HOMEOWNERS INSURANCE

Your home is probably one of your most prized possessions. Not only did you work hard to buy it for yourself or your family, but like most you probably continue to work hard to pay for it. When you bought your home, your lender required you to get Home owners insurance. Unless you knew an insurance agent, you were probably refereed to someone. Among all the things that you were thinking about when buying your home, selecting a quality homeowners policy was not at the top of the list. Most homeowner policies cover the necessities, providing base coverage required by the lender. Since your Homeowners payment is probably included in your mortgage payment, you might have never paid attention to your actual homeowner’s policy.

Like every other thing you buy, you have many options in benefit coverage and prices. Since most people never bother shopping their homeowners policy they never realize the money that could potentially be saved or the additional benefits they might need. This article is meant to be a guide to the basics of Homeowners insurance. It is intended to give you better information about homeowners insurance, and help you understand basic terms and concepts.

A FEW TERMS TO UNDERSTAND

Actual Cash Value or ACV:

The most amount of money the insurance company will pay you for the replacement of an item based on its depreciated value. For example: Five year ago you purchased a clock for $1000. The clock life expectancy is 20 years. You have already used 25% of the clock life expectancy; therefor an insurance company will only give you a $750 replacement value.

All Physical Loss or APL:

Property that is covered from Any and All perils EXCEPT those specifically specified by the policy.

Declaration Page:

The page attached to a policy that outlines all policyholder information.

Endorsement:

A page attached to a policy that changes the policy in any way.

Named Peril:

Property covered on a Named Peril only basis is covered against specifically loss form (wind, fire, rain, etc.)

Replacement Cost Value:

The maximum amo9unt the insurance company will pay to replace an item at the current replacement value. Example: Last year you paid $300 for a Tiffany lamp, today the same lamp cost $350. The company will pay you $350.

WHAT YOU SHOULD KNOW

Homeowner’s policies cover two primary forms of insurance:

1. Property Insurance- Coverage to protect your tangible assets against loss or damage.

2. Liability Insurance- The First part of liability coverage pays others in theft that they incur bodily injury while on your property. For example, a visitor falls on your sidewalk and breaks their arm. The Second part or the Med-Pay coverage pays to others the amount to cover medical bills incurred from sustaining bodily injury while on your property regardless of fault. Not all policies include Med-Pay benefits for liability arising from business or professional use. It is important to see if your policy excludes the Med-Pay coverage under these circumstances. If you work out of your home, Make Sure To Have This Coverage!

The property section of most polices are broken down into four categories, A, B, C, and D.

1. Coverage "A" covers your main dwelling and any permanent attachments thereto.

2. Coverage "B" covers other structures on your property that are no permanently attached to your main dwelling. These structures can include a shed, fence, landscaping, etc. Most Coverage "B" sections in policies do not cover items that are intended for use for business purposes.

3. Coverage "C" refers to property you own that is not a permanent part of your dwelling. Coverage "C" can include anything from furnishings, paintings, jewelry electronics, firearms, money, trailers, etc.

4. Coverage "D" protects you from expenses incurred from having to sustain your family in the event of loss of residence from a covered peril. Often called Additional Living Expense, this feature covers the expenses of relocating to temporary residence in the event your home become uninhabitable.

SOME BASIC TIPS

Do not assume! Disasters can happen, and it is always too late to change a policy after a catastrophe. Read your Homeowners policy thoroughly and discuss all your questions with your agents. If you have some items that you don’t know whether they would be covered, it is better to ask than to guess.

Take Pictures! Pictures are worth a thousand words, and they just might be worth thousands of dollars to your family. Taking pictures of your property inside and out can assure that all your items are accounted for. It is too easy to forget valuables, or to prove the condition of valuable unless you have a good picture.

Keep Receipts! If you have big expense items such as electronics, jewelry, etc., it is important to keep those receipts in a fireproof safe. If you have jewelry, it is a good idea to spend a little for a certified appraisal and keep it in your safe. This will prevent any disputes of possession for value in the event of fire, theft, etc.

Buy A Fire Proof Safe! A safe is the most inexpensive protection you can have. Not only can it deter theft, but its great protection against fire. A small safe can hold your important documents while, keeping your records organized.