Protect Your Most Valued Investment - Insure Your Home
March 15, 2019 | By Louis Tully
It seems that these days the American Dream has been watered down to just being able to buy a home for you and your family. This is especially true for younger generations. Even renting an apartment can be a costly endeavor. But the thing about buying a house that still makes it just as worthwhile today as it did in yesteryear, is the fact that your house becomes your biggest investment. You own the property. You can keep it, sell it, rent it out to strangers, pass it down to your children, or just make it your retirement palace. Either way, it’s yours to do whatever you wish.
For this reason, home insurance becomes an equally important factor. There’s almost no sense in owning a home if you can’t protect it, and home insurance does just that; it protects it. Besides, we’re all too familiar with things going wrong and likewise, we all know by now that things never go according to plan. So if you want to protect your most precious investment, you need to buy home insurance. If nothing else, it’ll give you peace of mind.
As a matter of fact, you kind of have to get the insurance anyway. Because if you’re still paying off your home via a mortgage loan, the bank still owns part of your house and will, therefore, require you to protect it.
What Is Home Insurance?
If you're familiar with renter’s insurance, it’s basically the same thing. In exchange for coverage, you’re required to pay a monthly or annual premium. In the event that your home is damaged, you’re still responsible for covering any repairs until you meet your deductible. The deductible is the amount you’re required to cover out-of-pocket. Once you’ve maxed out your deductible, the insurance company takes over. In fact, your insurance company will reimburse you for as much as you’re covered for. With that said, the larger your deductible, the cheaper the insurance premium. Weigh your options so you're sure you make the right call.
What Does It Cover?
There are two kinds of policies; named-peril and open-peril. Named-peril policies disclose a list of all covered risks. Anything not on that list is excluded from the policy. Open-peril policies (which cost way more) only disclose risks that not covered. Anything not mentioned in this type of policy is covered. Otherwise, both policy types cover personal items within the home as well as a percentage of the value of the home itself. Also, liability protection is always included for legal protection in case somebody has an accident on your property.
Despite all the things that basic home insurance covers, it typically does not cover any damage due to natural disasters; fires, floods, tornados, hurricanes, earthquakes, etc. That said, you will need to purchases an additional policy just for those specific things.
These extra policies are known as ‘riders’, which basically work as an add-on to your existing home insurance policy. They can cost very little or they can cost a fortune depending on where you live and other risk factors. For example, if you live in the state of California, earthquake and fire insurance would cost more than if you lived in Washington.
How Much Coverage Is Needed?
Now that you know a little bit about home insurance, it’s time to go over how much coverage you actually need. In order to find out, you’ll need to know the full replacement value of your home based on the current market. This should also include expenses for all material and labor. You can get help from the insurance company to find out the total costs.
Make Sure You Cover All Your Bases
- The house: Most insurance companies can cover the total current market value of your home, including the property. But because the land itself doesn’t need to be insured, you can expect to pay to insure more than what’s actually needed.
- Everything in the house: As for items within your home, be sure to opt for replacement value, not cash value. This is very important because cash value only covers things based on their current market value. This would be great if you were covering rare collectibles, but not so great if you’re trying to replace a damaged dishwasher. Replacement value will literally replace damage no matter their value.
Keep a Checklist of Everything
To make life a little easier under not-so-easy situations, it’s best to keep a record of all your valuables. It sounds easy enough, but it can be a splitting headache if you’re starting from scratch. Here’s a few tips to help you get it done:
- Write down all the things in your house worth replacing; TV, furniture, appliances, etc.
- Use the camera on your phone to take pictures of the stickers on these expensive items. These stickers should contain the item’s model number, serial number, and the name of the manufacturer.
- While you’re at it, you might as well take good pictures of the items themselves. Video footage works too.
- Keep the receipts! For any big purchases in the future, be sure to hold on to the receipt. These days, people like to scan their receipts and store them on their phone or computer.
After having said all that, insurance doesn’t cover everything and if you’re ever caught in a bad emergency, a little extra cash could be all you need to pull through. For fast cash, contact your local payday lender at one of these stores.
Now that you have a basic idea of what home insurance is and how it works, it’s time to shop around for a provider! Good luck and may you and your family be safe and your home covered.