COTW discusses 4 tips for choosing the right home insurance

4 Tips to Choosing the Right Home Insurance

Buying a home is both a significant achievement and responsibility. And as one of the most expensive purchases of your life, your home deserves protection from circumstances and perils that might cause it harm.

Disasters don’t always happen, but when they do, they can put you into a state of debilitating financial crisis. For those who own a home or planning to buy one, homeowner’s insurance is a small price to pay for peace of mind.

Whether you’re a first-time home owner or someone looking to renew your coverage, these tips will help you choose the right home insurance policy.

1. Know what’s covered and what’s not.

 The scope of your home insurance coverage is based on the type and level of policy that you choose. Standard home insurance policies typically cover the physical structure of your home and some of your personal belongings.

 Depending on the extent of your coverage, your homeowner’s insurance may include liability coverage that will protect your interests against lawsuits and medical claims in case of 3rd party injuries in your home or damage to another’s property. It may also have a loss of use coverage that pays for your temporary living expenses should your home become severely damaged due to a covered loss, and you need to live somewhere else while the repairs are going on.

Remember, though, that like most insurance policies, home insurance has its limitations. It may cover a lot of other things aside from the structure of your house, but homeowner’s policies generally exclude damages from earthquakes and flooding. Consider purchasing a separate coverage for these hazards, especially if you live in an earthquake-prone or flood-prone area.

 Make sure to check your policy copy to know what perils are covered by your home insurance. 

2. Know how much coverage is necessary.

Buying a house is a huge financial commitment that comes with the added cost of paying for home insurance. While everybody wants to save on their premiums, the last thing you want to happen is to under insure your home. You want to make sure that your insurance policy can cover all the expenses in case of a total loss. 

You can insure your home for either its actual cash value or replacement value, but most insurance companies would insist on the latter. Though more expensive, insuring your home at replacement cost value would provide you with more comprehensive coverage.

 Your insurer can help you determine the replacement value of your home, but you can also hire an appraiser to help you get an accurate estimate of how much you should insure your home for. When deciding the amount of your policy, make sure to take into account valuables and personal belongings that you want covered and for how long. Your premiums will depend on the tenure and amount of coverage that you choose.

3. Know your needs and lifestyle.

 Insurance companies nowadays have developed a better understanding of what people need and want. To better serve clients, most home insurance providers came up with points of differentiation that allows their consumers to tailor their policies to their lifestyle. 

Those who own plenty of valuable and priceless possessions like jewelries, antiques, and artworks can opt to extend their personal property coverage, while insurance holders who run a home-based business can purchase an endorsement to their existing policy or buy an altogether separate coverage specific for in-home businesses.

 Kids, pets, and travel aren’t factors that usually come to mind when you purchase home insurance, but it’s good to know that there are additional policies and endorsements to your home insurance that offer special coverage or higher limits for these kinds of perils.

4. Know your insurance provider.

 Last, but definitely not the least. When purchasing a home insurance policy, never go with the first company you find. Just because they seem to be offering you a good deal does not mean you won’t be able to find a better one somewhere else. The key to finding the right home insurance is shopping around.

Before signing with a company, check what other people are saying about them. Their reputation should speak volumes about the kind of service that they offer. Whether you end up having a pleasant (or horrible) insurance and claims experience ultimately depends on the insurance company you choose to work with. Take your time, compare your options, and choose wisely. 

Guest Blog: Rachael Harper