Once the excitement of buying a new home begins to subside, the reality of protecting that home from the unexpected needs to be addressed. A home is likely to be your biggest investment ever.
Homeowner’s insurance policies are challenging to understand. You can have many different types of coverage within a single policy, and different financial obligations can be set out for the homeowner and the insurer. Here is a basic overview of some of the most important points you need to consider when choosing your coverage.
Types of coverage
You can cover many different insurable incidents and items with your homeowner’s insurance policy. Some of the most common are:
Dwelling: Dwelling covers losses that occur to your home and any structures that are attached to it. Dwelling does not cover fences or sheds.
Other structures: “Other structures” covers those structures on your property that are not attached to your home, like your fence or shed.
Personal possessions: Your furniture, clothing, electronics and heirlooms are all covered by the personal possession section of your homeowner’s insurance policy.
Personal liability: If someone gets hurt in your home or on your property, personal liability coverage can pay for injuries and treatments that exceed your deductible.
Flood: Flood insurance covers damage that results from actual flooding and is generally purchased only by homeowners who live in a flood zone. It is important to remember flood insurance pays only when the flooding of your home is the result of an actual flood. For instance, if your roof were torn off by a hurricane and the inside of your home became flooded, that would not be a claim for your flood insurance to pay. If, however, your local lake overflowed and flooded your neighborhood, it would. In many instances, you may have to purchase flood insurance separately from regular homeowner’s insurance.
Limits
Your homeowner’s insurance policy limits determine the maximum amount the insurance company will pay you in the event of a claim. The lower your limits, the less expensive your policy will be. Of course, if your limits are too low, you may not receive enough from the insurance company to reimburse you for a total loss. When trying to determine appropriate limits for your policy, think about what you would need in order to rebuild your home after a total loss. Then, think about how much of that bill you could afford to pay with your savings. The difference is what you should consider as a limit.
Deductibles
Deductibles are the out-of-pocket expenses that you must pay before your insurance company will begin paying for losses. In order to get money from your homeowner’s insurance policy, your claim (or loss) must exceed the deductible. The larger your deductible, the lower your premium will be because you will be shouldering more of the risk. However, if you cannot afford to pay your deductible, then you could have trouble making yourself whole after a loss.
Life insurance
Life insurance is not offered as part of a homeowner’s insurance policy, so you must buy it separately. Adequate life insurance coverage can help ensure that your family gets to keep their home in the event the unexpected were to happen to you or your spouse.
Term life insurance coverage from a reputable company like SBLI is likely a good option to explore. SBLI offers affordable rates for fixed term and yearly renewable term (YRT) coverage. Fixed term coverage lasts for the term you choose and most often can be purchased for 10, 15, 20, 25 or 30 years. Many people buy it to cover the term of their mortgage. With this type of term insurance, your premium remains fixed for the term you select. Yearly renewable term may be less expensive in the early years of your policy. However, this form of term insurance renews every year and the premium increases each year as well. Visit sbli.com or talk to an insurance representative for a quick quote at (888) GET-SBLI.
SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts, which is no way affiliated with SBLI USA Mutual Life Insurance Company, Inc. NAIC #: 70435. SBLI products may not be available in all states.
Courtesy of ARAcontent
