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5
Things to Understand About Homeowners Insurance
1.
Look
for exclusions to coverage. For example, most insurance
policies do not cover flood or earthquake damage as a
standard item. These coverages must be bought separately.
2.
Look
for dollar limitations on claims. Even if you are covered
for a risk, there may a limit on how much the insurer will
pay. For example, many policies limit the amount paid for
stolen jewelry unless items are insured separately.
3.
Understand
replacement cost. If your home is destroyed you’ll
receive money to replace it only to the maximum of your
coverage, so be sure your insurance is sufficient. This
means that if your home is insured for $150,000 and it
costs $180,000 to replace it, you’ll only receive
$150,000.
4.
Understand
actual cash value. If you choose not to replace your home
when it’s destroyed, you’ll receive replacement cost,
less depreciation. This is called actual cash value.
Understand
liability. Generally your homeowners insurance covers you
for accidents that happen to other people on your
property, including medical care, court costs, and awards
by the court. However, there is usually an upper limit to
the amount of coverage provided. Be sure that it’s
sufficient if you have significant assets. |
