10 Things Every Homeowner Should Know Before Buying a Home Insurance Policy
Home insurance policies may at times become complicated. As a homeowner, having the know-how of some crucial information about home insurance. This in your best interest before diving in. You may never understand the importance of getting covered as a homeowner until you face a loss. But we don’t want you to get there. A lot of people do not take insurance seriously. Imagine a situation whereby fire from an electric fault reduces down property worth millions. If the owner of the home is not covered in such a scenario, then they have to bear the loss themselves.
On most occasions, the policies expire even before the occurrence of the loss against. But that should never distract you. What about if the loss occurred. For property insurance, like anywhere else, you only get compensation when the loss occurs. That explains why most people perceive the companies offering the coverage as fraudsters. In fact, some people loathe insurance. But it doesn’t have to be that way.
It gets worse when one has an insurance policy covering their property, but they don’t understand it well. Others think they understand the policy, but when a loss occur, they don’t get compensation. In most cases, the reason will be that the homeowner didn’t do something or that the cover didn’t cover that.
To help you understand home insurance, we have a compilation of 10 things a homeowner must know about insurance.
First, Homeowners’ Insurance Covers Come with These Three Major Benefits
There is no better feeling, in the insurance context than the one that comes from knowing that you have a cover for your property against any losses. It is priceless. It means that you do not have to worry about any bad occurrence to your home. Also, you won’t worry of inability to fix it. While home insurance does not cover everything, it protects against the most common incidents. The best thing is that you can cover that peril that you feel your property is vulnerable to.
Compared to other types, a homeowner premium insurance policy is not expensive. Getting a good monthly premium policy is a breeze. However, the rates are set depending on the type of home. It is ideal to give close attention to the insurance rates before investing in a property. But, many homeowners and first-time buyers don’t consider this when investing in a home
You’ll Feel Secure
Acquiring a high-quality premium policy will cut on the level of stress that comes with worrying about the condition of your home. Get a policy that covers you against many perils and you will feel comfortable.
Having seen the major reasons why you should get covered, let’s get to the insurance tips that every homeowner should know.
Before Signing a Home Insurance Cover, You Should Know the Following
1. Assess the Value of Your Home
Before you settle on which cover to buy, you have to make sure that you know the value of your home. An assessment company or even a builder could help determine the value. Do not trust your insurance agents with that role. They are in business and may undervalue your possessions for their interests. That means you will be able to know how much it would cost you to repair any damages to your property in case of a loss. This should be the first consideration for any homeowner before buying a cover.
2. Policy Coverage
A basic homeowners’ insurance policy covers a home and other possessions after destruction arising. The policy can cover, any or all of the following. Theft, vandalism, fire, lightning, explosions, riots and civil commotions, windstorm, hails, plane, vehicles, etc. A typical insurance policy has limitations to what it can cover. It would be ideal to consider an upgraded policy so as to protect yourself against more uncertain occurrences.
However, in most states, the laws dictate that a homeowner buys the upgraded policy. This policy covers the insured against all perils in the typical/basic policy and more as indicated by the insurer.
There is the comprehensive policy covers most risks except the most specific ones. These special risks include floods, wars, earthquakes, sinkholes, mudslides, nuclear accidents, landslides, etc. In this type of policy, you get compensation for any other losses except the ones listed by the insurer in the policy cover.
This is one of the most vital things that a homeowner should know. Research also shows that most people who have an insurance policy can’t explain what their policy covers. That is why so many people realize that a peril which they thought was in the policy, didn’t exist. The reason being that they didn’t read a certain clause or exemptions in the policy document.
Before taking a policy, don’t be in a rush. Seek more information and clarification from experts and ask questions until you’re fully satisfied.
3. Considerations for Determination of Premiums
The rates attached to a certain policy are pegged on the degree of risk attached to the property. The premiums that one pays increase with the increase in the probability of a risk occurring. A perfect example would be a house, which is in an area prone to theft and attacks from bandits. Another one is a property in a area prone to flooding. Extraordinary premiums apply in such a circumstance. Furthermore, there are areas prone to occurrence of various unfortunate happenings compared to others. Additionally, if your property has a high value, your premiums will also be high. It is also worth mentioning that cheating about the value of your property is illegal. so, if you devalue or you exaggerate the value, you may result in losses in case the insurer identifies that. So be truthful.
4. Save on Premiums by Employing Extra Measures to Keep your Home Safe
As discussed above, the degree to which a particular risk can occur determines the premiums that you will be paying. Luckily, you could earn a discount for instance by installing systems that will mitigate the occurrence of a peril. They include; installing a burglary alarm, and dead bolt locks. Updating the heating, and electrical system in the house, etc. That means the company will not demand premiums for what they won’t cover. It means excluding all losses that result from what you decide to ignore.
It is important to note that this move could cost you dearly. This is because you will not lay claims over what you do you get a cover for. Before taking this decision, ensure that the measures you put in place are strong and will not fail you. Ensure you do anything that you think will not only keep your home safer but also save you a few bucks.
5. Understand How to File Claims
Risks do occur and may result in massive destruction of property. In such a scenario, you may find yourself scratching your head not knowing where to begin. It means making frantic calls to relatives and friends in a bid to consult on what you should do. You do not want to find yourself in such a situation. That is the reason why before signing any agreements with the company, you should understand the formalities you’re to follow when filing claims. Bug the agents with the questions. Contact the support team. Anything that clears out the doubts leaves you comfortable to take the next step. Otherwise, it might take the eternity to get a compensation. compensation means getting reinstated to your initial status before the occurrence of the tragedy
6. Save Money by Purchasing Auto and Home Insurance From Same Company
Most insurers offer discounts to those who buy both vehicle and home insurance policies. They will consider you even if you do not buy them the simultaneously. You get a discount for either auto or home insurance, whichever comes second. But, the situation could be a little bit tricky. This is because it may be cheaper purchasing from another company. Do not be duped into thinking that that is the best deal ever. Even if the company offers you that discount, it should be less expensive than buying the same policy elsewhere. In such a situation, you need to ensure that you do your research and decide the way forward.
7. Find a Reputable Company
Quality matters in every aspect. You might fall into temptation and go for that company that offers standard policies, but it might be wise. Get to know more about the company. If their website has a lot of positive reviews about the quality of services offered that they offer. It implies that the company honors its promises and values it’s customer. This point makes sense when claiming for compensation with no success. Such rogue companies exist. Again, do not go for new entrants as their legitimacy is little or not known. Efficiency and quality services matter a lot
8. Keep Safe a List of all Your Asset
Let’s assume that a peril occurs and loss happens. For example, the house catches fire and burns everything to ashes. The last thing you would want to do is to trouble yourself trying to prepare another list. While getting the list is important, you cannot store in a cabinet inside your house. Take it together with other important documents and store them elsewhere. When a need arises, you will only approach the custodian to access to the document. Banks also store such valuable items.
9. Insurance Policy Cover Can be Void
By paying premiums, you enter into an agreement with the insurer as the insured. What this means is that it demands that both parties keep their promises. If it happens that either of the two parties has gone against what is in the agreement, then it ceases to apply. Suppose a homeowner, in a bid to claim for compensation, decides to set his/her house on fire. In that case, the cause of the fire is not captured in the documents signed. The party has gone contrary to the agreement. If there is proof and after an assessment, they determine the actual cause of the fire, then the owner will not get any compensation.
The insurance agent may also provide misleading information to the clients to fool them into buying a cover from their company. It happens due to the high competition in this industry. The agent might convince the homeowner that they cover a particular risk while they do not. If the insured bought premium because of misleading, then he can sue the company. If the court determines the case in favor of the client, then he/she wont get a compensation. That’s what it means by void.
10. The Backbone of Insurance
The best basis when understanding insurance is comprehending the seven principles of Insurance. You don’t need to go deep into understanding them, but the basic understanding is vital. They include the famous principles of insurance.
- Principle of Uberrimae fidei, also referred as, the principle of utmost good faith
- Principle of Insurable Interest,
- Principle of Indemnity,
- Principle of Contribution,
- principle of Subrogation,
- Principle of Loss Minimization, and
- Principle of Causa Proxima also referred as, the Nearest Cause
By now you know the value of getting an insurance cover as a homeowner. And that is not all. Now that you’ve got all the insurance hacks that will assist you as an owner; to identify an insurance company and to decide the policy cover to buy. To maximize the benefits of the cover and to make claims for the compensation, in the face of uncertainties, you cannot risk staying without a cover. Go ahead and get the policy cover of your choice and secure your home. Relieve yourself all the stress and the troubles of worrying over the safety of your assets.
From the principles of insurance, you as the insured should not contribute in any way to the occurrence of a loss. if you do, you may not get compensation. In fact, you’re supposed to take any measure and try your level best to deter and minimize the occurrence of a loss. That’s not all, you’re supposed to be sincere and provide all relevant information when taking a cover.