Your home is one of your largest assets. You want to make sure it’s properly insured, but there are many things to keep in mind. Here are 8 tips to consider when purchasing insurance for your home.
Purchase price, market value, or appraised value is not the insurable value of your home.
The amount of insurance on your home is based on the estimated cost to rebuild it with new materials. Purchase price is based on such factors as age, location, physical condition, and market conditions. Similar homes can have substantial differences in market value, but the replacement cost would be the same.
Make sure you have an “extended replacement cost” endorsement.
Your agent will provide an estimate of the replacement value of your home, but this is not guaranteed to be accurate. This endorsement provides 20-25% additional coverage in the event of a total loss on the home and if the insured amount is not adequate.
Homeowners policies are not designed to insure an in-home business, whether it is a full-time occupation, part-time business, or hobby.
There is a dollar limit on personal property and no liability coverage. Discuss this with your agent to determine if additional coverage is needed and the best way to obtain the coverage.
“Toys” are not well insured under a home insurance policy.
Coverage for these items is either restricted or nonexistent. Boats, campers, and recreational vehicles (ATVs, snowmobiles, golf carts, motorcycles, and scooters) should be insured under a separate policy providing physical damage and liability coverage.
Other types of property such as money, jewelry, guns, or others have specific dollar restrictions.
Make sure your agent reviews these with you, as there are often endorsements available to provide additional coverage.
The coverage for personal property in the homeowners policy can be expanded by purchasing a “Form 5” policy.
In other policy forms, uninsured claims can result from breakage, loss, animals, some forms of water damage, and other perils. In most cases these claims can be covered by purchasing additional coverage.
You may need additional coverage for water damage from overflow of a sump pump or backup of sewer/drain.
This type of claim is excluded in most policies but optional coverage is available.
When applying for coverage on a newly purchased home, insurance companies are being more restrictive on older roofs, electrical, and
These issues affect the pricing and even the ability to insure a home.
I want you to have peace of mind knowing you’re adequately covering one of your largest assets. I’d be happy to answer questions about homeowners insurance or other insurance needs.Insurance products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.