How to Know if Your Home Owners Insurance is Enough
Imagine your home catches on fire. You and the kids are out of the house at the time, and everyone is okay. Luckily, you had a security system installed that includes a smoke detector that alerted your local dispatch board, and the firefighters put out the fire. However, do you have the money saved up to replace your furniture, appliances, electronics and other personal property? With adequate home insurance, all you have to worry about is the deductible.
Personal finance experts preach about the importance of having adequate retirement savings to not rely on Social Security benefits or government assistance for the elderly. However, your home is your most important asset and investment. Lost or damaged property caused by vandalism, theft, explosions, smoke, fire and other acts of nature is stressful.
What Does Home Owners Insurance Cover?
Home insurance covers many circumstances you will hopefully never encounter. These include loss and damage due to vandalism, theft, explosion, frozen plumbing, hail, wind, lightning, smoke and fire.
What Is Not Covered?
What is not covered by a home insurance policy is just as important as what is covered. FEMA research shows that 20 percent of flood damage occurs outside federally designated flood zones, so even if you do not live in a flood zone, you may want your home protected with flood insurance. Earthquakes are another natural disaster that most home insurance policies do not cover.
Is It Necessary to Carry Home Insurance?
For most of us, it is necessary to carry home insurance. This is because it is required by lending institutions for anyone carrying a mortgage. If you are fortunate enough to own your own home, it is necessary to carry home insurance if you do not have the liquid capital to repair and replace the structures on your property and their contents in the event of loss or damage.
In 2017, wildfires caused $10 billion in property damage. Structure fires unrelated to wildfires accounted for a further $10.7 billion in lost property. These structure fires caused an average of $21,442 per home. Do you have that kind of money saved up for a home emergency? If you don’t, you need to carry homeowners insurance.
How to Know If You Have Good Coverage?
There are a couple of factors that go into determining if you have good home insurance coverage or not. You need to consider the deductible you must pay in the event something happens, the monthly or annual premiums you incur and any coverage limit your insurance policy imposes on you.
Homeowners Insurance Premiums
Insurance premiums are the monthly (or semi-annual, or annual) payments you make toward your insurance coverage. If your premium is not paid on time, whether it is due to an oversight on your part or the bank holding the escrow that pays the bill on your behalf, your coverage will lapse. If a protected event occurs to your property while your coverage lapses, your property will not be covered. Premiums are paid monthly, quarterly, semiannually or annually. If you have a mortgage, you may be required to keep enough money in an escrow account to cover your home insurance premiums for a full year. Factors that affect the insurance premium for your home include:
- Coverage limits
- Deductible amounts
- Optional coverage
- Age and condition of your home
- Your claims history
- Your credit rating
Contact Absolute Choice Insurance today!