Family First: Everything You Need to Know Before Buying Home Insurance
Insurance, in all of its forms, is all about mitigating risk. The insurance company is betting you will not have a claim, and that they will get to keep the premium you pay them, while you as the homeowner is betting they will have a catastrophic claim, and will need the coverage their policy provides. For many Americans, their home is their most valuable investment, and it only makes sense to protect that investment with a homeowner’s insurance policy. Even if you don’t believe in insurance, if you have a mortgage, your bank will insist you obtain a policy to protect their interest. There are several things you will want to keep in mind before you make your purchase.
Watch for Exclusions
The details of your insurance policy only matter when it comes time to file a claim. Filing an insurance claim can be a lengthy and stressful process, and understanding what your policy does, and does not cover, will make the claims process that much easier if you do have to go through it. Ask questions and read the fine print carefully before making payments to bind coverage. Keep in mind that if you live in a wind exclusion state such as Alabama, Florida, Georgia, Hawaii, Louisiana, Mississippi, South Carolina, or Texas, you may not be covered for hurricane damage, and you will want to purchase an additional policy to cover this type of peril. Ask about any other exclusions that may apply to your specific situation.
Know Your Deductible
There is a simple correlation to the policy premium and deductible when it comes to insurance. Generally speaking, the higher the deductible, the lower the annual premium. The deductible is the amount of money you are required to pay out of pocket before your policy kicks in with additional funds. A higher deductible means the homeowner is responsible to cover a larger portion of damage than a lower one. Adjust your deductible to the highest value you can reasonably afford to cover if there was a claim. Check with your bank before doing so, as some banks place limitations on your deductible amount.
When To File a Claim
Aside from keeping your premium low, a higher deductible will have the natural effect of discouraging filing smaller claims; something that can get you non-renewed quickly. Strange as it may sound, insurance companies do not like policy holders who are claims happy, and will cancel your policy if you file too many. If damage is relatively minor, perhaps under $2,500, it is best to cover the damage out of pocket and not file a claim at all. According to Simpson T Roofing for example, a new Richmond Hill roof however can run into the tens of thousands of dollars, so it is best to file a claim against your insurance policy in that instance.
Ask About Discounts
Insurance companies want to collect insurance premiums. Just as with any other business, it is typically more cost effective from a marketing standpoint to up sell existing customers, than to go out and drum up new customers. Take advantage of this simple truth, and ask about any multi-policy discounts. Additional insurance policies could include auto, life, or umbrella policies. Other discounts could apply for upgrades or safety features installed in your home. Talk with your agent about discounts that you may be eligible for before you commit to a purchase.
Purchasing an insurance policy does not have to be a confusing or tedious process. Purchase the policy that best fits your family’s specific needs, ask questions, compare rates, and read the fine print. Knowledge is power, so know and understand what you are purchasing before paying your premium.
Category: Home Insurance
