To secure a home loan, you would have needed to sign up for home insurance. Property is one of the most significant investments you’ll likely ever make. Therefore, it’s essential to make sure the policy you choose will offer the most comprehensive coverage. You don’t always know what will cause you to make a claim in the future.
Whether you’re wondering if you’ve got the right insurance policy or you’re shopping around for a new one, here are a few things to consider before you decide.
What the Policy Includes
Every home insurance provider is different, and what is ‘standard’ in one policy may not be in another. When requesting home insurance quotes, make sure you’re comparing apples with apples.
There are four important components of a home insurance package: house structure, belongings, liability, and living expenses if you have to leave due to damage. These aren’t all included in all insurance policies by default, so read through the policy to know what you’re getting.
Replacement Value Insurance
The most house-proud homeowners would have spent quite some time selecting the perfect pieces of furniture for their homes. Over time, you can end up with tens of thousands of dollars’ worth of furniture that follows a specific theme or style.
Read through the fine print of a proposed home insurance policy to determine if it includes replacement value, cash value, or fair market value. Replacement value ensures you can replace like with like. The latter options mean you may only receive payment for what the furniture would be worth on the market now.
The Claims Process
It can be stressful enough dealing with property damage, but there can be added stress if you realize too late that the claims process can differ from one insurance company to the next. While some companies will offer you the entire cash value of your possessions after you’ve made your claim, others will only pay based on what you have replaced.
Some insurance companies will sometimes only pay when you’ve got receipts to prove what your new possessions cost. For those without cash to replace items before an insurance payout, this claim method can be problematic. Make sure you’re aware of the intricacies of the claims process before you purchase your home insurance package.
Your Valuable Possessions
If you’ve got something precious, like computer equipment or expensive jewelry, it pays to think about separate coverage. Many home insurance policies have a maximum amount they will pay out for big-ticket items. You can purchase floater policies that allow you to be reimbursed for those particular items if they are lost or damaged. However, you will need a bill of sale or appraisal for your insurance company.
You likely know the importance of having an emergency plan and survival pack in an emergency, but you might be less familiar with what your insurance policy outlines about natural disasters. Quite often, flood and earthquake damage isn’t included by default. If you live somewhere prone to these events, make sure they are outlined in your policy.
There is no standard type of home insurance policy, which means you need to do your homework. From making sure your valuables are covered to understanding the claims process, there is a lot to consider before purchasing home insurance.