation to cover the potential loss. The coverage for these valuables may be limited in your existing insurance, and you do not want to find out too late that the coverage is limited to a family cover or an engagement ring that is damaged in a fire.

To make sure your belongings are properly covered, make an inventory of what you have in the house, check the market value of your goods and talk to an insurance agent. Keep your inventory (with receipts if you have them) somewhere safe as you may need to use them as a backup when making a claim.

Choose your deductible carefully and look beyond the price when comparing suppliers

If you shop for home insurance online, you will see that adjusting the deductible – the amount you pay before the insurance starts – can change the premium.

Increase the deductible and the premium usually goes down; reduce the deductible and the premium generally goes up. But this deductible is not something you should choose on a whim.

Think of the financial hit you can take if your roof is damaged, and that is a requirement of 40,000 dollars, says Gulla. Do you want to pay $ 1,000 or 1% of the value of your home for repairs, or are you willing to pay $ 5,000 to $ 10,000 to lower your premium?

Choosing a deductible insurance policy can work if you have a large savings account, you are looking for premium savings and you are willing to take some of the risk. If you do not want to cover a lump sum of five figures to repair your roof after a hailstorm, it may be better to transfer the risk and financial burden to the insurer with a low deductible insurance policy.

mention that price is important to keep in mind when trading between suppliers, but price should not be the only business breaker or manufacturer. If you make a decision based solely on who offers the cheapest insurance without digging into the fine print, you may find that you are underinsured at the worst possible time … when you actually need to apply.

Finally, don & # 39; do not be afraid to ask for a discount

You have probably seen car insurance ads that tell you about the different discounts you can get to be a safe driver or a good student.

Guess what? According to Gulla, if you have not made any updates to your insurance for a while, your insurance company may have new discounts available.

For example, Hippo offers a Smart Home discount if you install systems that help prevent loss. Combining your car insurance with your car insurance can also give you some savings.

Ultimately, a home is one of the biggest purchases we make in a lifetime, and having adequate coverage can protect your castle and the belongings you have in it. Skimping on insurance or fixing and forgetting your insurance may risk that you do not have enough coverage. Each time, take out your insurance to review the terms and make updates as needed.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and your general well-being can be refreshingly easy. ). We believe that navigating life insurance decisions, your personal finances and your general well-being can be refreshingly easy.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life does not have the right to provide tax, legal or investment advice. This material is not intended to provide and should not be relied upon for tax advice, legal advice or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

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