Home Insurance: Is Your Family and Investment Adequately Covered?

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Home insurance is one of those expenses that many homeowners don’t think much about…until disaster strikes. We all strive to pay as little as possible for Home Insurance, however when the time come that we need it, we pray we did not pay too little.

Everyone that has a place they call  needs insurance. If you own property, at the very least, then you need protection against liability for accidents that injure other people or damage their property. If you have a mortgage, your lender will require an insurance policy that at least covers their investment. If you rent property, be it a home or apartment, your landlord will most likely require renter's insurance to protect your personal belongings. However, these basic policies are focused on protecting other people.

So, why are you purchasing home insurance? Are you insuring your home and/or personal belongings because your mortgage Company or rental agreement requires that you have insurance, or are you purchasing home insurance to protect your investment and family in the case of a disaster? Be clear on what you want from your Insurance policy and then make sure you get a policy that will achieve those results.

Know What is Covered and What is Not:

There are many different events that can cause damage to your property: fire, wind, flooding, and theft just to name a few. Depending where you live, insurance companies may or may not cover certain causes of property damage or charge significantly higher premiums for certain coverage. 

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In addition, insurance policies will vary in the type of expenses it will cover: property damage, additional living expenses, personal liability and medical payments. It is important that you clearly understand what types of property damage your insurance policy covers and what is does not.

Be Sure Your Insurance Policy Provides the Amount of Coverage You Need:

Understanding the amount of coverage you need can be very tricky…understand what your insurance policy actually covers can be even more difficult.

Every policy will have a “Declaration Page” which outlines: your dwelling limit, your content limit, your additional living expenses limit, and other limits. The better your coverage, the less you will have to pay out of your own pocket in the event of a claim.

Most people under estimate the true value of replacing their home and belonging, much less the cost of living while your home is being repair or replaced. If you are unsure of the amount of coverage you need to adequately protect your investment and family, you should contact a qualified Insurance Appraiser.

Compare Deductibles

The deductible is the initial amount you have to pay out of pocket on each claim you make on damage to your house or property. While having a higher deductible will help lower the cost of your insurance, you need to be sure you are comfortable paying the deductible if you need to make a claim. Carefully compare the cost savings associated with a higher deductible to ensure they are worth it.

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Understand How the Compensation is Calculated:

Homeowner’s usually have the option to choose to insure your home and belongings for either replacement cost or actual cash value.

Actual cash value or market value is the standard insurance companied arguably prefer.  In this type of policy, the amount the homeowner receives is based on the cost to replace the property with similar materials and quality, less any depreciation. The insurance company determines the depreciation based on the combination of objective criteria (age, current market conditions, desirability) and subjective assessment (wear and tear). These polices tend to be very vague in respect to depreciation, changes to building code and workmanship and thus are more likely to end up in court to determine what is fair.

Replacement cost is the amount it would take to replace or repair your home with materials of similar kind and quality, without deducting for depreciation. The means the homeowner is compensated for the actual cost of the property repair or replacement, thus usually is a more favorable figure from the homeowner’s point of view.

For those homeowners that would rather pay more for the peace of mind of knowing what their compensation will be, a Guaranteed Replacement Cost policy with a single limit pre-set your compensation and combine your benefits.

Choosing an Insurance Company:

There are countless companies offering insurance these days: some are recognized insurance companies, some are companies you never heard of, many major banks and even major retailers are now offering insurance, not to mention the on-line insurance companies.

While dealing directly with an insurance company on-line may reduce your costs, it is also eliminating an additional layer of professional advise and support that a local established insurance broker can provide.

However, using an insurance broker does not mean you should not do your homework. While most insurance brokers are very professional in looking after the needs of their customers, they are also obligated to represent the interests of the insurance companies they represent.

For professional advise that The best way to ensure you are getting insurance advise that truly  policy is by hiring an independent Insurance Consultant that you can be sure is on your side.

Read Your Policy Carefully

A home insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are clearly stated. When you purchase home insurance, you will receive a policy. You should read that policy and make certain you understand its contents. Keep your policy in a safe place and know the name of your insurer.

Review Your Home Insurance Needs Every Year

You should review your home insurance policy at least once a year to make sure your policy provides adequate coverage.  Changes to your home, your neighborhood, the real estate or construction industry, or even your families routines could effect the type and amount of coverage you require to fully protect your investment and family.

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Report All Major Home Renovations

Most insurance policies have some sort of disclaimer stating that any changes to the property without notifying your insurance company could result in the policy being deemed null and void.

Most homeowners assume this only refers to the additional property value resulting from the renovations, however it is better to be safe than sorry…it is recommended that you send an email to your insurance broker notifying them of any significant renovations.  At least then you can argue that you notified them.

Before Making A Claim…seek Advice:

Just like your Insurance policy is a legal document, so is your insurance claim. The wording of your claim can play a critical part in the amount of compensation you get for your claim. If you are unsure about how to word your claim, it may be a wise decision to contact a “Claims Advocate Team” to help manage your claim and ensure you achieve the desired results.


 Like with most things in life, you get what you pay for.  Don’t assume all insurance policies or insurance companies are the same.

The cost of your home insurance policy is based on many different factors, including: the size and value of your home; its geographic location; heat sources; type of policy; type of coverage; the size of the deductible; and reputation of the insurance company. 

While it is wise to shop around for the best price…make sure you are not compromising important coverage that you will need should a disaster occur just to save a few dollars.

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Hopefully, you never find yourself in a legal battle with your insurance company over compensation for a claim, however these decisions usually favor the party with the most detailed and reliable information.  quinju.com allows you to collect, organize, store and archive every detail of your home renovations projects.


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One Thought to “Home Insurance: Is Your Family and Investment Adequately Covered?”

  1. Woodruff Designing and Remodeling, LLC

    You’re absolutely correct; choosing the right insurer and making sure you read your policy can cost you less down the road. Excellent article as always!


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