Tips and Tricks About Home InsuranceIs homeowner insurance really needed?
Unlike auto insurance, homeowner insurance is not compulsory unless you have a mortgage on the house and your lender requires the property to be insured. Many people often wonder if home insurance is needed at all but this is not a question that they should be asking. Insuring your home is important because if disaster strikes and your house is uninsured, you can say goodbye to your home. It would cost you hundreds of thousands of dollars to rebuild the house hence the question of whether to insure your house for several hundred dollars per year is rather pointless.
What is the difference between building and content covers?
A building and its contents are two different insurance products. Many home insurance policies cover both a building and its contents but sometimes the policies are two separate ones. Even for the policies that cover both building and contents; you sometimes have to take different policies for items such as jewelry and other valuable items. To answer the above question, if you were to turn your house upside down, the items that would fall are its contents and what would remain is the building.
How do you assess the value of contents in the house?
To get the most accurate figure for what the contents of a house are worth, you should walk from room to room and do the calculation yourself. Insurance companies can go with the figure you calculate if you provide adequate documentation such as receipts and pictures. Insurers have different ways to calculate the cost of your house’s contents but most of their methods give rough estimates. To avoid getting insured for a much lower figure than the actual value of your property, you can hire independent assessors to value your items and provide insurers with their findings.
Types of cover
Once you suffer loss as a result of a risk for which you are insured, there are several ways that different insurance companies compensate you. Some insurance companies pay you according to the original price of damaged items or on a ‘new for old’ basis. Others pay you for the current value of your items or give you ‘indemnity cover.’ When you buy an insurance policy, you should know exactly which cost the insurance company covers. If you think that an insurance policy covers replacement cost but in real sense it covers the original cost of items, you are not sufficiently covered. In the event that the unthinkable happens and your property gets destroyed, you might have to cover the difference between the original cost of items and the replacement cost. If you are rebuilding, the cost could run to tens of thousands of dollars or more.
How much cover should you get?
Many people who buy home insurance insure the house’s market value. Such people are over-insured and pay way too much than what they are supposed to. When buying insurance for your home, you should only insure the home based on replacement cost. This is the amount it would cost to rebuild it if it were completely destroyed.