Tips for Home Insurance

Owning a home is the largest investment most people will ever make, and just like any other investment, you want to make sure it’s protected. That’s where homeowners insurance comes in. While it may seem daunting, buying homeowners insurance doesn’t have to be difficult if you follow a few simple tips.

First off, make sure you buy enough insurance to cover what it would cost to rebuild your home. This doesn’t mean getting only enough to cover the appraised value of your home. If your home is worth $200,000, it might actually cost something like $220,000 to build a similar-sized new home. Make sure, too, that your policy has an escalation clause that automatically increases the replacement value every year by a certain amount, such as 3 percent. Because of increases in materials and labor costs, that $220,000 cost is likely to increase by a few thousand dollars every year.

As insurance policies go, homeowners insurance is relatively cheap, only costing a few hundred dollars a year for the average house. That doesn’t mean, however, that you shouldn’t seek to get the best deal possible on your rates.

One way to save money on homeowners insurance is to bundle policies. For example, an insurance company might give you a discount on homeowners insurance if you also have an automobile insurance policy. Another way to save money on rates might be through affiliate discounts. If you are a member of a trade or professional group, that group might offer discounts for using certain insurance companies. You can also save money on the rates you pay by adjusting your deductible. If you would have no trouble paying $1,000 out of your own pocket if your home was damaged or destroyed, you can set your deductible at that level, which will make the monthly rate lower than if your deductible were $500.

Finally, make sure you know what your policy does and doesn’t cover. Almost all homeowners policies exclude damage from flooding, as well as acts of war or terrorism and unforeseen events, such as plane crashes. Depending on in which area of the country you live, your homeowners policy may also have exclusions related to earthquakes and hurricanes, as well. Make sure you read your policy thoroughly, including all the fine print, and ask your agent questions.

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