When to Buy Home Insurance
Insurance coverage on your home should begin as soon as you become the legal owner or tenant, even if it is still under construction.
When comparing quotes and coverage, don't forget service! While good service may cost a bit more, it is well worth it.
Home Insurance Shopping Tips
Discounts - Some insurers offer discounts or other incentives for policyholders who install smoke alarms, sprinkler systems, and monitored intruder alarms. Some reduce premiums for seniors.
Some insurers offer discounts to loyal, long-term policyholders.
Deductibles - Consider lowering your premiums by opting for higher deductibles for claims relating to your home and its contents. A deductible is the self-insured part of each loss; it is not a feature of liability insurance, however.
Don't 'under' or 'over' insure! - Don't underinsure the contents of your home. Estimate the value of your possessions and update your inventory at least once a year. Remember to include taxes. If the value of your possessions is greater than the amount of contents coverage specified in your policy, have it changed accordingly. Minimum contents coverage for home owners is normally a percentage of the building amount.
Whatever the limits of your policy, however, you can never claim for more than the actual loss to insured property. Insured property does not include the market value of the underlying land.
Questions to Ask Your Insurance Broker About Home Insurance
Home insurance coverage can vary from one company and policy to another, so it pays to ask questions. The answers provided are very general, so ask your broker questions specific to your policy.
1. What kind of home/tenant home insurance coverage do I have?
- Some policies cover only "named perils" - in other words, if the "peril" (the cause of the damage) isn't listed on your policy, it isn't covered. This is generally referred to as a standard policy.
- Other policies cover named perils on the contents of your home and "all risks" on the building. "All risks" provides insurance for losses due to a wide range of causes. But instead of listing what is covered, an all risks policy lists what is EXCLUDED, or NOT covered. This is generally referred to as a broad form policy.
- Still other policies cover all risks on both the building and its contents, but is still subject to some exclusions. This is generally referred to as a comprehensive policy.
2. What's not covered in my home insurance policy?
- This is very specific to you. Only your broker will be able to answer this question.
3. Are there certain risks or potential hazards to my home for which I can't buy insurance?
- No policy covers everything that could go wrong. And if it did, the premiums would cost too much to be useful. Insurance is intended for unforeseeable events. Flooding, for example, generally cannot be insured against, that's usually because such damage is inevitable.
4. Is optional coverage available for hazards/risks that are not normally included in my homeowner's policy?
- Yes. For example, if you live in an earthquake zone, you might want to consider buying earthquake coverage or if you are worried about water damage from a blocked drain, you might want sewer back-up coverage.
5. What things could happen to my property that won't be covered, unless I make special arrangements?
- Here's one example. Damage arising from the freezing of indoor plumbing is seen as preventable. So, if you are away from home for more than four days during the normal heating season, you must drain the plumbing or arrange to have your home checked daily by a competent person to ensure that heat is maintained. If you do not make these arrangements and your pipes burst, you may end up holding the clean-up bill along with a mop and pail.
6. What are some items that might require additional insurance?
- The dollar limits to replace stolen cash, or garden tractors, watercraft and computer software are relatively small. Coverage limits may apply also if the following are stolen: bicycles, jewelry, watches and furs, coin, stamp and card collections. Reasonably priced supplementary insurance is usually available. This supplementary insurance, often called "riders" or "floaters", provide extended coverage for these specific items. Coverage can be world-wide and there's usually no deductible.
7. What is the deductible? Give me the price of my home insurance coverage with some different deductibles.
- The higher the deductible (the portion of a claim that you have to pay), the lower the premium. Compare the premium with different deductibles, and then decide whether the lower premium is worth the higher amount you would have to pay out of pocket if you had a claim.
8. Am I entitled to any discounts and/or is there anything I can do to get a discount?
- Many insurance companies offer discounts to policyholders who have newer homes, who have installed safety features like smoke detectors and burglar alarms, and who have made no claims for a certain period of time. Some are even giving discounts to non-smokers! So you can quit smoking or install a burglar alarm! Whatever the case, make sure you get all the discounts to which you are entitled.
9. On what basis are claims going to be paid?
- Most claims on home policies are paid on a replacement cost basis, meaning that the insurance pays the cost of replacing the damaged or lost item with a new one that is as close to the original as possible in functionality and quality. However, some policies may pay only actual cash value, which means replacement cost LESS depreciation. Ask your insurance broker what you have. Of course, you have to actually replace the item in order to receive replacement cost for it.
10. Should I make a claim with every loss?
- Although this is a very personal decision, before making a home insurance claim consider the cost of the damage compared to your deductible. If the difference is negligible, you may choose not to make a claim, especially if it meant losing your "no claim discount" (if offered by your insurance company). Losing your no claims discount would increase your premiums.
11. What kind of liability coverage do I have and how much?
- You are covered for unintentional property damage, bodily injuries and legal costs for which you are legally responsible anywhere in the world. A minimum limit of $1 million is recommended. Ask your insurance representative about the specific coverage in your policy.
Risk management is an essential part of every business.
As the owner or operator of a small business, you will know instinctively that a program to manage risk is essential for your business to survive and prosper in today's competitive economy.
A first step is to shop for an independent insurance broker who knows your type of business. You are familiar with the operation of your company, and your broker should be familiar with cost-effective ways of handling risks. A good insurance broker is a valuable asset for your company.
When planning your insurance coverage, an important first step is to identify those potential losses that could cripple your business, and insure against them.
