Odds are, if you own a home, you probably have homeowners insurance. This is especially true if you have a mortgage. But, how do you know that you have the right homeowners insurance policy for your needs? If you purchased your homeowners insurance policy based on price alone, odds are your policy isn’t going to do you much good if you experience a catastrophic event. It might be time to take a second look and buy a new policy. Here are a few things you need to know about selecting the right homeowners policy.
Minimally, you will need to have enough coverage to completely replace your home and belongings should you lose your home to a catastrophic event such as a fire, flood, or other disaster. If you don’t have the money in the bank to pay for alternative living arrangements while your home is being replaced, you will need to ensure that your policy reimburses you for these expenses. And, you should always carry liability coverage that will keep you from being sued in the event someone is injured on your property.
Levels of Insurance Policies
There are a number of different levels of coverage when it comes to insurance in the United States. Homeowners policies are categorized by what they cover and labeled accordingly. There are 8 different levels of coverage labeled HO-1 to HO-8, with HO-1 offering the least amount of coverage for homeowners of single family properties. Most will need a policy in the HO-3 category as this will provide protection against the most common perils. Additional riders to cover flooding, earthquakes, and nuclear attacks can be added in the event these are common in your area. For those who live in a co-op or condo situation, the coverage level you need is HO-6, which covers your belongings, but not the structure itself.
Your personal possessions will be covered under a typical HO-3 policy and will allow you to replace the items you own that reside in your home, and even in your car or hotel room when you are on vacation, in the event of a loss. Most policies will cover the usual items such as furniture, clothing, appliances and such without an appraisal. The amount that you will get is expressed as a percentage of your home’s value. For example, if your home is worth $100,000 and you have full replacement coverage on your home and 50% personal possession coverage, you will receive $50,000 to replace the items in your home. However, if you have items that possess a high value such as artwork, jewelry, and even some consumer electronics, you will need to take out additional insurance for those items and have them appraised.
Liability coverage helps to pay for medical expenses of those who are injured while on your property. This helps protect your personal finances from a lawsuit in the event that someone is injured. However, the liability coverage you have is subject to a limit specified in your policy, which can leave you exposed to amounts above that limit if you don’t have enough coverage.
If you live in Chicago, IL and are looking to have your home insurance Chicago IL reviewed contact a local agent and request an analysis and free home insurance quotes Chicago IL.
You may also like
While numerous voyagers comply with the “never purchase discretionary rental coverage” rule, the issue is ...