THE FALLS INSURANCE CENTER, INC.
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In the event of a serious loss – let's say it's a fire that destroys the
house – what would I do?
In most cases, you want to insure your dwelling and its contents for their replacement values, which likely will differ from the dwelling's market value and your personal property's depreciated cash value. You probably also should get a policy with automatic inflation adjustments so that the replacement cost keeps pace with the general level of price increases. (Homes insured under HO-8 policies are only covered for repair costs or actual cash values, since replacing them would be so costly. Owners of such homes could always get replacement insurance under another type of policy, but they would probably pay astronomical annual premiums.) Standard coverage normally insures your possessions at 50% of the value of your dwelling. Many people boost this coverage to 70% or 75% with additional protection. But there are still individual limits on certain types of personal property (see below). Free-standing structures on your property (garages, gazebos, tool sheds) are also covered, with standard protection equal to 10% of your dwelling. Trees and shrubbery normally can be replaced up to a limit of 5% of your dwelling coverage. As is the case with your personal property, you should assess your needs to determine if you want to pay extra amounts to increase these levels of protection. Also, pay attention to what might happen if you were to lose the use of your home for an extended period. Loss-of-use provisions are important elements of homeowners' policies, and coverage levels equal to 30% or more of your dwelling's insurance aren't unusual. If someone who is not covered on my health insurance were to suffer a serious injury in my home, and I was found liable, how would it affect me? The standard level of liability protection in homeowners' policies has been $100,000, but it's rising all the time. Today, $300,000 is not an uncommon amount, and even higher levels are recommended for affluent homeowners with lots of assets to protect. In this situation, "umbrella" policies have become popular. These policies provide excess liability coverage on both your homeowner and automobile policies, and are not that expensive (you normally need to carry both underlying policies with the same insurer).
Do I have certain possessions – computer equipment, cameras, jewelry –
whose replacement values far surpass normal coverage limits in my policy?
Standard policies may not come near covering the replacement costs of even
moderate amounts of home electronics hardware or expensive possessions. For
relatively small amounts, you can purchase "floaters" that will add protection
to certain types of personal property. In addition, equipment related to a
home-based business may not be covered satisfactorily unless you obtain
additional protection.
Can I afford a high deductible – say $1,000 – in order to save money on the
policy?
The differences in annual premiums between policies with
deductibles of $250 (you pay the first $250 of damage, the insurer pays the
rest), $500 and $1,000 may easily be worth 20% to 30% of the annual premium.
So, if you can afford the expenditure, and want to place a small bet that you
won't face a home-related loss, consider a larger deductible. What other
protections does my policy provide? Homeowners' policies regularly provide
other types of coverage, including off-premises theft protection and
unauthorized use of your credit cards. Make sure you understand which
provisions are included in the standard coverage you elect to purchase and
which may require supplemental premiums.
What other protections does my policy provide?
Homeowners' policies regularly provide other types of coverage,
including off-premises theft protection and unauthorized use of your
credit cards. Make sure you understand which provisions are included
in the standard coverage you elect to purchase and which may require
supplemental premiums.