Some of the best moments in life come from the simple comforts of home. This means that by having homeowners insurance, you’re committed to protecting one of your most valuable assets. While shopping for coverage can often raise more questions than answers, here is some insight to set you up for a successful home insurance shopping experience.
Does my homeowners insurance policy cover replacement cost or the actual cash value?
When deciding on your homeowners policy, it’s important to understand how you’ll be reimbursed for property loss depending on the coverage you choose. If your claim settlement terms are for an item’s replacement cost, you’ll likely be reimbursed in payment equal to what would be required to replace the items you lost. This coverage typically provides a higher payout in the event of a claim, as it doesn't take depreciation into account. While replacement cost coverage may result in higher premiums, it can offer greater financial protection in the long run, especially for valuable assets.
If your claim settlement terms are for an item’s actual cash value, you’ll likely be compensated for the value of the item it would be sold for at that time. Actual cash value coverage takes depreciation into account when reimbursing you for a covered loss, meaning it considers the current market value of the item minus its depreciation. This coverage is generally more affordable because it factors in the depreciated value of your property. While it may result in lower premiums, the payout you receive may not be sufficient to cover the full cost of replacing your belongings, so you’ll want to consider which type of policy is a better fit, especially if you have many high-value or well-maintained items.
Do I need an endorsement or rider on my homeowners insurance policy to cover some of my belongings?
A policy rider or endorsement is additional coverage (for an additional premium) for high-value items that are excluded from your original policy. For example, if you own items like expensive jewelry, artwork, antiques, or oriental rugs, you may want to consider a rider for your insurance policy. Understanding whether you need an endorsement or rider on your homeowners insurance policy to cover specific belongings is crucial for ensuring comprehensive protection.
For belongings that may not be fully covered by the standard policy, such as expensive camera equipment, antiques, or musical instruments, an endorsement or rider can offer the specific protection you need. One of the most important things you can do to protect your personal property is to complete a thorough home inventory before purchasing coverage. A complete listing of your possessions and their values is not only essential for filing claims but can help you determine what coverage beyond a standard policy might be needed.
What losses aren’t covered by my homeowners policy?
While homeowners insurance differs from state to state and person to person, damage from natural disasters such as earthquakes, tornadoes, and floods is typically not covered in a traditional homeowners insurance policy. There are a number of other cases your home insurance might not cover, so it’s important to clearly understand what is (and isn’t) covered and consider add-ons for your existing policy.
How much liability protection do I need?
Liability loss claims can often be the most expensive home insurance claim. When deciding how much personal liability coverage you need, you’ll often want enough to cover your total combined assets. You’ll also want to consider the liability risks attached to attractive nuisances your home may have, such as something like a pool, trampoline, or treehouse. A lawsuit could potentially leave you responsible for medical expenses, legal costs, and more, so it’s important to have sufficient liability coverage. Luckily, it is typically one of the most affordable coverages under home insurance policies.
How can I save on my monthly premium?
There are a number of ways to save money on insurance premiums. Many insurance companies offer discounts if you purchase multiple policies from them, such as bundling your home and auto insurance. By consolidating your insurance needs with one provider, you may be eligible for significant savings on your monthly premiums. Long-time loyalty to a carrier and having a history of no claims are other effective strategies for lowering your rates.
One of the most effective ways to save on your home insurance premium is by shopping around and comparing quotes from multiple insurance providers. Working with an insurance brokerage SelectQuote makes it easy to compare rates so you find the right policy. You can even explore whether you’re eligible for any policy-related home insurance discounts.
Let SelectQuote Help You Find the Right Coverage for Your Needs
Shopping for home insurance can feel overwhelming, especially if you’re unsure what kind of coverage you need. With nearly 40 years of industry experience, SelectQuote is here to help. Our licensed insurance agents will walk you through the process of buying home insurance by comparing coverage and rates from some of the most trusted insurance companies in just minutes. We’ll make sure you get the coverage you need at a price that fits your budget.
