Click on the news right now and you’ll see: floods, storms, fires consuming whole states. And that’s not even taking into account the everyday crime from thieves or vandals that usually dominates the news. Seeing and hearing all of that, it’s easy to look around your four walls and think, “Boy, a lot can happen to all this.”
Yes, it sure can.
And if you own, your home is probably your biggest investment (not to mention your refuge from all that’s happening out there). So, why on earth would you want to pinch pennies when paying to protect it?
Don’t be like most people shopping for a homeowner’s insurance policy– often they don’t know what kind of insurance to buy or what they’re trying to protect themselves against. Can’t think of a better way to waste money than to take unnecessary risks. We’ll look at how to avoid that when you’re shopping for coverage.
For those who rent, there are other factors to consider, but many of the same principles apply to renter’s insurance as well.
And speaking of peace of mind … if you need to have a conversation about your taxes (whether for 2020, 2019, 2018, or 2021), we’re right here:
–> And a reminder: If it applies to you, Wednesday, September 15th is the due date for third-quarter estimated taxes. If you’re reading this, and it’s already past … don’t fret, just pay it now … there will be some small penalties, but nothing crippling. The idea is to avoid LARGER penalties if the clock continues to tick.
Alright, let’s talk about protecting one of your biggest investments today, shall we?
Buying a Homeowner’s Insurance Policy: The What and the Why for Homeowners
“Intelligence without ambition is a bird without wings. ” -Salvador Dali
Becoming a homeowner is a big deal – a home is not only an important asset, but it’s also the place where you build memories and enjoy the most important things in life. So, insuring that valuable asset seems like a no-brainer.
The beauty of a homeowner’s insurance policy is that it helps pay to repair or replace your home and its contents (including heating and cooling systems) after damage from fire, smoke, and even water (though this last one can get tricky), theft and vandalism, storms, or a host of other “perils” you want to put in the policy (and pay premiums for).
Homeowner’s insurance also pays medical and legal costs if visitors are injured on your property.
Still, some homeowners are unsure exactly what’s covered by their policy. A recent survey found that only about half (56%) of homeowners knew what to look for in their homeowner’s insurance policy when buying their home, with 15% fessing up that they had no clue what to check. Almost a third (29%) said they thought they knew what to look for but learned a lot while buying insurance.
Knowing what you’re covered for is a big deal. Because, though they may make you feel like you’re in their good hands, insurance companies aren’t your buddies. Don’t rely on them to look out for you. Shop smart and think ahead for what you’ll need – and can afford in your homeowner’s insurance policy.
For starters, take a look at this dynamite cheat sheet from the National Association of Insurance Commissioners. It’ll help you sort out what the agent or insurance company is going to need from you, descriptions of coverage, basic insurance terms, what to ask, and more.
Despite good hands, insurers aren’t your buddies.
Before you even start shopping around, get together what the insurance company will need from you: proof of date of birth, social security number, contact information, marital status, and information about your job.
Also, have ready details about your current insurance and the home you want to cover. (The cheat sheet has fill-in forms that’ll help you pull all this info together.)
They also want to know how long you’ve lived in the home, how many and what kind of pets, whether anyone in the home smokes, and what kind of business you’re in. (This is just a sampling of the questions – be prepared for more.)
Then, start contacting agents and insurers and compare rates and coverage. Generally, get a coverage limit based on the estimated cost to rebuild your home, not on its purchase price or market value. And of course the cheaper the premium the larger the deductible you’ll pay out of pocket after a claim.
Then you’ll have to think about a type of homeowner’s insurance policy:
- The most basic policy will usually cover your home and personal property against loss from fire, smoke, wind, hail, lightning, explosion, vehicles, civil unrest, theft, or vandalism.
- The next policy up from that (sometimes called a broad form policy) covers your home and property only from perils specifically listed in the policy.
- A comprehensive policy has your back for the cost of your home and personal property against all perils except what you specifically list as an exclusion in the policy.
Water water everywhere
Think Hurricane Ida rampaging recently through the Northeast…where people were less likely to have flood insurance.
Floods are on all homeowners’ minds right now, and flood coverage can be another tricky point in policies. A busted pipe is generally covered unless the insurer can prove negligence or some other cause that’s not strictly an accident. Flood damage from water outside your home usually isn’t. Get flood insurance separately from someplace like the National Flood Insurance Program, or from a private flood insurer.
Just know that the flood insurer may not pay for damage from external water, for instance, if the land around your home is improperly graded. Flood coverage can be pricier in flood zones, too, just like you’ll have to pay a higher deductible for wind damage in a tornado-prone area.
Read my lips: Thoroughly read your homeowner’s insurance policy. Read it front to back before you sign. Better yet, have a professional advisor read it, too. That’s something we’re happy to help with.
Want to know more about disaster coverage for your home sweet home and have the confidence that someone you trust will help you sort it out? That’s what we do, so let’s connect:
Stay safe out there,
Emelia Mensa EA, CPA