As a homeowner, having homeowners insurance is vital. Without homeowners insurance, you can end up in great financial stress after significant damages have occurred to your home, such as theft, fire, or flooding. In order to know that your homeowners insurance is protecting you enough, you should know some of the basics of how it works. Here are four things all homeowners should know about homeowners insurance:
- Homeowners Insurance Doesn't Cover High-Risk Disasters: The first thing you should know is that your homeowners insurance isn't going to cover the cost of damages done by a fire, flood or earthquake if you live in an area that is at high-risk to any of these things. Whenever you purchase homeowners insurance, you should know what your home is at high-risk for so that you can purchase additional coverage that won't be included with your basic homeowners insurance policy.
- You Can Take Preventative Measures to Reduce Premiums: Many times, homeowners are not adequately covered for their home because they cannot afford the high premiums. Luckily, there are plenty of things you can do to lower the premiums and continue to ensure that you have adequate coverage. For example, installing a security system can reduce your premiums significantly since this also reduces the chance of theft significantly, as well. If you have a swimming pool, you can install a pool fence, which will also reduce your premiums significantly.
- There's a Difference Between Market Value and Replacement Cost: When it comes to purchasing homeowners insurance coverage, you want to be sure that you are covered in the case of a total loss. This will allow you to either rebuild your home completely just as it was. You don't want to purchase coverage for the market value though, but instead the replacement cost. There is a difference since market value is based on the surrounding prices of the home in your neighborhood, which can either be lower or higher than the actual cost of replacing your home altogether.
- File Claims When It's Needed: Just because you have homeowners insurance doesn't mean you should file a claim for every little thing that happens. Filing too many claims can actually increase your premiums because the homeowners insurance company will begin to see you as a high-risk customer. You should file a claim if there is significant that you know you are not going to be able to pay out of pocket for. Don't file a claim if there was a hole punched in your wall, which is something that can easily be fixed on your own.
When you understand these four things about homeowners insurance, you can be sure that you are getting the most out of your policy. Contact a business, such as Northeast Insurance Agency, for more information.