The Ins and Outs of Home Insurance

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Very few homeowners know the ins and outs of home insurance even though this is a very important aspect of their lives, and a very critical component of their budget, too. As with everything else, it will do you well if you take the time to understand your homeowner’s insurance so that you are able to upgrade it, when needed, or to make a claim against it, or even to get discounts and savings from it – in short, to manage it.

Let us first investigate why you need to upgrade your home insurance policy, and when. Any insurance policy will only be value-adding if it provides enough coverage for you, and an insurance that leaves you with little or no protection at all, is just as good as a non-existent insurance policy.

When you insure your home, you are asked to take stock, or audit your home, and declare the value of your home, including the structure, the furniture and appliances, and the other contents that are valuable and you want replaced if it ever was damaged. You usually do this by going through every room and listing down the valuable things and anything, really, that you would want covered against fire, or storm, or theft. You usually include here the appliances such as computers, television sets, furniture, stove, paintings, antique pieces, and sometimes even jewelry. The structure itself is valued through construction documents such as bill of materials, construction plans, and other engineering documents used to build the house. Do not think, however, that you should just declare everything inside the house and apply it for coverage – remember that it will all redound to the price of the premiums that will be asked of you and so you should still exercise prudence in valuating the contents of your home, unless you are willing to pay for sky-high premium prices.

Over the years I am sure that you have made improvements to your home, whether with the structure (added a new room, changed the tiles, etc) or with the contents (bought a plasma TV, had stereo surround system), and if you do not upgrade your homeowner’s insurance policy, these improvements and additions will not be covered by the policy in case of a claim and you will be left with not enough coverage. In fact, most insurance companies will advise you to inform them of any changes you will be doing to your home that will affect your homeowner’s insurance policy, even before you go ahead with the changes.

Now, let us move on to how you can get potential savings from your homeowner’s insurance policy simply by understanding it well. Your insurance premiums are always computed based on how risky your insurer will rate your home to be, so the trick to getting less premiums, and therefore getting some savings, is to make your home less risky. The usual risks taken into consideration are the occurrence of fire and theft, and there are proven and accepted ways on how to reduce these risks.

Common practices are installing alarm systems and changing your ordinary locks into dead bolts, which will surely reduce the chances of common thieves into breaking and entering into your home. On the other hand, risk associated with fire can be reduced by installing smoke detector systems and changing your electrical wiring system to make it safer and even putting fire extinguishers in strategic places of the house can result to lower premiums. Again, the important thing is to inform your insurer of the changes you have been doing to improve your home, and if they can’t adjust your policy immediately, they will do so at the next renewal period.

A home is probably one of the most important and expensive investments and assets you own, and it is only appropriate that you give it the proper importance it deserves. Do not think of scrimping on a few dollars but getting little or no protection at all for your home, you will be glad that you have invested in your home insurance plan in the long run.

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