Homeowner’s insurance is a vital part of protecting your home and your possessions. However, many people are not aware of all the ways in which they can take advantage of their homeowner’s insurance policy.
1. Know the different types of homeowner’s insurance policies
Homeowner’s insurance is typically broken down into four main types, or coverage limits. You can purchase all four types of homeowner’s insurance policies for your home through the same company, but you cannot carry multiple policies with different companies at once. Because these are usually sold as a package deal, it is important to choose the following options based on the value of your home.
- Coverage for the structure of your house
- Personal property coverage
- Additional living expenses coverage
- Coverage for additional structures on your property
The cost of these types of insurance coverage will vary depending on the size and the value of your house, as well as its age, attractiveness to thieves, and any additional risks or exposures associated with it (such as proximity to chemical plants). As an example, if you live in a larger house in an urban area, you would likely have to pay more for these types of insurance than if you live in a small house in the suburbs.
2. Know what coverages are included with your policy
As we have discussed above, there are several different types of homeowner’s insurance policies, which will vary depending on the size and value of your house. However, the majority of homeowners’ insurance policies will cover similar things within each category.
- Your home
- Personal property
- Liability coverage for accidents that happen on your property
- Additional living expenses in the event that your home is rendered uninhabitable by an insured disaster or accident
The cost of homeowner’s insurance is typically modified based on the amount of coverage you purchase for each type of coverage. If your home is currently under construction, it will not be covered by homeowner’s insurance until it has been finished and a certificate of occupancy issued. Similarly, any building scheduled to be completed within 12 months will not be insured until it has been completed.
3. Consider insuring your valuables independently
Your valuables, such as jewelry and electronics, are not automatically covered by your homeowner’s insurance policy. It is a good idea to make a list of the items in your home that have significant value, and ask your insurance agent if they offer special coverage for those items under a personal property rider. If you live near an earthquake zone or another area with high seismic activity, it is also a good idea to ask your insurance company about an earthquake endorsement. This will protect your valuables if they are damaged or destroyed due to an earthquake within the coverage limits of your policy.
Some people also think that their homeowner’s insurance will cover other belongings like their vehicles but getting separate auto insurance is important to protect your car on your property, no matter what kind of disaster hits.
4. Be sure to check for discounts
Homeowner’s insurance is usually sold as a package deal, so you cannot purchase auto insurance or renter’s insurance from one company and your homeowner’s insurance from another. However, many companies do offer discounts for these policies if purchased together. Some of the most common discounts offered are:
- Multiple policy discounts if you purchase more than one type of insurance (homeowner’s, auto, etc.)
- Multi-policy discounts if you purchase two or more types of homeowner’ insurance coverage (coverage for the house and contents, liability coverage, additional living expenses)
- Home security system discount
- Smoke detector discount
- Multi-policy discounts if you have a renter’s insurance policy in addition to a homeowner’s policy
- Discounts for homes with a security system installed
5. Make sure you have enough coverage
You have to make sure that you have enough coverage to rebuild your house if it were to be destroyed by a covered disaster. If you don’t have enough coverage, then you won’t be able to fully rebuild or replace your home without having to pay the difference out of pocket. Also, think carefully about how much additional living expenses you would need in order to temporarily relocate yourself and your family while your home is being rebuilt.
6. Review your policy every year, as the coverage may change
Your homeowner’s insurance policy will automatically renew itself unless you cancel it. However, unless you have a fixed-rate policy that does not change from year to year, your coverage may be modified depending on changes in the market and any damage claims submitted under your policy.
Homeowner’s insurance is a necessary purchase to protect your home in the event of disaster or theft. However, many people do not realize that there are many ways to take advantage of this coverage. In this article, we have outlined six tips for getting the most out of your homeowner’s insurance policy. Be sure to review your policy every year and ask your insurance agent about discounts for multiple policies purchased together.