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Homeowners insurance simplified.
You have a home and you have home insurance. You know how much premium you are paying annually, but do you know what’s covered? Do you know what your home's reconstruction cost is? For starters, this isn’t the same figure on what it would sell for in today’s market. In many cities, 100% reconstruction cost will far exceed what your home's value actually is. How much of this reconstruction cost do you currently have insured? Proper "insurance to value" is one of the most important considerations in insuring property. Every insurance company will have somewhat different variations of what is included and not included in their home policies. The basic outline of coverages on a home policy are dwelling, personal property, liability and medical payments.
Understanding reconstruction cost.
Your dwelling coverage is a percentage of actual reconstruction cost for your home. Most insurance companies will have access to reconstruction cost estimators that will calculate accurate reconstruction cost values based on entering information about your home. They will usually present you with that value and it’s up to you, the customer, to decide how much of that you want to insure. Average ranges will be from 80-125%. The reason someone would insure more than 100% percent of the home’s value is simple. When a home is declared a total loss, not only will a new home need to be built with brand new materials, but first the destroyed home and its materials will need to be removed. The lot will need to be cleaned and prepared for new construction. If this is an older home and laws and building codes have changed since it was first constructed, it will need to be brought up to current building codes. New materials and designs that were not used when the home was first built will now have to be used. This can increase a home’s replacement cost a significant amount. TIP: If you knowingly have an older home and are looking to insure it for the full amount, ask your agent or insurance representative about "extended replacement cost" coverage. Many companies offer coverage past 100% and the increase in premium may be minimal for what you get in coverage.
How much of your personal property is covered?
The second part of your home policy is your personal property coverage. Some insurance companies will let you choose this amount but most of them will offer a percentage of the dwelling amount as the standard option. For example: If the insurance company says they offer 70% of the dwelling for personal property and your dwelling amount is $300,000, then $210,000 would be what you get for personal property. Again, this is different with each insurer so make sure to ask your agent or representative about the details. TIP: Ask your agent or rep what percentage, if any, of the personal property amount is available off premise. Things such as theft can occur away from home and this may be covered.
Liability basics.
If someone is harmed while on your property, you can be personally liable and held accountable for any expenses the visitor would incur. Your liability coverage included in your home policy is there to protect you from this. Anything from damage to a visitors personal property or medical expenses from an injury while on your property would fall under the liability category. Usually liability will start at $100k and go up from there. Raising the coverage to $300k or even $500k will not make a huge difference in the premium. You wouldn’t want to be in a situation where a claim was made on your home policy without enough coverage in place. TIP: If you have a pool, deck or trampoline in your back yard, make sure to mention this to your agent or representative. They will be able to tell you whether or not an accident arising from such items would be covered. Most policies have an option for "medical payments to others". This can range from $500-15,000, possibly more with some insurers. This coverage will cover a claim regardless if it was the insured or the visitor who was at fault.
Summary.
Most agents and insurance companies have set coverages that they will present to every potential client on the first quote. You may find that some companies will quote you the lowest amount of coverage possible to keep the cost low, hoping you only look at the premium and nothing else. Others may quote you the highest coverage limits available. With this strategy they could be hoping you're overlooking the cost by how much coverage they are offering. You can have too little coverage, but at the same time you can have too much. Probably better to have the latter in a bad situation. Everyone's needs are different. Sometimes having the coverage we need can be costly. Most likely, more than we initially had in mind to spend. QuoteClicker's goal is to be able to assist our customers in getting multiple quotes from the nation's leading insurance providers. This is a service we offer for FREE to our customers in search for insurance. By having multiple quotes, you are able to evaluate all of them and make sure that you are not only getting the proper amount of coverage for you and your family, but also making it affordable at the same time.
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