How Can Home Insurance Be Beneficial?

If you decide not to take out a homeowner’s insurance policy, your home and contents will not be insured and you will have to pay to repair or replace any damage or loss out of your own pocket. This can often be very costly if say, for example, your home was to be hit by a hurricane or tornado and damaged beyond repair, you may not be able to afford to rebuild it and could run the risk of losing everything.  It is always a good idea to make sure that you are covered to give you peace of mind.

Firstly, you need to ask yourself what you are looking for? Does your policy cover you to rebuild your home and does it cover you for accidental damages, do you also require insurance to cover the contents of your home such as your furniture or items of jewelry?  Depending on the policy, homeowner’s insurance policies usually cover you for damage to your home, personal liability, and loss of possessions through damage or theft. Additionally, you may want to protect yourself against personal injury to others in your home, if someone was to get hurt while on your property, they could pursue a claim against you and sue you to pay for medical expenses and loss of earning.

When looking for home insurance there are three basic types of cover:

.  Actual Cash Value.

.  Replacement Cost

.  Extended Replacement Cost

Actual Cash Value

This is the amount required to replace your property less any depreciation cost at the time of loss. You would be reimbursed for the amount it would cost to replace your property rather than the actual cash value.

Replacement Cost

This is the amount of money it would cost to rebuild your home as it was before if it were to be damaged beyond repair. It also covers you to purchase brand new items should your possessions be damaged beyond repair or stolen. This is a popular option for many homeowners as it provides comprehensive coverage.

Extended Replacement Cost

This type of cover is the same as replacement cost but with the added benefit of covering you for on average, an additional 25% of the replacement value of your home.

Tips to keep insurance costs down

Shop around - it could save you money.

Increase your deductible - this is the amount of money you have to pay before your insurance company starts to pay a claim, a larger deductible will result in a lower premium.

Improve the security in your home - insurance premiums will probably be lower if you have a security alarm system and smoke alarm.

Disaster proof your home - talk to your insurance company on how you can implement additional security in your home to protect from natural disasters.  For example, having storm shutters to protect windows can bring down the cost.

The type of insurance cover you choose will depend on what you are looking for. It is a good idea to talk to a risk advisor who will assess your situation and who will be able to recommend a policy based on your needs. They will make sure you protect your assets should you find yourself in a situation where you have to make a claim. They will also be able to help you to find the right insurance company that best fits the bill for you.