You probably heard it a million times, but your home is one of the largest investments you will ever make. Unfortunately, it’s also one of the most vulnerable. From vandalism to theft, it’s important to have coverage when you need it the most.
Some homeowners buy the insurance and have no idea what they are even buying. They listen to their agent and figure that since they are an expert, they know what’s needed and what’s not. Unfortunately, that’s not always the case.
So whether you’re currently looking or looking to switch carriers, here are 20 questions you need to ask your insurance agent before signing on the dotted line.
1. What is homeowners insurance?
Homeowners insurance is a type of property and casualty insurance. It covers your home and your possessions inside.
2. What are disasters?
When it comes to homeowners insurance, the following perils are classified as disasters:
3. Do you cover natural disasters?
A homeowners policy will cover all of the above-listed perils. Floods and earthquakes are common exclusions from homeowner policies. So, if you live in an area prone to earthquakes and floods, then you will need to have an endorsement made on your policy or purchase an additional policy.
4. Is homeowners insurance required by law?
Unlike car insurance coverage, states cannot make you buy homeowners insurance. However, if you’re financing your home, your lender will want verification of coverage.
5. Why do I need homeowners?
Everyone needs homeowners insurance because of how expensive housing is. Not to mention, disasters aren’t known for being discriminatory. For example, constant wildfires in California ended up destroying thousands of homes and Hurricane Harvey forced about 30,000 people into temporary homes.
6. What if my home is destroyed?
To keep it short, if your home is destroyed by a disaster, then a standard homeowners insurance policy is going to save you from going into crippling debt by repairing your house.
7. Are there different types of coverage?
Yes, there are different types of coverage. The two major types are the ones we’re talking about here; replacement cost homeowners insurance and actual cash value homeowners insurance (ACV). Most insurance carriers require that your home be insured at replacement cost on a homeowners policy.
8. Which type is better?
Replacement cost is the better choice, as the purpose of insurance is to indemnify which means to make whole again. You want your homeowner’s insurance policy to make you whole again by completely rebuilding your home.
9. What does homeowners cover?
A homeowners policy is a package policy which covers the following:
- Dwelling – your home
- Other structures – such as a shop in the back yard
- Personal property – your furniture, clothing, etc.
- Loss of use – pays for your living expenses as your home is repaired from a covered peril
- Personal liability – bodily injury to someone on your property
10. What else can it cover?
You can add additional coverage to your homeowner’s policy to include but not limited to:
- Medical payments coverage – pays for guest injuries without declaring a fault
- Water backup of the sewer – should your home sustain damage from a backed up sewer
- Valuables – jewelry, silverware, etc.
11. Is my pet covered under my policy?
No. Under standard homeowner policies, your pet is not covered. However, you can purchase pet insurance, which covers your pet in the case in case of injury and routine treatment.
12. How can I lower my rates?
To lower your premium, you can pay a higher deductible, which is the amount of money you need to pay before your policy takes effect. You can also bundle all your insurance needs into one package, which usually qualifies you for discounts.
13. What is an umbrella policy?
Umbrella policies give you an added layer of liability coverage on top of what’s already covered by your standard policy. It’s usually recommended if your assets are worth more than $500,000.
14. When should I call my agent?
You always want to let your agent know if there have been any updates to your home, including additions. That way your home is properly rated, and you are properly insured.
15. What if?
What if you have a hobby farm; what if you have an in-home daycare for kids? These are unique situations that you will need to need to call your insurance agent about.
At Sandifer Insurance, we understand how confusing insurance coverage can be. If you would like to know more about how you can save money on your homeowners insurance or any other type of insurance, we are here to help.