No matter whether you have bought a house recently or own one since long, a home insurance policy can always prove to be beneficial for you. There might be some people who may call it a necessary evil, but for others, it’s the best way to obtain peace of mind during the times of crisis. Be it insurance companies or individual agents, they all convince people to buy insurance for their homes. However, there are few who are smart enough to understand exactly whom to trust and from where to shop for it.
What home insurance is exactly about ?
When you buy the best home insurance policy, your home, its contents and other assets in the house are naturally covered in the event of theft, fire or any other disaster. Although a standard homeowner’s policy will protect your dear abode from theft, fire, and fallen trees, it will not cover the destruction caused by disasters like floods or earthquakes. For this, you will need an additional coverage.
You must remember that a home insurance plan is not a blank check. You will be entitled to a limited amount only as compensation. In case you want full replacement value, you can pay little extra each month to get certain articles insured like jewelry or artwork.
If you buy the best home insurance policy, you will be beneficial in various other ways as well. Like if a person slips and falls in your house and sprains his ankle, he might sue you for his medical expenses. Your home insurance policy will cover the expenses for you.
How much insurance does your home actually need ?
When buying the best home insurance policy, make sure it covers the rebuild cost of your home. For instance, if your house burnt to the ground, you must get a compensation amount for it to be rebuilt. However, the rebuild cost is much lower than the current market value of your home.
Many insurers offer free online calculators to get an estimate of what it would take to rebuild. Be sure to add on any unique or expensive details. All this will decide the replacement coverage you will need. It is essential to work out an accurate build cost. Getting a policy with high premiums might ask you to pay for cover you don’t need. However, low premiums can leave you with an insurance shortfall and a big bill.
There are many insurance companies which offer unlimited cover, which means they will bear the entire loss, whatever the cost may be. But you must remember that it might happen to become more expensive at times. Calculating the sum based on the area, type of property and the number of bedrooms is a good idea to know the accurate figure.
Different types of coverage
Not every insurance policy is created equal. When you buy the best home insurance policy, you will come across three levels of coverage:
- Actual cash value
This value covers both the house as well as the value of your belongings. However, the value is calculated by deducting depreciation and you will get the sum based on their current value and not how much you paid for it.
- Replacement cost
Replacement cost includes actual cash value without the deduction for depreciation. This means that you can repair or rebuild your home up to its original value.
- Guaranteed (or extended) replacement cost
This is the most comprehensive among all and pays the entire costs you will going to require to repair or rebuild your home, even it increases your policy limit. There are certain insurers who offer extended replacement that offers more coverage than you have paid for purchase. However, this coverage is accompanied with certain terms & condition and offer up to 25% higher than the limit.
Select the right insurance company
If you want to buy the best home insurance policy, go with an insurance provider who is legitimate and creditworthy. Do your research to find out whether the company you choose has been licensed to issue insurance plans or not. Also, look for the financial strength of the insurance company. Asking your family, friends and colleagues for referrals is also a good thing to do in this regard. When it comes to buying an insurance policy, it always makes sense to benefit from the experiences of others.