Purchasing a homeowners insurance policy is not as exciting as planning a new deck or painting the kitchen but it is a big part of home ownership. Disasters can always happen and your homeowners’ insurance would be your safety net in case it hits you. We want to list a few important questions for you to ask when making your decision about the coverage you need at a price you can afford.
Estimate Your Rebuilding Cost Per Square Foot
Ask your insurance agent to send someone to give you a replacement evaluation or contact a builder who builds new homes and ask the contractor to estimate your home’s rebuilding cost per square foot. If for some horrible reason your home burns down to the ground and your policy does not pay enough to rebuild you could be liable for a large sum of money to replace your home. To prevent this do not accept the dwelling coverage amount an insurance company recommends their cost replacement calculators are not 100% correct. Once you have chosen an appropriate dwelling limit it would be wise to consider extended replacement cost coverage to your policy. Look at what has happened since the pandemic to home cost. We are seeing lumber storage and high demand which is raising home costs considerably.
Understanding Homeowners Insurance Deductibles
A homeowners insurance deductible is the amount of money that you’re responsible for paying before your insurance company will pay you for an insured loss. The subsequent claim payment that you receive from your insurance company is the total damage or loss amount minus your deductible. That means if your deductible is $1,000 and your home sustains $50,000 in insured damage, your insurance company will pay you $49,000 after you pay your deductible. Homeowners may not realize that on some policies, a higher deductible may apply for claims due to wind, hail, named storms, or other disasters. If by chance wind damages your roof and your policy has a 5% on wind disaster rather than the normal $1,000 deductible you may have to pay lots more than the $1,000 deductible. It is wise to look at multiple insurers to see if they have these high deductibles. Because if your house is covered say for $250,000 and your policy had the 5% wind deductible clause you could have to pay the first $12,500 on the damages.
What Homeowners Insurance Does Not Cover
Any home can experience flooding during a heavy downpour however a standard homeowners policy is unlikely to cover flood damage. You must live in a community that participates in the National Flood Insurance Program (NFIP) to qualify for National Flood Insurance. Find out if your community participates in the NFIP and the kinds of NFIP resources available in your community. Everyone can qualify for water backup coverage which will pay for damage due to water backing up into our house from sewer lines, sump pumps, or other water lines. Another good addition to the policy is ordinance or law coverage to handle any required code changes that may happen after you purchase your home, even a house that was built five years ago is out of code.
Ways to Lower Your Homeowners Insurance Costs
While having the right coverage is generally more important than paying the minimum, there are discounts to make your policy more affordable.
- Shop around
- Raise your deductible
- Don’t confuse what you paid for your house with rebuilding costs
- Buy your home and auto policies from the same insurer
- Make your home more disaster-resistant
- Improve your home security
- Seek out other discounts
- Maintain a good credit record
For most people, a home is the most expensive asset they have. Take a little extra time to understand what it is that you are purchasing when you buy your next homeowners policy.
Rollins Insurance represents multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio.
Rollins Insurance is an independent insurance agency providing our clients the best prices with the most coverage possible since 2008. We represent multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio. We find that most people are under-insured and over-paying when we meet them. We love what we do and our primary business is Personal Auto, Homeowners, and Life and Health insurance. We are a family-owned and managed business that specializes in providing needs-based insurance services.
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