A new home may be the biggest investment you will make in your lifetime. So naturally, the second most important investment you need to make is in a home insurance. The best home insurance policy will be a comprehensive policy that offers various personal insurance protections, including losses occurring to one’s home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability
insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
When you request a home insurance quote, ensure that all the gaps are covered, because it is your home and what you have inside could be at stake. Prior to buying a home insurance, you need to scrutinize the policy to check the coverage details. Making the right decision in picking the best home insurance always pays off at the end.
Here are the five things you need to know about home insurance:
1. Home insurance coverage details
Study about home insurance coverage in four principal areas: the structure of your house, belongings, liabilities to others, living expenses in case the you are forced out. In case of a natural disaster, you must know all about the coverage details of the expenses incurred to rebuild the house and replace everything in it. If you get sued, learn about the liability coverage to protect yourself. Lastly, living expenses should cover the cost of making the house liveable or living elsewhere, while your home is being repaired or rebuilt.
2. Ensure replacement value coverage
Look for a policy that spells out that both your home and its contents are covered by replacement-value insurance. The best home insurance replaces everything you lost with similar, new items. Try to get Guaranteed-Replacement-Value-Coverage, which covers rebuilding irrespective of the cost. Several companies offer Extended-Replacement-Value Insurance, which cover up to 100 percent of the value of the home, plus a certain percentage to cover rebuilding the home in today’s market.
3. Detailed analysis of the claim process
Analyse and examine the claims offered by different companies. Two policies may promise the same amount of coverage, but they can be vastly different when it comes to the claim process after a loss. It is crucial to inspect if the entire claim will made upfront in case of a loss or it includes just a fraction of the amount. It would be wise to opt for home insurance which will give you the cash value of your possessions right after a loss and does not wait to cover the replacement value until after you have replaced all your items and have valid receipts to prove it. The replacement timetable of the policy is an equally important factor to consider about home insurance.
4. Home insurance inflation guard
Go for a home insurance that offers an inflation guard which covers the increasing cost of rebuilding. A house built 10 years ago may have cost $100,000 but it may take $120,000 to replace it today. Before freezing the policy, talk to your agent at length to verify if the coverage amounts are realistic.
Last but not the least, opt for a special policy known as a ‘floater’ or ‘endorsement’ for certain valuable items such as computer equipment, jewellery, furs and fine collectibles. Several home insurance policies may limit the amount of certain items to a fraction of the replacement value, but a floater will reimburse you the entire amount even if you lose the article.
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