What you REALLY need to know about your Home Insurance Policy!

How many people know what their home Insurance policy actually covers? When it comes right down to it are we even shopping for coverage or are we simply shopping for price?  In today’s budget conscience society the answer for most is price.  Unfortunately, in this case that mentality can leave you in a terrible financial situation.  Too many homeowners purchase insurance because it’s a requirement at the settlement table.  The coverage’s people carry are just enough to satisfy the loan requirements, but that isn’t always enough.  Remember, banks are concerned with protecting their assets not yours.  You worked hard to buy your home now you need to be smart to protect your investment.  It could be the largest investment you ever make.

Philadelphia Home Insurance

So where to begin?  There are many different insurance companies out there offering home Insurance policies.  They all ask the same questions…How much insurance do you need?  What is your deductible?  The most common misconception is that the different companies all offer the same coverage just different pricing.  WRONG!  All home Insurance policies are NOT created equal!

Here are a few of the basics to help you on your way to finding the right policy…

The Dwelling coverage is the amount of money your home is insured for.  The mortgage company will want you to insure your home for the mortgage value (their investment).  However, the real basis to determine dwelling coverage isn’t market value or mortgage value, but rather rebuilding cost.  That is the amount of building materials and labor it would cost to rebuild your home in the event of a loss.  It is important that you have a good agent that will take the time to ask questions about your home to determine an accurate rebuilding cost.  What is the square footage and the overall quality of your home? If your agent is arbitrarily assigning a value they are not looking out for your interest.   Additionally, some companies will also offer extended rebuilding coverage as an additional benefit.  If your agent isn’t offering this it might be a clue to keep searching.

Look out for policies that are strictly “hazard” policies these policies would not include coverage for your personal property inside your home.  Your clothes, furniture, dishes and all personal effects are covered under this section.  Certain items that are collectibles like fine art and antiques may need to be listed under a personal articles policy to make sure there is adequate coverage.

Be sure your policy offers automatic inflation protection.  Although market value may not be going up the cost of building materials and labor is on the rise.  Sit down with your agent often and let them know about any major home improvements.

If you see depreciated loss settlement anywhere on your policy start searching for new coverage… unless that is you only want them to pay you the value of your five year old TV instead of what it would cost you to buy a new one.

Don’t skimp on liability coverage! Often times you can purchase significantly higher limits for just a few more dollars a year.  Make sure your liability coverage exceeds your assets otherwise you will need to purchase a Liability Umbrella Policy.  If you get sued can you really afford not to have it?

One quick way to offset any added cost associated with better coverage is to take a higher deductible.  That way you maintain some of the risk, but only within your comfort level.

Finally, find an agent you trust that will take the time to answer your questions.  There will always be cheaper policies out there, but now that you’re informed, is that a risk you’re willing to take?

To find out more about home insurance rates, please call our office or fill out a free Philadelphia Home Insurance Quote online.

Tags: Home Insurance, Homeowners Insurance, Liability Cover, Personal Property, Rebuilding Cost

This entry was posted on Wednesday, February 3rd, 2010 at 10:18 am and is filed under Home Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.