How To Protect Your Home With Insurance

Introduction

All homeowners have to have their home protected with insurance. This is usually a condition of the mortgage itself. However, the policy may not completely protect your home. It is also possible that your home is underinsured either because you haven’t purchased enough insurance, or you haven’t updated your policy recently. This means that even if your home is with insurance, you may not get its full value in the event of a disaster. For this reason, you will want to make sure to check this out.

Step 1

Start by thoroughly inventorying everything in your home. Video or photograph everything and place these videos or pictures in storage away from your home just in case a catastrophe should occur. It is a good idea to also keep a copy of your insurance policy in this same location. These videos or photographs will also help to ensure that you get a policy now that will adequately cover you later. Make sure that everything is insured for “full replacement value” (this ensures that everything will be restored to its original condition), not current cash value. Whenever any of these things changes or you remodel your home, you should update your coverage to reflect your present situation.

Step 2

Look for an independent broker who sells insurance from numerous companies. They will be less biased than a broker who only represents one insurer. You are also more likely to get a better deal since you will have insurers competing for your business. Just make sure that you answer their questions as honestly as possible.

Step 3

Insure your home for an insurance amount that would pay for actually rebuilding it in case it was ever destroyed. This will be different from the price that you truly paid for your home, or that it is appraised at today. To calculate this number you will want to multiply your home’s total square footage by the local building costs per square foot. You can learn about local building costs simply by contacting a contractor in your area.

Step 4

Ensure that your home with a policy that has plenty of liability insurance. This will protect you in case someone should sue you for getting injured on your property. You will find that many policies stipulate only a minimal amount of liability coverage. However, according to the Insurance Information Institute you should maintain anywhere from $300,000 to $500,000 worth of basic liability insurance. You never know when an accident may occur, and you definitely don’t want to pay for it out of your own pocket when you could have insurance protection.

Step 5

Before signing up with an insurance company, make sure to take a look at their financial stability. While your home insurance policy may look great on paper, if the company doesn’t have the funds to back you with insurance money than your claim with an insurance company will be worthless. This is why you will want to check their rating with A.M. Best. The higher their rating, the better a company they are reported to be.

Tips

Make sure you read everything carefully before signing any contracts.

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