Home Insurance Tips

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Can my pets play a role in my rates?

The Role of Pets in Homeowners Insurance

When you're in the market for a pet, it might not occur to you to consider your homeowners insurance policy before taking your new pet home. As it turns out, the pet you choose to have in your home can affect your homeowners liability insurance rates.

The Power of Pets
If you bring home a breed of dog that has an elevated history of biting people, then you can expect your liability rates to go up. While you might love your dog and know that it has a sweet, non-aggressive personality, the insurance company is only looking at and evaluating the likelihood that the dog will bite someone and necessitate a medical claim. They base their decision on cold, hard numbers of other dog bites from that breed.

Additionally, if you plan to house the dog outside for a significant number of hours each day, you'll find that your rates go up, as this increases the likelihood of your dog getting out and attacking someone.

Before you buy a pet, make sure you contact your homeowners insurance company to find out the potential ramifications.

How important are limits?

Setting Limits

When you compare home insurance rates, you'll be asked to set limits on your benefits. If you set the wrong limits, you could set your family up for financial problems in the future after an unforeseen, insurable event.

What are limits?
Your limits indicate the maximum amount of insurance your insurer will pay out in the event that your home is completely destroyed. So, if your limit is $500,000 for dwelling and your home is completely destroyed after a fire and needs to be rebuilt, $500,000 is the maximum you can receive.

What does it matter?
If you accept limits that are too low, you might not receive adequate financial resources to restore your family to its former manner of living after an insurable incident. You may need to sell your property and move to a more affordable location. This could result in changing schools, changing jobs, and losing some of your investment.

The solution
Be sure to get your home appraised before you apply for a home insurance policy. That way, you can compare rates based on a realistic limit, rather than one that will not make you whole after a loss.

Do I need special insurance for my condo?

Condominium Insurance

If you live in a condominium, a regular homeowners insurance policy is not appropriate for you. As the owner of a condo, you're not responsible for covering the actual structure of your dwelling. Instead, the condo association has one major insurance policy that covers the actual structure of the condominium building.

Interior condo walls (those that you can paint and hang shelves on), the wiring within these walls, and the plumbing within the actual unit should be covered under the insurance policy of the individual condo owner. In addition to covering these items, it should also cover the personal property within the condo. If you have extremely valuable art, jewelry, or antiques, then they might exceed the limits of your personal property coverage and could require special insurance.

Be sure to compare home insurance rates that are appropriate for the type of property you own and possessions you have. That way, you can find coverage that fits into your budget from the start.

How important is liability insurance?

Homeowners Liability Insurance

It's everyone's worst nightmare. You're hosting a family barbecue and one of your guests, your invited friends, trips over a loose paver on your patio. The trip results in a broken leg and a pile of medical bills--all for which you, as the homeowner, are responsible. Without homeowners liability insurance, you could be looking at the loss of your emergency savings or, worse yet, your retirement savings. But when you have homeowners liability insurance, you can make a claim against your insurance policy and save your bank account from total destruction.

Liability insurance does more than just protect you against someone being injured on your property. It also covers you against claims that the property itself causes damage to another. You might be wondering how your property could possibly cause damage, but think about your trees. What if one of your trees falls on your neighbor's car? The claim would be covered by your homeowners liability insurance.

So remember this as you compare homeowners insurance policies. Save yourself time, money, and relationships by investing in homeowners liability insurance.

What do all the different coverages mean?

Understanding Home Insurance Coverage

It's important to understand all the different components of a homeowners insurance policy before you begin to compare home insurance quotes. Without understanding the actual mechanics of the policy, you cannot hope to choose the policy that offers the best value for premium.

  • Dwelling: The part of your policy that covers your dwelling covers your home and anything that's attached to it, like an attached garage. It also covers any of the built-in construction of your home like your wiring or plumbing.
  • Other structures: Anything on your land that's not attached to your home, like your shed, fence, or detached garage, is covered under other structures.
  • Personal property: Personal property coverage covers your personal contents within your home. If you have extremely valuable items like jewelry or art, the value of the items might exceed the limits of your personal property coverage, so you may need additional coverage.
  • Personal liability: If someone gets hurt on your property, you may be liable to pay for their medical costs as well as pain and suffering. This is covered under the personal liability section of your policy.

Will home renovations lower my home insurance rates?

Building to Save

Sometimes, getting the best homeowners insurance rates is really all about the home that you're attempting to insure. Every year, as storms worsen and building supplies get more advanced, codes departments upgrade the minimal building codes for new and renovated homes. Because these homes are made safer against natural disasters and the claims risk is lower, the owners are treated to the best homeowners insurance rates.

You can transfer this knowledge into lower rates by making certain improvements in your home that may translate into lower risk for your insurance company. By upgrading your windows, roof, doors, and other areas of your home, you could save yourself insurance money and, if you take advantage of energy-efficient building materials, you could also take advantage of certain tax credits.

To find out which improvements will make the most impact on your homeowners insurance rates, be sure to call your existing insurer or those that you're considering.

Should I check my insurance company's ratings?

A.M. Best

When you're looking for home insurance, you have to compare both companies and rates. After all, a great home insurance rate from a company that doesn't have the financial wherewithal to pay your claims is useless.

Using A.M. Best to Compare Home Insurance
In order to gauge the financial stability of the home insurance company you're considering, you can visit the website of A.M. Best, an insurance rating company. A.M. Best reviews insurance company's financials and determines how likely the company is to be able to continue to pay claims. With that information, they give a letter rating, almost like a grade in school.

The website itself is simple: Just search for the insurance company and look at the grade rating. In general, ratings of A or better are acceptable.

So when you compare home insurance, be sure to check the A.M. Best rating of each of the insurers you find affordable to ensure that the company you choose will be there to pay claims when you need them.

How can I lower my own rates?

Comparing Home Insurance Rates

When you compare home insurance rates, many of the decisions you make about your coverage can do more to affect your rate than the actual company you choose.

  • Deductibles: Deductibles are the out-of-pocket amounts that you agree to bear for your insurable incidents. The lower your deductible is, the more risk your insurance company has to take on and the more expensive your coverage will be. Likewise, the higher your deductible, the less expensive your insurance premiums will be. In this case, you'll have to spend more out of pocket to make yourself whole after an incident.
  • Limits: The limits of your home insurance policy are the maximums the policy will pay out to make you whole after a claim. If you accept a lower limit, your premiums will be smaller, but you run the risk of not getting reimbursed enough to put yourself back.
  • Umbrella coverage: If you cover your home, auto, and life with the same insurance company, you create an umbrella of coverage that can save you a lot of money on premiums.

Is there anything my policy doesn't cover?

Understanding What Your Policy Covers

Many people assume that just because they have homeowners insurance, they have protection against any kind of incident. Unfortunately, many people don't realize just how untrue this is until they place a claim and it gets denied, and by then, it's too late.

Separate insurance coverage is offered for natural disasters like floods. As a homeowner, it's important that you understand this so that you get the coverage you need. When you compare homeowners insurance rates, be sure to consider the fact that you need to purchase separate coverage for flood if you live in a flood zone. If your home is not in a flood zone, you might not need this additional coverage. Keep in mind, however, that flooding doesn't only occur inside of flood zones.

Floods aren't the only disasters that require the purchase of special coverage. Earthquakes and sinkholes sometimes also require separate insurance coverage. Find out which natural disasters are common in your area and how to protect against them.

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Ray Lokar