Whether you rent or own, you should have insurance. As a homeowner, your mortgage lender will require you to have insurance, though you are not obligated as a renter unless your landlord requires it in your lease.
Like other types of insurance, home insurance protects against the things we don’t want to think about. With crime, fire, and water damage; accidental injuries; and some natural disasters, home insurance will cover the cost to replace personal items, cover medical bills if someone is injured in your home, and repair physical damage to the structure.
However, it does not cover all situations. If your home is damaged in a hurricane or earthquake, from water from a sewer backup or a major flood, or due to poor workmanship, you tend to be responsible for the costs to repair.
With any sort of insurance, you have options. If you want to choose a good policy and make sure you save money in the process, you’ll want to keep these homeowners insurance facts in mind:
- Different companies have different pros and cons.
- The kind of policy can affect you when you make a claim.
- There are ways to get discounts.
- It helps to take inventory of your belongings before disaster strikes.
- Small claims aren't always worth it.
- It's best to file major claims quickly.
1. Different Insurance Companies
While most places will have similar policies, you should shop around and see who has good discounts and who you feel comfortable with.
You may want to use a local agent to help, and while we millennials prefer to do everything online, it will really help to talk with different insurance companies to get a feel for their policies and customer service.
2. Differences in Policies
When you’re shopping, ask your agent whether your policy covers actual cash value or replacement cash value. If you need to file a claim, this point will be important to the amount of assistance your policy will provide.
Actual cash value refers to the cost of an item with depreciation. For example, if your Apple MacBook is six years old and it gets stolen from your home, you would be entitled to the cost of the computer when it was taken.
However, with a policy that provides replacement cash value, you would be able to submit for the cost to replace the computer when you buy a new one. That could mean a difference of $500!
3. Homeowners Discounts
Once you choose an insurer, there are many things you can do to reduce your monthly premiums. If you have both auto and home insurance, you tend to get a discount when you bundle your policies with the same company.
Additionally, telling your insurance company that you have a home security system, working smoke detectors, deadbolts on your exterior doors, and a fire extinguisher will give additional discounts. Ask your agent what other discounts you may be eligible for. Having these things and being proactive in maintenance will reduce the likelihood that a major disaster will occur, as well. Your insurance company will trust that you are a good homeowner, too, which is helpful.
When shopping for a home security system, be mindful of your choices. Some companies offer you the ability to set up yourself, some offer monitoring. For example, Blink offers you the ability to set up your own system and monitoring, where Brinks offers a monitoring service with their security package.
Find out what works right for you, and check with your insurance agents to see which offer you the best discounts on your rates!
Having these things and being proactive in maintenance will reduce the likelihood that a major disaster will occur, as well. Your insurance company will trust that you are a good homeowner, too, which is helpful.
4. Taking Inventory
One of the best things you can do for yourself is to take an inventory of all your possessions and keep that in a safe place (or multiple places). Take pictures of each room so that you will have documentation of the things that you own.
This will be really helpful in case you need to file a claim for more than one item at a time. If you are burglarized or have damage to your home and things get moved around, these pictures and an inventory will help you assess what you will need to replace.
5. Small Claims
If your deductible is $1,000 but you might file a claim for tree damage on an outdoor shed that cost $400, you may want to reconsider filing the claim. If you then need to file a claim two years later for major damage to your home, your insurance premium may increase. Ask your insurance agent for help if you aren’t sure.
6. Don’t Wait to File a Major Claim
You may be in the midst of dealing with a police report or with water or fire damage cleanup, but calling your insurance company right away is the best thing you can do to mitigate the process. Filing a claim might be confusing, so be sure to check my post on what to do when you need to file a large claim!