How to Choose the Right Home Insurance

Insuring your home should be among your top priorities, no matter what your income level or financial condition is. It is much more important than some other insurance options, like auto insurance. After all, you can live without your car for a while but you cannot live without a roof over your head and you might not be able to afford major home related expenses with your savings alone. Your home is your most important and valuable asset and you should have adequate insurance on it.

Don’t Pinch Pennies

The most important aspect of home insurance is to make sure you are not underinsuring. There is simply no point in having your insurance pay up an amount that is not enough for your house. In event of any damage to your home, the insurance should pay as much as is required to rebuild the house.

Reconstruction costs can be difficult to predict and you can’t accurately estimate how much it will cost to rebuild your home in future. But make sure you have factored in all the important aspects like inflation when getting an estimate of the per square foot reconstruction value. This way you can avoid rude shocks in event of accidents that damage your home. Another option is to go for guaranteed replacement plans even if they are more expensive than dollar value plans.

Understand the Coverage

Take as much time as you need to read through your insurance plan terms and understand exactly what is covered. What your agent quotes as ‘complete’ coverage may not cover flooding and other uncommon risks that can cause just as much damage to your home as the more well known risks. You might be able to get riders that add these to your insurance coverage.

Replacement Costs Vs Present Value

Always opt for replacement cost insurance for your belongings inside the house. You may not be able to replace the damaged item with the money your insurer gives you if you go for regular coverage. Replacement cost insurance covers all the costs incurred in replacing the item with one that is similar to it. Jewelry, antique furniture and other high value items need to be covered with a special rider that is added to your general home insurance policy. If you are a collector of rare artifacts, these need to be insured separately as well.

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