UNDERSTANDING YOUR HOMEOWNERS OR RENTERS INSURANCE
How much is too much or too little?
You are more likely to not have enough than too much. Rates will vary based on needs. Property and casualty apply to those who own a vehicle or rent or own a home.
Having proper homeowners’/renters’ insurance
If you are a renter, be aware that if there is a fire that destroys the building you live, someone gets hurt in your place of residence, or you have a dog that bites someone, you may be financially liable or at a loss of destroyed personal property and no money to find another place to live.
How much would it cost to find a place to live, and have it refurnished especially if you live paycheck to paycheck? Renters insurance can provide financial relief by providing the cost of a place to live, paying for medical, or replacing damaged property.
For standard coverage it might be around 20 dollars. If you own less than standard it could be less per month. The insurance also follows you. If you went on vacation and brought your laptop or left it in the car and it was stolen, you would be covered.
Homeowners need to be aware of the increased values of their home over time. The value of the home didn’t increase, the cost of land increased.
When I moved in with my uncle to help care for him in his later years, I was looking over his insurance policies and noticed his homeowner’s insurance, he was underinsured.
If there was a fire causing a total loss and he needed to rebuild, he would have had to build a much smaller house, because of inflation costs. Don’t pinch pennies, it could cost you dollars.
There is also something called “inflation guard” might be available. Inflation guard protects the insured from the cost of inflation when construction prices increase. You will have to ask for it. Most agents won’t bring it up.
Let’s say you are covered for inflation but there is a natural disaster and costs of materials increase because of the demand during this crisis. Inflation guard doesn’t cover that cost, but an extended replacement cost will.
Consider the value of your possessions in your home, are you insured for replacement cost or actual cash value? If it's actual cash value, then everything in your home that was destroyed would be the cost to replace or repair it and then subtracting the depreciation.
The replacement cost would not depreciate the property that was destroyed. This includes the home itself.
If your home becomes temporarily uninhabitable because of a natural disaster, consider rental coverage. Factor in what rents or hotel rooms are in your area
Homeowners that want to protect the home and not factor in depreciation should choose replacement cost.
Maybe the natural disaster wasn’t total, maybe the electricity went out and all your food spoiled, yes that is covered also.
Most natural disasters are only covered if you add that on to your policy.
Certain dogs that have a reputation of being aggressive may not be covered if they bite someone. Check your insurance.
If all your possessions and assets are valued beyond 500k you might consider having umbrella insurance. It’s inexpensive, I think I pay $8 a month for mine.
If you enjoy hosting parties at your home or even if it's cookouts with family and friends, you might want to add medical if someone gets hurt.
They can charge early termination fees, and when looking for insurance pay attention to early termination fees and other hidden fees.
This may be a shock, but some states in the U.S. can base your premiums on your credit score.
One insurance that I got rid of as soon as I qualified was my Private Mortgage insurance (PMI).
PMI is required for anyone financing a home with less than 80% of the home’s value. This is very common in rural areas where I lived. There are requirements that must be met to qualify: meet the 80% value, no late payments, good credit, and no second mortgages.
Be careful of quick settlements, they can be costly. You get paid quickly, so that the insurance company doesn’t have to pay as much as you are entitled to. They sound good, but good policies are usually the slowest to pay out.
These are the little things that get overlooked when purchasing insurance that can cost homeowners and renters dearly, especially those with moderate means. They are the least likely to recover from losses if they aren’t insured adequately.