Insurance and homeowners go together like peanut butter and jelly. Lenders require fire insurance at a minimum for homes with a mortgage, but many owners opt for more comprehensive coverage with a homeowner’s policy.
However, comprehensive doesn’t mean that everything is covered. Filing a claim is not the time to learn that you don’t have the right coverage. Are you covered? Here are some topics you should discuss with your insurance agent to get a better understanding of your policy and whether some adjustments might be in order.
- Guaranteed replacement value – Are you covered? Is there a cap? Does it go up with inflation?
- Liability protection – Is your coverage high enough, or do you need an umbrella liability policy?
- Flooding – Do you need flood insurance?
- Mold – Does your insurance provider cover mold?
- Earthquakes – This is California. Have you thought about getting earthquake coverage?
- Pools – Pools, trampolines and play equipment have safety implications.
- Sewer back up – Do you have coverage if your sewer backs up?
- Certain kinds of pets or breeds of dogs – Some insurers won’t insure you if you own certain breeds of dogs.
- Limits on jewelry and cash – Do you have enough coverage for these and other valuable items?
- Deductible amount – Check to make sure your deductible amount is where you want it.
- Business use of your home – Do you need additional coverage for business equipment or liability?
For more information on types of policies, what is covered and how they work, take a look at A Consumer’s Guide to Home Insurance published by the National Association of Insurance Commissioners.
The whole concept behind buying insurance is to transfer the risk of loss that you cannot afford to an annual premium that you can. Price and coverage need to be considered when comparing policies. Take a look at the Insurance Information Institute’s page about which disasters homeowner’s insurance covers and which ones it doesn’t. Then call your agent and make sure you understand what you’re insured for and if there are alternatives available.