Every homeowner wants to get a low-cost home insurance policy. Who wouldn’t?
But it’s very important to remember that low cost will not always equal high quality and opting for a policy based only on price can actually cause you to lose money in the future.
You Need to Know What Type Coverage Your Homeowners Policy Provides
If you were to rely on your mortgage lender to make the decision on which homeowner’s policy to buy, all they would tell you is that you need the bare minimum of coverage to qualify for your mortgage. Of course, that would save you money, but it’s a risky decision. Every homeowner with an insurance policy needs to consider the cost of possible losses in the future, meaning that you must be covered for catastrophe. Think of the costs involved should you have to completely rebuild your home and replace all of your personal property.
A basic home insurance policy covers you if there is damage to your home or damage to your personal property inside the home (there are some personal items that are excluded). This coverage generally includes damage caused by ice and snow, frozen piping, burglary, smoke from fire, and fire itself. The policy will also protect you from claims related to liability, such as the medical costs for third parties who are injured in your home, as well as any legal costs that are incurred if someone has brought suit against you.
Some Things Are Not Covered By Your Homeowners Policy
Insurance companies differ as to what type of extra coverage they are willing to provide and how much they will charge for that extra coverage. For example, if you reside in an area is at risk for earthquakes or flooding, your policy may not provide coverage for damage caused by those events. When receiving quotes from various carriers on a policy, make sure to find out what is covered and what is not. It’s entirely possible that one carrier will offer significantly more coverage for a much lower cost than its competitors.
As far as coverage for your personal property, make sure you take an accurate inventory of your valuable possessions. This does not mean merely making a list. You need to document the items using photographs and/or video and keep those photos and video together with receipts of purchase and serial numbers. Keep a copy of those items in a safety deposit box. The following items are among those that should be accurately inventoried:
- Expensive Furniture
- Fine Jewelry
- Fine Art
- Antiques and Collectibles
- Major Appliances
- Electronic Equipment (televisions, stereo systems, computers, etc.)
Learn the Difference between Replacement Value and Actual Cash Value
If you opt for a low-cost homeowner’s policy, you may be cheating yourself out of adequate reimbursement should you suffer a loss. You will be paid differing amounts depending on whether you choose coverage for Actual Cash Value (ACV) or coverage for replacement costs. Make your decision carefully.
Following are definitions for the two types of coverage:
Actual Cash Value (ACV) is a type of coverage that will reimburse you for property that is destroyed, damaged, or stolen – minus the cost of depreciation. Depreciation is calculated based on how old the property is. This type of coverage is less expensive than replacement cost coverage.
Replacement cost coverage will reimburse you for the amount of money it would take to fully replace the property that is destroyed, damaged or stolen. This type of coverage does not take depreciation into account. In other words, if you suffered a personal property loss, you could go into a store and replace the item or items without shelling out extra cash. Replacement cost coverage is more expensive than ACV coverage.
Get your no-cost Sacramento home insurance quotes today from SacramentoHomeInsuranceQuotes.org – it is quick and convenient and a simple way to shop for what you need.
