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“Insurance Savings Advice & Tips On How To Save Money On All Your Insurance Needs”
“Insurance Savings Advice & Tips On How To Save Money On All Your Insurance Needs”
HOMEOWNERS INSURANCE -
Types of Homeowners Insurance (continued)
total cost. This increased cost is not covered under the standard homeowner’s policy. An endorsement is required to cover any costs incurred because of new building codes in effect. In other words, if your
home is insured for $200,000, and the cost to rebuild the home is $190,000, but $40,000 of this cost is due to new building codes that must be followed, the insurance company will only pay you $150,000. To protect against this type of shortfall a special endorsement is required.
c. Loss or damage to personal property is only covered up to the actual cash value
of the loss. Wear and tear and depreciation are deducted from the value to determine
actual cash value. In other words, if the personal property damaged or lost is not
brand new, the settlement you receive from the insurance company may be less than
it will cost to repair or replace the personal property. To avoid this exposure,
you will need to purchase a “Replacement Cost Coverage” endorsement. With this endorsement,
you will receive the full un-
d. Depending on where you live, special exceptions for damage caused by certain catastrophic or other events, such as hurricanes, earthquakes, sink holes, fungi contamination, etc. may exist. Sometimes coverage is excluded altogether for certain hazards, sometimes limits of coverage are reduced, and sometimes larger deductibles apply for certain hazards. Make sure your agent explains what exclusions and limitations to coverage apply, and whether additional coverage can be purchased to lessen your exposure.
e. Damage from flooding is most always excluded from homeowners insurance. Coverage for flooding is only available through the National Flood Insurance Program run by the Federal Government. However, purchase of this additional coverage can usually be arranged through your insurance agent or company.
f. Coverage for certain types of personal property is restricted to limits that are far lower than the amount of stated coverage for all other personal property. Types of property with restricted coverage include cash, jewelry, furs, collectibles, antiques, fine art, computers, cameras, etc. If these items have significant value, their full loss will not be covered. Endorsements can be purchased that will cover these items up to their full value. Check with your insurance company.
g. Identity fraud protection is also generally available in case your personal information is stolen and misused. This coverage provides protection for lost wages, attorneys' fees, and other costs incurred while clearing your name.
Deciding on Coverage & Deductible Amounts
Most people purchase enough property insurance to cover the cost of rebuilding their
home should it be a total loss, due to an insured occurrence. If the estimated cost
of rebuilding the home is $200,000, they purchase $200,000 of coverage. As noted
above, many people choose to purchase an endorsement to cover potential overruns
of up to 20%-
1. Consider the following when deciding the amount and types of coverage to purchase for your home :
a. In order to decide on the amount of coverage for your home, make sure you answer
all questions accurately about the characteristics of your home. These include such
things as size, type of construction, type of interior appointments, number of bathrooms,
etc., but does not include the value of the land, since this is not being insured.
The insurance company will use this information to determine the estimated cost
to rebuild your home, and for this reason it is important that it is accurate. It
is also important that it is accurate since if large inaccuracies exist it may jeopardize
your ability to collect fully on a claim, due to misrepresentation. Do not be tempted
to low-
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