Home Owners Insurance
You can save several hundred dollars a year on homeowner
insurance and up to $50 a year on renter insurance by purchasing insurance
from a low-price, licensed insurer. Ask your state insurance department
for a publication showing typical prices charged by different licensed
companies. Then call at least four of the lowest priced insurers to
learn what they would charge you. If such a publication is not available,
it is even more important to call at least four insurers for price
quotes.
Make certain you purchase enough coverage to replace the house and
its contents. "Replacement" on the house means rebuilding
to its current condition.
Make certain your new policy is in effect before dropping your old
one.
What is Home Insurance?
A homeowners insurance policy is basically a contract
you make with an insurance company. In exchange for your premium,
the insurance company will pay for financial losses related to your
home or your property during the period of the contract. The insurance
company also agrees to pay for damages resulting from injuries or
damage to other people for which you are held legally responsible.
When you're searching for homeowners insurance, you'll want to shop
for the type of policy that will fit your needs best, with adequate
protection for your valuable possessions and supplemental coverage
to protect against natural disasters that are not covered in your
basic policy. If you're like most people, the owner of the mortgage
of the home will require homeowners insurance.
Types of Home Insurance
Home insurance can be broken down into 7 basic types
of plans. What differentiates them from one another are the types
of circumstances they cover. The most popular plans today involve
#2 and #3.
Basic homeowners insurance covers 11 types of disasters:
aircraft, wind/hail, explosion, riots/civil unrest, fire/lightning,
vehicles, volcano eruptions, vandalism, theft, smoke, and self-damaging
instances (part of building falls on itself, etc.).
This list can be expanded to include 6 more disasters:
falling objects, water damage (3 sub categories), snow/sleet/ice,
and electrical surge damage.
1. This is the basic homeowners insurance that covers
your home and property against losses due to the 11 disasters listed
above.
2. This plan includes #1, in addition to more specific
disaster circumstances: snow, falling objects (like trees), water
damage (i.e. washing machine overflows, or dishwasher breaks), and
electrical damage (power surge).
3. This plan includes extended/specialty items, in addition
to all of the above. The only disasters that this doesn't cover are
flood, earthquake, war, and nuclear blasts.
4. Renters insurance coverage. This type of insurance
will protect your personal property for the above listed items.
5. Complete risk coverage for the building and property.
6. Condominium coverage. This type of policy covers
personal property from the above disasters (all 17).
7. This policy is designed for older homes with historic
value. Coverage includes protection from the basic 11 disasters listed
above. Under this plan, coverage is limited to repairs or cash values
of the items involved. The rebuilding/replacement cost is not covered
in this, because some aspects of the home (historic significance)
can make these costs higher than current market value.
There are variations that can be had with all of the
above plans. There are special policies that can be used to cover
mobile homes. Opposite of renters insurance, which only covers the
renters property, there is landlord insurance. This covers the actual
dwelling, but not the property within.
Flood Insurance
Besides fire, flooding is the most common natural disaster.
In order to legitimize a flood as occurring, two adjacent properties
must be under water.
As with earthquake insurance, the basic homeowners insurance
policy does not include flood damage. This coverage must be obtained
from a provider that associates with the NFIP (National Flood Insurance
Program). The NFIP is overseen by FEMA, which is the Federal Emergency
Management Agency. FEMA, in turn, is run by the Federal Insurance
Administration.
On average, the general policy is around $300/year.
If you live in a lours' area, your premium can be as low as $100/year.
A standard flood insurance policy is purchased from the NFIP. Under
a “write your own program”, a policyholder obtains insurance
directly from a private insurance company, as opposed to going through
the NFIP. Your premium will be the same amount, regardless of purchase
through the government or private company.
Most insurers offer three basic plans of coverage:
-General property
-Residential Condo building association
-Dwellings
General property coverage will apply to apartments and
business dwellings. Residential condo building association provides
coverage for condominiums. Finally, your dwelling coverage applies
to most residential homes. Each of the above has its individual limit
in terms of coverage. When searching for a provider, focus on the
service they provide, as opposed to the price. Since the federal government
sets the rates, private insurance companies will attempt to gain your
business through the service they can provide. One measure of quality
service is the time it takes for a claim to be resolved. A worthy
company will be able to pay off its claims in a timely fashion, as
opposed to a competitor which may be struggling to process its claims
within an acceptable window of time.
