Homeowners insurance is meant to protect you. But unfortunately for many homeowners, that doesn’t mean it always does. There are numerous ways a claim can be written, and a variety of coverages that may or may not apply to you.
Your job is to know what you need and make sure you get it. Here are three tips:
Watch That Recreation. It seems like a purchasing a trampoline or putting in a pool are great ideas. After all, they bring a lot of joy. But did you know a trampoline in your backyard can raise your premium by as much as 10 percent? The reason is that as much as a trampoline is a lot of fun, it is also a source of many injuries. And those are claims your insurance company has already anticipated and built into the cost of your premium. So before making any recreation purchases, check first to see how it will affect your home insurance rates.
If you have an expensive item, get an endorsement. Often homeowners lump everything into their personal property coverage without stopping to consider, is there anything that stands out that is extremely valuable, hard to prove, and even harder to replace if stolen? Something, like say, a wedding ring. While you may not have a receipt, an endorsement is an amendment to your insurance policy that can be used to prove worth. In the case of the wedding ring, it would be a formal appraisal from a jeweler that would be sent to the insurance company to be added as a special notation on the policy. In the case that the ring is stolen, the endorsement would then be used to justify the full value of the ring. And the difference between what the insurance company might give you and what the endorsement upholds, for many people is well worth the effort.
Get Guaranteed Replacement Value Insurance. In the event of a disaster, your insurance company has two choices: they can either rebuild your home, or deem your home beyond repair, demolish it, and pay you the value – including any depreciation. As the cost of rebuilding is often higher than the cost of simply writing the home off (especially with building costs increasing every year), the second choice is typically the easiest thing for an insurance company to do. But does that leave you in a better place? Not if you can’t replace your home for what your insurance company pays you. On the other hand, a guaranteed replacement value policy gives you a cushion, so that if your home does need to be rebuilt, you are not stuck owing the difference between the cost and what your insurance company covers.
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