Homeowners Insurance

Homeowner’s Insurance

A home is typically a person’s most valuable investment. Homeowner’s insurance provides protection for damage that occurs to a home or on a homeowner’s property. If damage is caused by the homeowner’s property, such as a bite delivered by a family pet, then many homeowner’s policies will cover the costs. Also, if property is stolen from a homeowner off premises, then homeowner’s insurance usually will pay for replacement.

Homeowners should make sure that their coverage pays replacement value for their home and not actual cash value. This means that, if a home is destroyed, the insurance policy will pay to rebuild the home instead of contributing only that home’s current market value toward replacement costs. Also, homeowners should make sure that they have enough liability coverage in case an accident occurs on their property. Most homeowner’s policies have a $100,000 limit on liability coverage, but homeowners may purchase up to $1 million in extra coverage by investing in an umbrella policy. In addition, homeowners should purchase enough insurance to replace their house but should not insure the land beneath the house. People who fail to subtract land value from their home’s replacement value often end up paying too much for homeowner’s insurance.

Homeowners should ask their insurance companies about potential discounts for purchasing home security systems. Purchasing all policies from the same insurer including auto, home and life will often save homeowners a significant amount of money. Increasing the deductible of the policy will also result in significant savings. Discounts may also be available for seniors or for non-smokers. In addition, many companies lower premiums after policy holders have been with the company for a certain number of years.

The Insurance Information Institute lists the average homeowner’s insurance claim as costing $7,876. The National Safety Council puts the annual cost of home injuries at $192 million. To protect against disastrous financial loss, all homeowners should purchase this important type of coverage.