One of the most common misunderstandings among homeowners is whether they have the appropriate amount of hazard and liability insurance, also known as homeowner‚Äôs insurance. Purchasing homeowners insurance is something that is commonly done once escrow has closed on the property you are purchasing. This property can either be used as your primary residence or as a rental property, either way it is important that you have sufficient insurance on the property. If you aren‚Äôt sure of the amount of coverage you purchased you can look at your policy or contact your agent to help you determine if the amount of coverage you have is sufficient or if you should purchase more.
The first thing commonly listed on your policy is usually building/dwelling/property. This line refers to the cost of rebuilding your property in the case of a fire, damage from weather and vandalism among other items. This amount was determined based on what you and your agent estimated the cost to be if your home needed to be rebuilt. Most insurance policies do not cover floods or earthquakes; if you feel that your home may be damaged by either one of these you should purchase additional insurance that will protect you and cover your home. Your insurance agent can recommend how much insurance you should have to rebuild your home, but ultimately the decision is up to you and how much you can afford. It is important that you not underinsure your home; doing so will not provide you with enough money to rebuild your home. The amount of coverage provided by your policy should be reviewed every year to allow you to make any necessary changes as the value of your home and belongings changes.
Many homeowners often forget that their insurance policy also includes liability coverage. Liability coverage can be used if your pet bites someone or is someone is injured on your property. If you should get sued by someone who fell or was injured on your property, your insurance company will provide a lawyer to defend you. If a judgment has been ordered against you, your insurance company will pay the settlement. There is a limit to how much is covered by liability coverage, it is typically $300,000. Liability insurance is something that should not be forgotten about, it is included in your policy to protect you.
The term deductible is something that everyone is familiar with, the amount of your deductible is chosen by you. This amount determines how much money you will need to pay when a claim is filed. It is common for many people to choose a higher deductible in order to save money on their premiums. If you are unsure of how much of a deductible is safe, you can always discuss your financial situation with your insurance agent. They will help you determine an amount that will be beneficial to you.
Most common insurance policies do not cover any collectibles, firearms, jewelry or artwork that you may own. To ensure that these items are properly covered you may need to purchase a policy that specifically covers those specialty items. This may seem like an added expense, but if you should experience a fire or robbery you will be thankful that you added the extra coverage.