Finding the right homeowner’s insurance is a vital part of buying and owning a house. Your insurance policy can protect you from a lot of—but not all—losses and damage. Knowing what’s included in your homeowner’s insurance policy can save you a lot of money and heartache when you have to make a claim. Here are some of the things you should be aware of. If you’re not sure about any of these, be sure to ask your insurer.
Coverage Exclusions
A big part of being smart about homeowner’s insurance is knowing what’s covered and what’s not. It’s very important to know what your particular policy will pay for in the event of a disaster. Most insurance policies don’t cover flooding or earthquakes, so you might need separate policies if these are concerns in the area where you live.
Dollar Limitations on Claims
There might be a limit on how much your insurance company will pay for certain damages. If there are items in your house that are particularly valuable and would cost a lot to replace, you might want to think about insuring those separately. Your regular homeowner’s insurance policy might not completely cover the cost of stolen jewelry, for instance.
Replacement Cost
If your home is totally destroyed, you’ll only receive the maximum amount of your coverage. If your home is insured for $200,000 and it costs $250,000 to replace it, you’ll still only receive $200,000. So if you know the value of your home has gone up a significant amount, it’s definitely time to update your policy. The last thing you want is to be stuck with one that won’t actually help you recover completely from a disaster.
Actual Cash Value
If your home is destroyed and you don’t plan on rebuilding, you can opt to receive a cash payout of the amount of your policy minus a deduction for depreciation. This is also sometimes called market value coverage.
Your Liability
Your homeowner’s insurance policy typically covers your liability for accidents that might happen on your property. This usually covers medical care, court costs, and anything else awarded by the court. But there are limits to the amount your insurance will pay out. Make sure it’s enough to cover yourself and your assets.
Pet Coverage
Sometimes our four-legged friends can throw a wrench into insurance coverage. Your liability coverage usually covers any damage done to others, including dog bites, which make up about a third of all liability claims. But there are some exceptions. Certain large breeds of dog may be excluded from coverage or could cause your rate to go up. These might include Akitas, Boxers, Chow chows, German Shepherds, Pit Bulls, Great Danes, Mastiffs, Rottweilers, and more.
Claim Deadlines
Make sure that any deadlines for making a claim are clear. Many insurance policies have a 14-day reporting window. This ensures that any damage that’s been done doesn’t get worse before an adjuster can review it. Missing that window for making claims could have disastrous results. You might very well be forced to pay for any repairs or replacements out of pocket.
Potential Discounts
Make sure to ask your insurance provider about any discounts you might qualify for. Certain home improvements and technology upgrades can help make your home safer, which is definitely of interest to your insurer. Smoke detectors, alarm systems, deadbolts, and upgraded doors, windows, and roofing are all features that could potentially get you a discount on your homeowner’s insurance. Bundling your insurance policies is another great way to score a discount. Some people feel weird inquiring about discounts, but it never hurts to ask!
