Do You Know What Your Property Insurance Covers?

Most people don’t give much thought to their property insurance policy until a weather emergency, fire, or other type of incident causes damage and they need to make a claim. In fact, nearly 60 percent of 1,000 homeowners surveyed by Insurance.com didn’t know what replacement value meant. An additional 50 percent couldn’t describe what their policy covered and almost 25 percent didn’t know the dollar value of their property insurance policy.

This lack of knowledge can cause confusion, frustration, and unnecessary delays when it comes time to file a claim. It also means that many homeowners have inadequate insurance coverage and could be out thousands of dollars when they experience some type of property damage.

Do You Know What Your Property Insurance CoversWhat is Homeowner’s Liability Insurance and Why is It Important?

The homeowner’s liability portion of your property insurance policy covers the expenses another person incurs when sustaining an injury on your property. It usually covers damage that you caused to someone else’s property as well. Having an adequate amount of liability coverage is especially important if someone files a personal injury lawsuit against you. It would cover your attorney’s fees as well as pay out the claim to the injured party. As a lawsuit can become costly in a hurry, it’s to your advantage to select the highest amount of liability coverage available.

How to Get the Best Deal on Your Property Insurance

You’re not alone if you feel confused and overwhelmed by insurance requirements when you purchase your first house. It’s best to take your time and contact several companies to compare cost and coverage limits before choosing the best one to meet your needs. In addition to liability coverage, here are some terms to look for when comparing policies:

  • Actual cash value: This portion of your policy provides the current dollar value of your property less any depreciation.
  • Deductible: A deductible is an amount subtracted from your benefit that you must pay before the policy kicks in. You don’t pay it to the insurance company or the party filing a claim against you directly.
  • Personal property: This portion of the policy covers items damaged or destroyed inside of your home such as clothing, computers, and other electronics.
  • Premium: The premium is the amount you pay for property insurance annually or monthly. Mortgage companies typically include the premium in your monthly house payment although another company handles claim details.
  • Replacement cost: This is the actual dollar value to replace your home or property within your home. Be sure to estimate the value of your belongings appropriately to ensure that you have enough coverage.
  • Sub-limits: An example of a sub-limit is imposing a maximum $250,000 value on a $500,000 policy.
  • Rider: A rider covers specific high-value items such as jewelry, antiques, artwork, and electronics.

You should understand each point of coverage the policy offers as well as the maximum dollar amount you can claim against it. As an insurance broker representing over 100 carriers, Alliance is happy to provide you with multiple options that best meet your needs and your budget.

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