If you’re like most people, your home is the largest purchase you will ever make. And, while it’s highly likely that you already have homeowners insurance, it’s also likely that you’re underinsured. You’re not alone; one study found that 60% of U.S. homes are underinsured. Plus, if you’ve remodeled or added on to your property over the years, you’re almost guaranteed to have underestimated how much coverage you need.
How to Fully Protect Yourself
To protect the investment you’ve made in your home, take a little time to understand what homeowners insurance does and does not cover, how much coverage you need, and what determines the amount you pay.
Homeowners Insurance Provides Coverage for…
Typical homeowners coverage protects you from damage caused by fire, smoke, theft, hail or wind, damage due to frozen or burst pipes, and other perils. However, most policies do not cover damage from floods, landslides or earthquakes, or even sewer backups. You must get an endorsement or separate policy to protect yourself from these risks.
Homeowners insurance covers four things:
The home itself plus any other buildings on your property, such as a detached garage, sheds, gazebos, or other structures.
The contents of your home, including furniture, clothing, housewares, and other items. Most policies cover your items even when they’re not actually in your home, such as when you’re traveling.
If your home is damaged and you must live elsewhere while it is being repaired. This coverage pays for things like hotel, restaurant, and other expenses.
This coverage is designed to protect you if someone is injured on your property, or if you, a family member or even your pet causes damage or injury to someone else.
How Much Coverage Do You Need?
When determining how much coverage you need, you must choose between replacement cost or actual cash value.
- Replacement cost value (RCV) covers the cost to rebuild your home or replace your lost possessions with similar, new items without regard for depreciation.
- Actual cash value (ACV) reimburses you for the depreciated value of your home and damaged or lost items. This amount is based on how much your things are currently worth, not how much you paid for them or how much it would cost to replace them.
Many policies offer an extended or guaranteed replacement option, which pays a certain additional amount to rebuild your home, even if it exceeds your policy limit.
The best way to make sure you have the amount of coverage you need is to talk to Alaska USA Insurance Brokers. We can arrange to do an assessment, to make sure the coverage you have is appropriate for your situation.
What Affects Rates?
While every insurer has their own criteria, here are 10 of the most common things that determine your cost for homeowners insurance:
- Value and age of your home, which impacts the cost to repair or replace the structure
- Contents, such as furniture, clothing, antiques, electronics, and others
- Location, which includes proximity to fire protection services, neighborhood burglary rates, local construction costs, etc.
- Security, which is how you protect your home with security systems, smoke alarms, etc.
- Risk factors, which include pets, pools, trampolines, wood-burning stoves, firearms, and others
- Use of your home for a home-based business, rental property, etc.
- Your past claims history along with the claims history of the property itself
- Your credit history; better credit scores can help lower your premium
- Your other policies; you can save by bundling your homeowners with other insurance such as auto
- Coverage levels and deductibles; higher deductibles will lower your annual premiums
Don't Wait Until It's Too Late
Don’t just blindly pay your premiums year after year without making sure you’ve got the right coverage for your situation. Put your insurance to work for you by taking the time to review your insurance coverage regularly.
Call Alaska USA Insurance Brokers today to make sure you’re fully protected. We will help you identify the best level of coverage for your needs, at a price that fits your budget.
Did You Know?
- When determining your cost of homeowners insurance, the insurance company will consider how many claims you’ve filed in the past, and how many claims have been filed by past owners of your home. If former owners have filed multiple claims, you could be on the hook to pay a higher rate for your coverage.
- Some people think they only need enough insurance to pay off the mortgage, but that’s completely wrong. The cost to rebuild your home is different from your mortgage amount or your purchase price. Insurance also covers what’s inside your home. To help you in case of a disaster, take time to do a complete inventory of your home and its contents once a year. Be sure to list special items such as collectibles, antiques, expensive electronics, and others. Take photos, store this information in a safe place, and then talk with your Alaska USA insurance broker to make sure you have enough coverage.