Home Insurance Questions & Answers
- What cost should I expect getting home insurance?
When determining how much home insurance will cost, there are a number of factors that must be taken into account. A few will be out of your hands, and others are not. It is important that you are always aware of what sorts of factors can affect your rate positively how you can make it happen.
The dwelling coverage is how much you are paying to have the actual physical structure of your home replaced in case of a loss. This coverage is calculated by the cost of building in the area, and the square footage of the residence, and multiplying the two. Because the cost of building varies in each area, you can use our home insurance calculator to determine what the costs would be for you.
The other coverage's, aside from the dwelling coverage, would also affect how much you pay. The contents, loss of use, and the other structures coverage are usually calculated as a percentage of the full cost of dwelling insurance, which cannot be changed. On the other hand, the personal liability as well as MedPay are both coverage's which do offer different options to homeowners.
Here's an example; the personal liability limits could be increased if it meets your needs. In a standard policy for homeowners insurance, it would include a limit of $100,000 in personal liability. If you were to increase the limit by 5 or 10 times, you would probably see a rate change for your policy. Also, some homeowners like to add an endorsement- such as jewelry or expensive collectibles- which are items they want to specifically have covered, and this will likely increase the premium paid each month.
On Home Construction; certain homes have been specifically built to withstand extreme weather systems such as hail and wind, and these are cheaper to insure than other homes. Another example is homes built with wood frames versus homes built with brick. Brick is a little cheaper to ensure, as they are less likely to have severe damage in a fire. Another example is older versus newer homes, which have older and more rudimentary plumbing, electrical and heating systems which put them at higher risk, and lead to rates which are a little more than newer homes.
In terms of home safety features, there are some things that your home might have which will cause the premium to fluctuate. In many cases, you could have control over them. The idea is that safer homes are rewarded by insurance companies. There are discounts for things like:
- having a security alarm
- having working fire alarms
- near enough to a fire hydrant
- having doors with deadbolt locks
- near enough to a fire department
Finding out your insurance score is a beneficial part of determining what kind of price you'll pay for home insurance. This is essentially a number which is assigned to you based on the sort of claim history you have and your credit score. In general, with a good insurance score, the rates your insurance company offers will be pretty good as well. By having a good credit score, you are in a better position to receive better rates from insurance companies.
The final factor affecting your coverage rate is the region that you are residing in. across the US there are higher risk zones for cyclones, hurricanes, tornados, and earthquakes. People residing in these areas are far more likely to see higher rates for coverage than those living in lower risk zones of the country.
- What sort of information will I have to provide to the insurance agent?
Here are some of the questions you can expect to be asked when looking to get an insurance quote. Be prepared to provide the most accurate answers possible in order to get a realistic, comprehensive policy at a good rate. Agents will also be able to help with some of the questions that you may not know off the top of your head. These include:
- What is the value of your possessions?
- In what condition is the home being insured?
- Are you an owner or tenant?
- What type of liability coverage are you looking for?
- Do you have pets?
- How many people are residing in the home?
- When is the home insurance policy supposed to be reviewed?
If there is one thing we know, it's that life can be too busy at times to all you need done. We do know, though, that it is always important to be aware of what your policy actually covers. There are four events which should automatically lead you to review the homeowner's insurance policy that you have.
The first is renewal time. This is a good time to take a look and read through your current policy even though you would rather simply pay the renewal to keep the coverage steady. This is a good time to go through the policy and contact your agent with questions about it. The following are some examples of what things should be asked at renewal time:
- Are there any discounts I qualify for that I am not receiving?
- Is this a good time to shop around and compare providers?
- Is this a good time to shop around for a cheaper rate?
- Is there any reason to increase my liability coverage?
- Are my possessions insured well enough?
- Will I be able to save money if I increase my deductible?
- Does the policy I'm on have separate deductibles for different risks?
- Has the policy provider I am with made any changes to the coverage I get?
Next, making any major purchases or renovations to the residence will affect the worth of the home being insured, and perhaps there will be new items you want covered, such as TV's or a new deck. You will have to call up your agent and let them know what changes have been made. Making home improvements such as adding or expanding rooms, kitchens and bathrooms are a good time to pull out and review your policy and make sure it continues to fit your needs.
Also, if there is some kind of an expensive gift which has been given to anyone residing in the home, it is important to call up your agent and discuss how you can protect it best, either by endorsing it individually or by increasing the coverage on the policy for possessions. These items can be things like expensive jewelry, artwork, or electronics.
Third, if the house has been made safer in some way. These are things such as security systems with alarms. If you have had one installed in your home recently and the coverage you have has not taken it into account, you can benefit from a discount by calling your insurance agent and notifying them of the changes. Other things which could reduce your premium are upgraded electrical, plumbing or heating systems.
Lastly, when individuals move in or out of the residence. In cases of marriage and also divorce, insurance is affected, because the possessions within the home typically change. It is important to notify your agent if there are other adults moving in, including when young adults return home from college. If there is a significant enough change in the value of possessions in the home, the rate will be altered to reflect it.
- In a standard policy, what is actually covered?
There are six basic points of coverage you should be aware of when looking for home insurance; they are:
- The Dwelling is protection from damage or loss of home from events including natural weather patterns such as hurricanes, lightening, etc, and fire. In the event of a natural disaster, such as earthquakes and floods, a separate insurance policy is needed.
- Other structures include structures such as garages or sheds that are on the property itself but detached from the main home. The cost of insuring these other structures is generally calculated as 10% of the dwelling coverage cost. There is also usually an option to get a higher rate if you find it necessary.
- The personal property coverage is included with a standard policy as it protects the actual items within the home. The coverage is intended to protect possessions that are stolen or destroyed by the natural weather system or fire. Some of the things that are included in this coverage are furniture, electronics, clothing, etc.
- Loss of use is coverage against the living expenses you will face if for some reason you are unable to reside in your home- and the event is covered by a claim. While a home is being repaired and is unlivable, the loss of use coverage will cover the hotel and food expenses that you incur.
- Personal liability protection protects you if there is a situation where a lawsuit is filed against you for having caused property damage or injury to a person. Any covered family members in your policy are also protected in this kind of an event. Also covered are family pets, such as dogs, which might have caused bodily harm to someone or damaged a property.
- Medical Payments is a coverage also known as MedPay, which helps with medical expense payments. This is limited to injuries sustained while on the property being covered, but only if there are no lawsuits involved.
- I have a condo; what kind of coverage do I need?
There are benefits to condo insurance as it is specifically tailored to provide the best type of coverage a condo owner would need.
There are key differences in being a house owner and a condo owner, namely that a condo owner isn't responsible to ensure the whole structure, just the unit space. Although, depending on the condo plan, there is often a master policy which the building has and owners are required to pay a share into- more info on this is below.
- What is included in condo insurance?
Typically, all condo insurance covers a few standard things, including:
Dwelling coverage of a condo essentially covers the structure from the studs of the walls and inwards. It does not cover the whole entire structure plus the exterior as it would with regular dwelling insurance. What amount is needed for coverage varies from condo to condo; it is generally based upon the type of construction that went into the making of the condo. It can vary anywhere from $30,000 to $100,000, dependent upon what sort of building materials were used, and the value of appliances and upgrades the condo might have had. These things might include hardwood floors, granite counters, and fancy new appliances. To find the best coverage for you and your condo's needs, contact a home insurance agent for help.
Personal property/ contents coverage is what protects the actual belongings inside the condo. These are things like clothing, furniture, TV's and most other possessions with value. However, there is a maximum limit for these things, and if any one particular item has a very high value and it exceeds the limit, you would have to take out a specific endorsement to protect it. An example of this is that the condo payout for stolen jewelry is $1500; if you find that your jewelry is worth more than this, you would have to take out a specific endorsement to protect the individual pieces.
Loss of Use coverage can be claimed in special situations when the owner is unable to live in the condo for a period of time and needs to cover the living expenses of shelter and food during this time. This claim is only valid if there is a covered claim on the condo for damage and it is unlivable during repairs. It also covers things like laundry, dining out, etc.
Personal liability coverage is meant to protect the owner or any family members on the policy if involved in a lawsuit regarding property damage to another person, or for causing bodily harm to a person. While most policies have a minimum of $100,000 of coverage, it can be increased. The coverage is for court fees, lawyer fees and other expenses associated with this type of event.
MedPay coverage, also known as Medical Payments coverage, is there to protect the condo owner from having to pay medical bills in cases where a person is injured in the condo itself, and you want to cover their cost of medical attention. An example would be if someone slipped in your tub, and you wanted to pay for their medical fees. The condo owner would be able to use the MedPay coverage to pay the bills up to the amount stated in the policy. This coverage is only valid in cases where there is no legal stipulation involved, and is used at the will of the owner. The MedPay limits can be increased if the owner finds it necessary, but most condo policies out there offer a standard for coverage of up to $2,000 per claim/incident.
Aside from this, there is an insurance policy known as a Master Policy; this is a policy which condo unit owners all pay into on a monthly bases. It covers other areas of the condominium building which are shared, such as the laundry and recreation rooms, basement, in-ground parking lots, hallways, roof, stairwells and building entrances.
- Am I insured for flooding? & What if my home is home is in a standard flood zone?
The norm for insurance companies is to separate flood insurance from the standard homeowner's insurance policy. To get information from the Federal Flood Insurance Program, you can take a look at www.floodsmart.gov. There is also flood insurance available to tenants living in a rented home.
In some cases, depending on your region, flood insurance is required for homeowners by their lenders (the bank mortgaging your home). Standard flood zones, including A, AE, V, are all in the flood zones. Those in other areas outside of the standard flood zones may not be required by their lenders to take out an insurance policy for flooding, however the FEMA (Federal Emergency Management Agency) has stated that low- moderate risk zones do see up to 35% of all losses in a year. It's a good idea to seriously consider flood insurance even if it is not required by your lender. Those who are in low or moderate risk zones and who would like flood insurance will be able to receive coverage at lower than usual rates.
In the event of a flood, the insurance will typically cover the value of the possessions lost and the cost of rebuilding your home. The coverage of the lost possessions is their cash value at the time of the incident, after depreciation.
If your home is in a standard flood zone, then the lender requires flood insurance as protection. However, even if your lender does not require it, we do recommend it, especially in cases where your home is located near a lake, river or where snow melts, and has the potential to flood.
- Is there a difference between non-renewal and cancellation?
Yes. There is a big difference between non-renewal and cancellation of your insurance policy.
Cancellation occurs when a policy is either
- premium balance is past due, or
- there is an incident of fraud or significant inaccuracies stated on an application.
If your policy is cancelled for any other reason not stated above, there is a likelihood of being charged higher rates the next time you take out home insurance, regardless of which company you go with. In cancellation, the policy has not run out its time, or expired as it normally would after the agreed upon time. When a policy is not renewed, it is either by you (the client) or insurance company. A notice will be sent out with a certain amount of warning time if the company decides not to renew the policy. This might occur in cases where the company decides that they are going to stop offering a particular line of insurance. Another reason this might happen is because the company has decided they want less policies in that geographical area. Whichever way it might happen, in the case of non-renewal, there is a much lower chance of being charged higher premiums with the next policy you do take on.
- Should I be getting a separate policy for my jewelry?
Usually, in a standard homeowner's insurance policy, expensive items such as furs, china, jewelry, and other valuable items are covered in cases where they may be stolen or destroyed.
However, the coverage on these items is not unlimited, and is reflected in the amount which is specified on your insurance policy. Typically, the standard for jewelry coverage is $1500, and no more than $1000 for a single item. If you feel that your precious items exceed this amount, it's a good idea to upgrade your policy to cover your needs, by contacting your insurance agent. There are a lot of options when it comes to increasing limits on these types of items and specific adjustments can be made to your policy to accommodate them.
- Actual Cash value vs. Replacement cost Coverage?
There is a difference between the replacement cost coverage and actual cash value coverage. These are both types of protection coverage that are available on homeowners insurance, for both the dwelling and the possessions to be covered.
The replacement cost coverage is used most often in standard home insurance policies. It refers to the amount it would cost to replace the dwelling and its contents in the event of a disaster that the policy covers- hurricanes, hail, fires, etc. The insurance company would pay to replace or repair the home, to its previous standard, without calculating the depreciation value.
This type of replacement cost coverage can also apply to the contents of the home that were damaged, lost or destroyed in a covered event. It covers things like furniture, electronics, clothing, etc, which would be replaced with items as similar as possible and of equal quality. If for example your old leather sofa was damaged in a fire, the insurance company will replace it with a new leather sofa of equal quality.
Actual cash value is the other type of coverage that comes in some home insurance policies. It the event of a claim, it would replace the home and its contents, but only at the depreciation current value. To use an example, a home that was worth $100,000 and was destroyed in an even that was covered by the insurance policy, the owner will receive $100,000 in cash (rather than the cost of rebuilding the same house of the same materials), and the value of the old leather sofa (now only $400) and the 5 year old TV (now at $200) rather than the actual cost of replacing the items.
- What ways can I try to save money on my policy?
There are a few things you can look into when it comes to saving money on a policy. We have created a list that homeowners can go through to find out what they can do to ensure they are receiving the best priced and most comprehensive policy they can get. Here is what you do:
Look over your policy
When reviewing the policy you have, keep in mind that a great policy will be able to cover the cost of replacing your home and all of its contents to you, but not exceed that amount. Find out the value of your home and its contents, and see if your company is under or over insuring you for what you are paying.
If you want to be able to get a quick and easy, but very accurate home insurance quote, try our FREE home insurance comparison tool. It basically takes your coverage information and does a speed search through multiple companies to find and list the companies with the best rates. For you to find the best insurance policy available, this service is very quick and efficient, and it's what we do.
Use the home/auto discounts available
When a home owner is insuring the home with a good company, we generally recommend using the same company to insure your automobile. Most companies have what is called a home and auto discount, which is applied when you ensure both the home and automobile with the same company. Often, both policies are discounted up to about 10% and can save you quite a bit.
Raising the deductible
The deductible is a set amount which you have agreed to pay to the claim before the insurance will start paying. Try to find out how high you are willing to make your deductible and change it to this. Having a high deductible will lower the premium you pay.
This refers to making the home being covered safer and more resistant, and essentially at lower risk of having to file a claim. Insurance companies are willing to reward safer homes because they are at a lower risk of having claims made. Some of these upgrades include things like a new roof, installing storm shutters, and more. To find out more ways to improve the security of your home, you can contact an insurance agent, or you can look through the section 'homeowner tips'.
Ask the company about discounts
Simple calling up the home insurance agent and asking about what sorts of offers for discounts are out there is a simple task. Companies often have things like special rates for non-smokers. Find out if there are any discounts out there that you and your family would be eligible for.
- Deductible and my premium; how do they effect each other?
A premium on a home insurance policy is affected directly by the deductible you decided on. Essentially, if you have a high deductible, you will pay a lower premium. Vice versa, with a low deductible, you will generally be paying a higher premium. Before you go off to change your deductible, make sure you fully understand what it means, and how it will affect your policy, as well as the current financial situation you are in.
How it all works
The deductible on your home insurance policy is the amount that is paid straight up, out of your own expenses, before the insurance company will start to pay towards a claim. Here is an example of how it would work. Let's say you had a policy with a $500 deductible. Suppose your home was damaged by a fire, and you have filed a claim for it. The owner is responsible to pay for the first $500 worth of expenses (the deductible) before the insurance company begins to pay for the damages. As you can guess, the deductible can really have a big effect on the premium you pay each month. Having a low deductible will mean the premium you pay is fairly high. In a way, if you don't usually have a lot of lump sum saved up, this system might be better for you, especially if you were to need to file a claim, less money would come out of your pocket to have your home or belongings replaced. The best way to determine what is right for you is to decide how much you are willing and able to put out in the event of a disaster and make this your deductible. Making your deductible higher than what you feel comfortable paying is taking a big risk, and not really the safest choice, financially. If you decide to settle for a lower amount, you could end up paying higher premiums than necessary each month.