5 Things You Need to Know About Your Homeowners Insurance Policy

By J. Jason Astwood, LUTCF, FSCP

Introduction

When you buy a home, the last thing you want to do is spend money on an insurance policy that isn’t going to provide you with adequate protection. Homeowners insurance policies are not one-size-fits-all and can be flexible to suit your needs as a homeowner. Here are five things you need know about your home insurance policy:

1. Coverage may not be continuous.

You may find that your coverage will not be continuous if you:

• Make a policy change. If you add or remove valuable items from your home, or change the location of them (for example, if you move out of state and take your valuable jewelry with you), this is considered a change in coverage. This means that after making these changes, there will be an interruption in your coverage until the next renewal date.

• There are many times when a homeowner is purchasing a new home and the loan officer is the one looking for the cheapest possible homeowners insurance policy to be able to close on the loan. This practice is typically not in the best interest of the homeowner as this can come back to hunt the homeowner when a claim take places. I seen this too many time over the last 20 years as an insurance professional. My recommendation is that you must review you policy before you sign any documents, it is your responsibility to make sure you have the right coverage not just the cheapest policy out there.

• Have a lapse in coverage. When this happens, all existing policies are terminated and replaced by new ones effective on their respective renewal dates. Any new policies will include different terms for coverage than any previous policies did; for example, they might cover less or exclude certain types of damage to personal property altogether. You should always make sure to ask about any changes before purchasing a new policy so that it's clear what's been covered at all times throughout each period while living at home!

• Cancel early due to lack of satisfaction with provider services; bad customer service experience (long wait times when trying call customer service line); negative reviews posted online about company being unwilling go above & beyond customer needs/expectations (like sending flowers when flowers aren't necessary).

2. There are limits to your coverage.

Homeowners insurance is a financial product. Like all financial products, it has limits. This means that no matter how much you pay for your homeowners insurance policy, it won't cover everything that happens to your home or its contents.

The most important thing to remember when you're getting ready to buy homeowners insurance is this: You are the one responsible for making sure that you have enough coverage. Insurance companies cannot be held liable if they underwrite your risk based on incorrect information—you need to provide them with accurate information in order for them to quote and issue a policy (and make sure there aren't any gaps).

So let’s say that an earthquake strikes and damages some of the walls in your home? Homeowners insurance will help protect against earthquakes as long as they fall within the scope of coverage listed on the declarations page of your policy at the time of loss (this will likely include non-earthquake-related damage caused by dampness or water intrusion). But if those same earthquakes cause flooding, which then causes mold growth inside those damaged walls? Well, that would not be covered because mold growth is usually not included in most policies unless specifically requested by a customer—and even then it may only apply under certain circumstances (if there was already visible evidence of previous leaks before adding this rider onto their existing policy).

3. Your policy has deductibles.

• Your policy has deductibles.

The policy deductible is the amount of money you pay before your insurance company will start paying out. Deductibles can range from $500 to $5,000 and they typically increase with the value of your property. A higher deductible means you pay less in premiums, but it also means that if something happens to or at your house, you’ll need to pay more out-of-pocket until the claim meets its deductible amount. If there isn’t enough money in an account to cover a large claim because all the funds are tied up in other claims with smaller deductibles, then there won't be enough money for everyone who needs it and some people will go without coverage until their claims are paid off by premiums from new homeowners who've purchased policies since their homes were built or renovated (and thus aren't subject to pre-existing condition clauses).

4. Personal liability isn’t always included in your home insurance, but it should be.

• Personal liability coverage is not always included in your home insurance policy, but it should be.

Personal liability limits the amount of money you are responsible for if someone is injured on your property or while they are visiting you at home. This can include damages to property, medical expenses and other damages (such as pain and suffering) due to injuries caused by an accident on your property. If you don't have personal liability insurance, someone could sue you with no financial obligation on their part—even if they were at fault for causing the accident!

You can get homeowners' personal liability coverage as an add-on option to homeowners' policies from many companies or through certain kinds of umbrella policies (which we'll talk about below).

5. It’s important to choose replacement cost coverage over actual cash value coverage when purchasing a new policy, if you're able

• Replacement cost coverage is more expensive than actual cash value coverage (ACV) because it covers the cost of replacing your property with comparable new items, rather than what you would receive if you sold your destroyed items on eBay. The good news is that this type of policy will often cover more than ACV policies, so even if you are able to sell your destroyed possessions for a decent price, you could still be out thousands of dollars.

• If you’re unsure which type of policy is best for you and your home, talk with an agent or call us to see how much each one might cost. For example: A homeowner may have paid $1,000 for a set of two patio chairs six years ago and only received $500 when they were damaged in a storm last year. Even though the homeowner had actual cash value coverage at time of loss (the amount he or she paid), they would only get $500 back from their insurance company because that's all they paid - not what those chairs are valued at today! In this case choosing replacement cost coverage would have been much better since as long as they bought another set of patio chairs worth $500 each ($1000 total) then they'd have gotten their money back plus more!

Home insurance policies aren't one-size-fits-all and can be flexible to suit your needs as a homeowner.

Home insurance policies aren't one-size-fits-all and can be flexible to suit your needs as a homeowner.

While it's important to know that you have coverage in case of an emergency, home insurance policies also provide peace of mind by protecting your home and belongings from unexpected costs. Plus, if someone gets injured on your property, some policies cover liability for any lawsuits that may result from those injuries. A good policy will include the following:

• Property damage — This covers damage or destruction caused by fire, windstorm or hail, lightning strikes, explosions or volcanic eruptions (if you live near one), smoke or fumes from fire or water damage from plumbing failure within the house’s walls and ceilings; freezing up of pipes (or any other type of sudden loss); robbery/burglary; vandalism/vandalism resulting in physical injury; falling objects such as trees damaged by storms such as hurricanes and tornadoes hitting a structure causing structural damage such as cracks (not including normal wear)

Conclusion

If you’re in the market for a home insurance policy, it’s important to know exactly what your policy covers. While there are many different types of policies on the market today—and they vary widely by state and even by zip code—there are still some commonalities among all of them: personal liability coverage is one example of this. You should also be aware that there are limits to what each policy will cover; after all, if there weren’t any limits then everyone would just buy up as much coverage as possible! It's important to read through all of these details carefully before buying anything so they don't catch anyone off guard later down the road when something happens at their home or business property location." Another recommendation is to sit down with your current insurance agent and do an annual review. It's possible that you don't feel the love from your current agent and need more information you can call me at 801-224-0154 or at www.astwoodins.com