Home Insurance Information You Can Really Use

You've heard it time and time again: read the fine print before signing. Unfortunately, when it comes to reading an insurance policy, the unusual terminology may make it all but impossible to understand what you have just read. Here is helpful home insurance information, including what you need to know about some of the most common and confusing clauses encountered when purchasing homeowners insurance.

• "Act of God" Clause: Although this phrase is frequently used when talking "about" insurance, the actual policy rarely uses this exact terminology; instead, search for language related to natural disasters like hurricanes, earthquakes or tornadoes. Some policies cover claims resulting from wind, hail, lightning and other "acts of God," while others specifically exclude these perils. Always ask your agent whether you have coverage for natural or environmental incidents.
• Actual Cash Value or Replacement Value: Of all the confusing terms likely to be encountered when purchasing homeowners insurance, the question of whether to insure for Actual Cash Value (ACV) or Replacement Value is one of the most important you will make. ACV is the replacement cost of the item when the incident occurs minus the depreciation. Replacement value is the full cost to repair or replace the property without deducting for depreciation. Depending upon the age of the property or items insured, the difference can represent tens of thousands of dollars in the event of a major loss.
• Deductible: A deductible is simply the amount you will pay out of pocket before the insurance company begins to pay on a claim. It is often possible to lower the cost of insurance premiums by selecting a higher deductible; just be sure to set aside the savings to cover the cost of the deductible in the event of a claim.
• Depreciation: Since all items tend to wear out, become obsolete or need repair over time, they are said to depreciate or lose value. ACV pays a claim based upon the depreciated value.

Important Information About Obtaining Home Insurance Online Quotes

Obtaining a home owner insurance online quote is an easy and effective way to reduce the cost of insuring your home and personal belongings, but there are a few important considerations to keep in mind. Learn how to protect your property with this important information about your rights and responsibilities when buying home insurance online.

• Right to Cancel: The insurance company can cancel new policies for the first 60 days for any reason that isn't specifically excluded by law. The insurance company must provide written notice at least 20 days in advance.
• Right to Renew: Instead of cancelling a policy entirely, some companies will offer coverage at different rates or different terms. Always be sure to read the paperwork once it arrives and review any changes. By law, insurance providers must supply a written notification of all changes at least 30 days before they are due to go into effect. If you disagree with the changes, begin shopping for a replacement policy as soon as possible before informing your provider in writing that you will cancel the account. Never cancel a homeowners policy until you already have a new policy in place.
• Right to Refuse Coverage: The insurance company can also decide not to renew the policy at all, so be sure to review the reasons for non-renewal in advance. The company will provide at least 30 days advance notification and specify the exact reason for the cancellation or non-renewal of the policy. One of the most common reasons is non-payment of the premium in a timely fashion. To avoid this common complaint, take time to sign-up for automatic payment plans that assure the payment always arrives on time.

Must Ask Questions When Obtaining a Homeowners Insurance Quote

Obtaining a home owners insurance quote can be confusing, especially when attempting to compare different policies and plans. One important part of successfully buying the right insurance at the best price is to ask plenty of questions. Not only does it allow you to compare what is or isn't covered under each policy, but it helps identify potential gaps in coverage. Here is a convenient checklist of must-ask questions that will allow you to compare homeowners insurance quotes:

• Does this policy cover "Acts of God" like hurricanes, windstorms, hail, earthquakes or floods? If the policy doesn't provide coverage and you live in an area prone to specific problems, it is a good idea to inquire about purchasing additional coverage.
• Does this policy cover expensive jewelry, tools, electronics or collectibles? The majority of standard policies put caps or limits on coverage. If you own expensive tools, equipment or other valuables, ask about purchasing separate insurance to provide coverage in the event of a loss.
• Does this policy provide enough coverage to rebuild the home in the event of a total loss? Remember, most policies differentiate between actual cash value versus replacement value, and there are differences in zoning and inflation that could make it impossible to rebuild or replace your home in the event of a loss. Additional Ordinance or Law endorsements are available to ensure your home can be rebuilt in the event of changes to permits or other codes. Explore all options when purchasing a policy to find the right mix of affordability and comprehensive coverage for your needs.

Locating Homeowners Insurance News

Staying up to date on homeowners insurance contract changes can be challenging. It helps to find a reputable source of reliable and objective information. Learn how to locate homeowners insurance news without the hassle, headache or cost with these great resources:

• Federal Emergency Management Agency (FEMA): You might be surprised to learn what a valuable resource FEMA is when it comes to up-to-date information related to insurance and natural disasters.
• Flood Insurance and Topographic Information: Flood insurance can be tough to obtain. Learn how to purchase flood insurance, prevent flood related damage from taking place and news related to flood insurance.
• Consumer Action Handbook: Obtain state-by-state information about homeowners insurance.
• The Federal Citizen Information Center: A favorite resource for consumers seeking everything from homeowners insurance information to how to buy a home.
• The Insurance Information Institute: A comprehensive resource for everything related to insurance, including news and industry updates.

Homeowners Insurance Information When Disaster Strikes

If you find yourself needing to file a homeowners insurance claim, here is some homeowners insurance information and step-by-step tips on what to do in the event of a claim or loss.

• Assess the Damage: If you believe it was due to theft, vandalism or otherwise "man-made," obtain a police report as soon as possible.
• Do not move or relocate anything unless it is absolutely necessary to protect people or your property from additional damage.
• Contact your insurance agent.
• Collect photographs, receipts and other information to substantiate your loss.
• Keep copies of all receipts, expenses, repairs and other information.
• Fill-out all forms provided by the insurance company in a timely manner. Make copies and return as soon as possible.

All About Home Insurance

If you are purchasing your very first home, condominium or even vacation home, there is a lot to learn about the different types of homeowners insurance policies. Unlike car or auto policies, homeowners insurance provides a lot of different choices or packages to select. Here are some considerations for choosing the right insurance for your needs:

• Clearly Identify the Type of Dwelling: When you call to obtain a quote, the agent will ask you about the home, but filling out an online home insurance application isn't always as straight-forward. Insurance for a site-built home is a very different policy than one for a condominium. Even if you think of both of them as "home," be sure to clearly identify the type of building and coverage needed.
• High or Low Deductible Policy: A high deductible saves money but also requires more out of pocket cost in the event of a claim. A low deductible makes sure you are covered without large expenses, but the policy often costs more.
• Actual Cash Value (ACV) or Replacement Coverage: If you opt for actual cash value, then you will be insured for the depreciated value of the item, minus the deductible. For example, if your home is insured for ACV and the roof is on year ten of a twenty-year life span, then the insurance company would only be responsible for the depreciated value of the roof minus the deductible. If the roof were estimated at $12,000, the depreciated value would be $6,000 minus the deductible of $1,000, so you would receive a total of $5,000.
• Ordinance and Zoning: If you live in an older home or an area undergoing rapid changes to the zoning and building code, it is likely you may encounter new building codes and permits when repairing a home. Changes to the building code may require extensive renovations before work can be completed on the repairs, ultimately adding much to the cost of work.

Homeowners Insurance Requirements

After suffering tremendous losses due to flooding, hurricanes and other natural disasters, many insurance underwriters are implementing stricter guidelines and additional homeowners insurance requirements in order to obtain the best rates. Find out how you can avoid the risk of cancellation, non-renewal and escalating homeowners insurance rates with the following tips:

• Never Submit Frivolous Claims: In the past, ultra-low deductibles often enticed homeowners to submit a claim for things they could easily pay out of pocket. That has all changed. Excessive submission of claims is likely to result in higher rates over time.
• Property Maintenance: If you purchase replacement coverage, it is likely you will also encounter a maintenance clause stipulating the property must be maintained. Everything from paint to roofing repairs must be performed in a timely fashion and remain in good condition.
• Good Dogs, Good Credit and Good Behavior: While this won't necessary result in a loss of coverage, it can impact rates. Stay on the right side of the law, your creditors and your neighbors by keeping an eye on your selection of pets, purchases and pastimes.

Types of Homeowners Insurance Claims

When it comes to homeowners insurance, have you ever wondered what types of loss are likely to take place? You might just be surprised to learn about the most (and least) common types of homeowners insurance claims.

• Fire & Lightning: The first thing that comes to many homeowners’ mind when they think of a loss is the risk of fire or lightning related damage. Surprisingly, the actual statistics indicate the claim frequency at less than 1%, but with an average cost in excess of $19,500.
• Water Damage: On the other hand, most people fail to realize how frequently water damage takes place. According to research, it is actually one of the most common type of claim at 1.53%, with an average cost of a bit more than $5,000 per occurrence.
• Wind & Hail: By far the most common type of claim is related to wind and hail, with a frequency of 2.2% and average cost of more than $6,600 per claim.

The combined claim frequency for all losses is just over 6.15%, with an average cost of $6,600 between the years of 2002 to 2006. While it may not initially appear that six out of every 100 insured homes is a lot to worry about, keep in mind the total number of years you are likely to own the home. Eventually, disaster is likely to strike; make sure you are prepared by purchasing the right homeowners insurance policy.

Home Insurance FAQs

Have you ever wondered about all the different codes, rates, premium differences and types of home insurance? The home insurance industry is complex and confusing, especially if you are unfamiliar with the different types of home insurance. Here are a few frequently asked questions about home insurance.

Q. What is the average premium paid for home insurance?

A. Home insurance premiums are based upon many factors including individual credit score, type of construction and even state of residence. Residents of Idaho pay the least for home insurance with an annual premium of only $457, while Texas homeowners shell out an average premium of $1,372 annually. The nationwide average premium for HO-3 homeowner insurance is $765 per year.

Q. How much home insurance do I need?

A. The decision on how much coverage to purchase varies according to your age, family income and available resources. In general, it should be enough to replace the physical structure of your home, personal belongings, cost of living somewhere else while the home is being repaired and liability in the event someone is hurt or injured on your property.

Q. What is an endorsement?

A. An endorsement is when you purchase additional insurance coverage for expensive items like jewelry, tools or other valuables. Most standard types of home insurance only provide limited coverage for expensive items. By purchasing an endorsement or "rider" for expensive items, you can make sure all of your belongings are fully covered.

Are You Covered?

Find out if you are covered by taking this quick quiz that shows common claims and the type of homeowners insurance likely to cover the loss.

Q. Someone breaks into your home and steals your jewelry with an estimated value of $12,000. Are you covered or not?

A. Partially. Most types of homeowners insurance provides limited coverage for jewelry and other expensive items up to $2,500 (on average). In the event of theft or other loss, you would be responsible for the deductible plus any amount beyond the cap. Ask your agent about an endorsement for expensive items.

Q. A neighborhood child slipped and fell in your backyard while playing with your children. The injuries required a visit to the Emergency room and his parents are threatening to sue. Are you covered?

A. Yes. Unless you knew there was a risk or it can be determined there was some type of negligence on your part, the liability portion of your homeowners insurance policy will cover legal expenses as well as medical bills.

Q. There was a big storm that resulted in a tree falling into the yard. Will my insurance cover the cost of having the tree removed?

A. Maybe. If your tree damaged the home or property, then the property would be covered. However, the tree is only covered in the event of vandalism, fire, theft, etc. Typically, tree and debris removal is only covered if the debris blocks entry into other parts of the home.