What Is A Good Home Insurance Policy?
Having a quality home insurance plan is an important part of your financial safety net. Though it might not be the most exciting topic of discussion, having good coverage can mean the difference between life and death if you're unfortunate enough to find yourself in a situation which calls for immediate response.
It's difficult to make sense of such a large variety of options when looking into home insurance policies, but we're here to help you define what makes up a good policy by breaking down the essentials: does it cover fire and flooding? Are there any exclusions? What are your rates like? Is there anything else I should know? Let's get started! They say ignorance is bliss. Well, blissful ignorance could have led you into trouble.
You're new to the home-ownership game, taking over your first house while the real-estate bubble is still in full swing; things are looking up. Your mind is elsewhere—you've got a lot to look forward to with this new phase of your life, and insurance isn't exactly at the top of that list. That's understandable, but you should know that if something happens to your home, you could be stuck with paying for damages and rebuilding costs out of pocket while you wait for your insurer to get around to covering your losses. Don't put yourself in that position by not having a plan in place before disaster strikes.
Home policies typically include coverage for damage caused by fire and/or smoke (on premises), wind damage, and water damage. If you want to make sure that your home is fully covered, take a look at these three things:
What Is Covered? – It's best to read your policy before purchasing a home insurance plan. Make sure the amount of coverage you have—for each potential disaster scenario—is sufficient for the value of your home. There shouldn't be any hidden fees or surprises when something happens to your house, and reading the fine print is the easiest way to avoid unpleasant surprises. Exclusions – Home insurance policies will have certain situations which aren't covered by the policy. Be sure to know what these are so that you don't find yourself in a situation where you have no insurance coverage and need to pay for damages out of pocket. Deposits – All insurance policies require that you have a small amount of cash deposited with your insurer. This is mostly for your protection, as it provides the insurer with funding if disaster strikes and they aren't able to cover their members' losses.
Now that we've covered the basics, let's take a deeper look at some common home insurance policies:
Catastrophe Specific – This insurance policy is specifically designed for those who live in tornado-prone areas. The policy is a little more expensive than other options, but that's because its sole focus is on covering you in the case of a disaster. It has broader coverage, though not as broad as some other policies with less expensive premiums.
– This insurance policy is specifically designed for those who live in tornado-prone areas. The policy is a little more expensive than other options, but that's because its sole focus is on covering you in the case of a disaster. It has broader coverage, though not as broad as some other policies with less expensive premiums. All-Inclusive – If you want the security of knowing you're covered no matter what comes your way, this may be for you. Though it does have a higher price tag than some of the other policies on this list, you're safe knowing your home is covered no matter what.
– If you want the security of knowing you're covered no matter what comes your way, this may be for you. Though it does have a higher price tag than some of the other policies on this list, you're safe knowing your home is covered no matter what. Basic – This plan covers fire and smoke damage in addition to wind damage and water damage. It has a basic deductible (around $1,000), which means that if there is little damage to the home but its value has dropped significantly due to repairs, you'll be responsible for covering that portion of the losses yourself.
– This plan covers fire and smoke damage in addition to wind damage and water damage. It has a basic deductible (around $1,000), which means that if there is little damage to the home but its value has dropped significantly due to repairs, you'll be responsible for covering that portion of the losses yourself. Flood – Though not intentionally named this way, this home insurance policy is nonetheless designed to help save people from the repercussions of flood-caused disasters. Flood policy options are more expensive than others; it also has some exclusionary clauses compared to other policies. But if you live in a flood-prone area—and most of us do—this should be your go-to coverage.
– Though not intentionally named this way, this home insurance policy is nonetheless designed to help save people from the repercussions of flood-caused disasters. Flood policy options are more expensive than others; it also has some exclusionary clauses compared to other policies. But if you live in a flood-prone area—and most of us do—this should be your go-to coverage. Multiple Loss – This plan can be customized and reinsured depending on your needs. It covers fire, wind and water damage, as well as additional coverage for accidents caused by animals or building codes violations (such as roof leaks causing water damage). You may want to upgrade to an add-on package, which includes this component along with earthquake and civil defense coverage.
– This plan can be customized and reinsured depending on your needs. It covers fire, wind and water damage, as well as additional coverage for accidents caused by animals or building codes violations (such as roof leaks causing water damage). You may want to upgrade to an add-on package, which includes this component along with earthquake and civil defense coverage. Replacement Cost – If you have a solid disaster plan in place—whether it's a fire, flood or smoke policy—this should be your go-to option. Home insurance companies generally prefer to offer replacement cost plans because they're more predictable. They don't have to worry about the extent of an insured property's damages (though that has been known to happen).
Conclusion
Protecting your home is important, especially as you begin planning for retirement. You can get the protection you require by making sure you have the right insurance coverage in place. Do some research on the matter and find the home insurance policy that's best for you.