It is always beneficial to take preventive action against any possible losses you may encounter in the future. Losing a home to unavoidable disasters such as fire, storm and water damage is both painful and costly. There is no better support that can be obtained than receiving monetary compensation at a time of crisis. This will help you move on and start a new life.
Getting a home insurance protects not only your assets but also the future and well-being of your family. Many homeowners obtain property insurance without really knowing the terms and the coverage. It is very important to pick the right type and amount of insurance when your home is involved. The house is your most prized possession. You cannot risk being underinsured because of mere oversight and lack of diligence in choosing the right insurance for you.
There are three types of insurance that you must get for your home. They are the following:
1. Fire insurance
Fire insurance indemnifies against any damage caused to the house by a fire breakout. It may cover not only the structure of the house but also its contents such as appliances, furniture, kitchenware, ornaments, lightings and other personal belongings. The perils insured by fire insurance may also include lightning and explosions.
When registering for a fire insurance policy, it is essential to insure your home for the right and actual amount that you will need in case of fire. The sum should cover the total expenditures that will be caused by the removal of the rubble and fragments and the rebuilding of a new home. It may also include the cost of the owner’s things and personal belongings inside the house.
If you think you can make money by insuring your property with several companies, you are wrong. The amount you will get when your house is ravaged by fire does not depend on the number of policies you possess but on the actual amount needed to reconstruct the house. Thus, if the homeowner holds more than one policy, all the insurance companies involved will only pay their proportional share in the amount of the damage.
There are specific fire insurance schemes that may be the most suitable for your home. If you are living in a home at a time when real estate prices are declining, you may consider getting a replacement cost policy. This type of fire insurance pays out the value of the property lost without considering its cost of depreciation. On the other hand, if you live in a progressive neighborhood and you have good reasons to believe that the price of you house will soar in the next few years, an extended replacement cost scheme is perfect for you. This policy will pay you the coverage limit in case the property’s price inflates and bigger amounts will be needed to build a new house. An actual cash value policy is probably the least beneficial for insured homeowners. It only pays the actual and current value and therefore subtracts the depreciation costs from the original purchase value.
2. Storm insurance
Getting a storm insurance coverage is very critical for homeowners especially if you live in a place that is prone to storm calamities. You cannot afford to lose everything you own with the occurrence of one tragedy. Never let yourself be caught unprepared by any storm. You have to insure your homes for maximum security in case of any unavoidable and unstoppable events.
There are different types of natural calamities to which a house may be subjected. Some residential communities located in coastal areas are always attacked by hurricanes or wind and hail. Others are frequently plagued by strong winds and excessive rainfall. It is therefore important to find out what kind of storm insurance coverage you will need to obtain depending on your living circumstances. Just become you have storm insurance, it does not mean that you are covered by any natural calamity that comes your way.
As a homeowner, you will also need to find out about your insurance policy’s terms regarding damaged and stolen belongings. Some policies offer the exact replacement cost while others have a fixed cash value for every type of item stolen or damaged. It will be better for homeowners to choose the one that provides for full replacement coverage. This system will allow you to claim the current amount needed to replace the lost belonging. Keep in mind that if your storm insurance policy offers no specifics, it means that it is using the fixed cash value system. In this case, the insurance company will only give you the amount corresponding to the depreciated value of your property.
There is usually a waiting period for the effectivity of storm insurance policies. Therefore, you will not be able to obtain a new one when a storm is already looming. Insurance companies often refuse to renew policies after the location of the insured home has just been put under hurricane watch. Thus, you have to make your own evaluation of your current situation and decide whether or not having storm insurance will better your interests and protect you from a possible catastrophe.
For those living in hurricane prone areas, it is crucial that you check if your insurance policy explicitly includes hurricane coverage. Some policies cover wind damage but exclude damage caused by hurricanes in the fine print. Thus, when a hurricane strikes the home, it is already too late and the homeowners cannot recover the costs of repair and restoration from their insurance companies. To avoid this crisis from happening, read your policy thoroughly and avail of separate hurricane insurance if necessary.
Once you have already chosen the type of storm insurance appropriate for your circumstances, you can now determine the amount of coverage you will obtain. Make sure you have an updated value of your home. Take into consideration any increase in real estate prices, renovations made and installation of new fixtures and permanent furniture. In determining the value of your home, you need to ask yourself how much it will cost to completely rebuild your home. You can ask your insurance agent for the range of construction rates in your locality.
You can also include in the coverage the costs of your appliances, furniture and personal belongings in the house. You can list or even take a video record of the items inside your house so you will have proof of what you own when you make your insurance claims.
3. Water damage insurance
You do not have to live in coastal regions or near internal bodies of water in order to need water damage protection. This type of insurance covers water damage stemming not only from natural sea calamities but also from pipe leaks and overflows in the home’s water systems. Floods can also be caused by ice storms, hurricanes and excessive rainfall.
Home insurance policies do not automatically cover water damage. This is a common misconception that many homeowners possess. It is important to remember that majority of basic home policies do not cover water damage incidents. You may need a separate insurance policy or rider for this particular concern.
But even if you already have a water damage insurance policy, you still have to determine what instances are covered. Some policies will indemnify only flooding that is caused by natural events. It is advisable to choose a policy that will also cover manmade accidents such as pipe leaks and damaged water systems. We all know that even though these are not natural calamities, they are often just as unavoidable and surprising.
There are two types of water damage insurance policies --- flood insurance and homeowners insurance. Flood insurance covers the occurrence of any flood due to overflows from seas, rivers and streams. This overflow may cause the water to enter your homes and settle in low areas such as the basement. Flooding may also be caused by excessive rainfall. When there are it is raining excessively and nonstop, the soil will not be able to absorb all the rainfall, thus causing flooding to occur.
Water damage that is brought about by flooding can only be covered by a flood insurance policy. This type of insurance is therefore a must in every home since flooding is now commonplace in residential lowlands.
On the other hand, a homeowner’s insurance policy covers water damage that occurs after heavy waters fall on the home such as when there is a hailstorm dropping hail into the windows or a broken pipe which is leaking water into the home. This is in contrast to the flood insurance, which covers water damage caused by water which can no longer be absorbed by the soil and thus seeps into the home.
The amount to be covered by water damage insurance is just as significant as the amounts indicated in the two previous types of insurance. The homeowner must make a detailed list or a video log of his possessions. He must have an estimate not only of the cost of his house but also of his personal belongings, including important documents which will be expensive to replace and which are very prone to water damage. In this way, the homeowner will be adequately covered once any water damage crisis occurs.
