Standard homeowners insurance covers the contents of your home and liability protection as well as damage wrought by the majority of disasters. While this insurance is not legally mandated, most lenders require coverage to protect their investment in your home in the case of a fire, storm or other scenario.
What Insurance Covers
As a package policy, homeowners insurance insures your home, its contents and your liability, which is any legal responsibility for injuries or damage caused by you or the members of your family (including pets). Policies additionally cover living expenses in case you are not able to live in your home for a period of time because of an insured disaster. Insurance only covers disasters listed in your policy. It most likely does not cover damage from a flood, earthquake or routine wear and tear. When choosing an insurance policy, insure only your house and not the land under it. If your house is destroyed, the land under it will not be. Insure that land, and you will pay a higher premium.
Filing a Claim
When you need to file a claim, start by calling either the police (if there has been a crime such as vandalism or burglary) or your insurance agent. There is a time limit for how long you have to file a claim. Ask your insurance agent if the claim exceeds your deductible, if you need to obtain estimates for repairs and how long it will take to process the claim. If you need to make temporary repairs, save the receipts to submit them to the insurance company for reimbursement. Prepare a list of missing or damaged items -- even photograph or videotape damage -- so you can substantiate your loss.
The cost of your homeowners insurance policy depends on a variety of factors: The square footage of your house and additional structures, building costs in the region, the home’s construction, the amount of crime in the neighborhood and the likelihood of damage from natural disasters. Additionally, the proximity of your home to a fire hydrant and fire station can play a role in the cost. The amount of your deductible factors into the premium price as well. If you have a low deductible, you will pay more in monthly costs.
How to Save Money
Homeowners insurance can be costly, but you can save money by raising your deductible. Insurance companies recommend a deductible of at least $500, according to the Federal Citizen Information Center, but you can save as much as 25 percent on your premiums by raising the deductible to $1,000. You can also save money by buying multiple types of insurance from the same company. Some companies will take 5 to 15 percent off the premium if you buy two or more policies from them – just double-check to see if that’s less expensive than purchasing coverage from multiple companies.
Standard policies insure jewelry and other expensive items, but there are limits as to how much the insurer will reimburse you for them. A standard policy covers $1,500 for theft of jewelry, according to the Insurance Information Institute. For more coverage, you can either raise the limit of liability or purchase “floater” policies. The latter type offers more protection because it also covers accidental losses. The item must be professionally appraised to purchase a floater policy.
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