What You Need to Know About Homeowner’s Insurance
If you own a home, you likely have homeowner’s insurance, and if you don’t, you should! Though the importance of insurance is fairly well documented and understood, some major misconceptions are present in many homeowners’ grasp of the subject. A lot of homeowners are under the impression that all insurance policies are created equal, or that insurance in general is a sort of catch-all for any eventuality, and this is not the case. At their most basic level, most insurance policies cover your home and the possessions inside it in the event of theft or fire, but there are also are many things, depending on your location and needs, that may not be covered by your homeowners insurance. Because of this, it’s important to know what your insurance provider will and will not cover before purchasing a policy so you don’t encounter any unpleasant surprises should you have to file a claim.
When shopping around for homeowner’s insurance, you’ll want to keep these things in mind during your search:
Cheaper is not always better
One of the first things most people do when they’re shopping is compare prices. Much like anything else we might purchase, it’s important to understand exactly what comes with that price when it comes to homeowners insurance. Make sure that your “cheap” policy isn’t less expensive because important coverage has been removed or because the company has inadequate reinsurance. Look at value, not price; make sure the policy covers the things you need it to cover while not tacking on additional costs for coverage you may not need, which brings us to our next point:
Know what you need and what you don’t need
Most homeowners need insurance against common things such as fire and theft, but not everyone needs insurance against, say, earthquakes (more on that in a minute). A lot of these things are dependent on where you live and what your situation is as a homeowner. If you have pets, for example, you may want to see about coverage for animal bites. If your home is older, you may want to take a look at coverage against burst pipes or, if you have a septic tank, sewer backups. There are also more common things that most people require coverage for, like flood insurance, which are not usually covered in most policies, so it’s a good idea to know what you need and what the policy you’re considering covers, because:
Not all policies cover the things you may need (most don’t)
Flood coverage is an excellent example here. Even if you don’t live in areas with heavy rainfall or nearby bodies of water, flooding can still happen either in an unusually severe storm or an infrastructure disaster, such as a burst dam. It’s usually a good idea for most homeowners and not especially pricey to include that coverage, but most plans by default don’t always insure against flooding. The same is doubly true for earthquakes. Even though you may not live in an area especially prone to them, they can still happen, and the less frequent they are, usually the cheaper it is to add insurance against them. Termites, mold damage, and sinkholes are other things not typically covered in most policies; so if you think you’re at risk for either, don’t assume just any policy will cover you should you need to file a claim related to them.
Understand exclusions and limitations
Insurance policies come with a lot of fine print, exclusions, and limitations that can catch you off-guard if you don’t stay on top of them when buying. For example, if you happen to suffer severe wind damage during a storm in which your home floods as well, you may not be covered if flooding isn’t covered covered under your policy. This is called “anti-concurrent causation,” where two events happen at the same time, one of which is not covered under your policy. Even though you may be insured against wind damage, the insurance company is not obligated to pay your claim because of the concurrent flood damage, which is not covered.
Your homeowner’s policy is meant to protect you in the event of a major, or even semi-major, disaster but it’s not the same thing as a warranty plan. Take the time to understand what is and is not covered, and remember that there’s no such thing, in a practical or affordable sense, as an all-risk plan these days.
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– Get It Right Solutions