If you're smart, before you pack a single box, you will make sure your home insurance has you covered for whatever life might have in store. While your mortgage lender likely requires you to carry some level of home insurance, don't assume that amount will protect you from financial disaster.
Donald Griffin, vice president of personal lines for the Property Casualty Insurers Association of America (PCIAA), offers these tips.
Tip No. 1: Insure for your home's replacement cost
Here's one of the most common mistakes homeowners make: Confusing a house's market value with its replacement cost. Your home insurance coverage should cover the cost of rebuilding your house if it is destroyed. "The best indication [for coverage] is the cost to build a new home," Griffin advises. "With an existing home, look at the replacement cost rather than the market value." This is often less than what you paid for your home; if you're insuring your house for its market value, you may be overinsuring it.
On the other hand, if you bought a foreclosed home, the price you paid may not accurately reflect construction costs to rebuild it.
To determine the replacement cost, most home insurance companies use software that allows them to enter your home's features and calculate the cost of replacement. In addition, most policies include coverage for up to 125 percent of the replacement cost.
While it may be tempting to use this buffer as a reason to purchase less coverage, the reduced cost may not be worth the risk you take in having inadequate coverage. Griffin says it can be less expensive to rebuild a home than to do extensive remodeling, and many home insurance claims are for only partial damage to a home.
Tip No. 2: Don't skimp on liability insurance
There's the old joke that trial lawyers have never seen a lawsuit they didn't like. That may be an overstatement, but the threat of legal action is a real concern for everyone - especially if you have assets like a house, savings and investments. If you're sued for an incident covered under your home insurance (like a slip-and-fall injury on your front steps), liability insurance covers not only the settlement but also your legal fees (up to your liability limit).
According to Griffin, many liability insurance policies will cover you even if an incident happens away from your home. He also recommends buying an excess liability or an umbrella policy that offers coverage of $1 million beyond what is already included in your home insurance and car insurance policies. These policies are relatively inexpensive, often costing $200 to $300 per year.
"You don't want to lose your home because you failed to buy an insurance policy," says Griffin.
Tip No. 3: Protect your personal property
When you receive a home insurance quote, be sure to review the coverage amount for your personal property. Most policies include coverage equal to 50 to 75 percent of the replacement value of your house.
In addition, you may need a separate endorsement, or rider, for some valuables. For example, coin collections, stamp collections, jewelry, furs, fine art, cameras and other expensive belongings may be subject to limited coverage under the personal property provisions of your plan. When requesting a home insurance quote, ask whether these items need to be listed under a separate endorsement to ensure they are properly covered.
Tip No. 4: Don't overlook coverage for additional living expenses
If your house is destroyed or otherwise unlivable while repairs are being made, you'll be glad you can tap into your "additional living expenses" (ALE) coverage. This type of coverage won't pay your mortgage, but it will cover the cost of an apartment or hotel. If you are displaced from your house, you can make a claim for this coverage by submitting paperwork documenting your living expenses.
The ALE standard for most homeowner insurance policies is a benefit worth 20 percent of your home's replacement value. When you get a home insurance quote, find out if the policy specifies any limitations or exclusions on ALE.
Tip No. 5: Examine what's not covered
Finally, read the exclusions section of your home insurance policy. Understanding what's not going to be covered is just as important as knowing what is - before you ever have to make a claim.
In the end, Griffin reminds new homeowners that it is important to choose a financially stable insurance company. Financial strength ratings are available from A.M. Best, for example.
"Remember," he says, "you are buying a promise from that insurance company that they will be around when you need to make a claim."
And what about customer satisfaction? J.D. Power and Associates releases annual customer satisfaction rankings of home insurance companies. And state insurance departments generally post their annual "consumer complaint" reports on their Web sites.
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Filed under insurance by on Jan 8th, 2011. Comment. 
Getting a good homeowners insurance policy is a smart move. It wouldn't make sense to buy a house and not get the proper coverage to protect such a large investment. It's a good idea to get that coverage but to make sure you're getting the best deal possible it would also be smart to do a home insurance rate comparison to find a company that offers the coverage you need at the most affordable price.
Getting quotes online to compare the rates of various companies is very easy. You simply need to fill out a short form with some basic information and then click a button to get quotes from a number of different companies. To help speed the process along it would be a good idea to have some of the required information ahead of time. You will need to have things like the square footage of your home and the year it was built and possibly even some of the construction materials used.
In addition to this basic information about your home it would also be a good idea to decide how much coverage you want before you go searching for quotes. A lot of people make the mistake of insuring their home for an amount equal to the purchase price. All you really need is enough money to replace the house if it were completely destroyed and the cost to rebuild a home is often significantly less than the purchase price. The reason for this is because when you purchased your home you were buying the structure as well as the land that the house sits on. If you need to rebuild your home you already own the land and you are simply paying for building materials and labor.
A homeowners insurance policy will also provide coverage for some or all of your personal possessions inside the home. It may be a good idea to take an inventory of your personal possessions if you wish to carry enough coverage to replace them in the event of a burglary, fire or some other natural disaster. Some people even take photos or videos of their personal possessions and store these off-site in a safe deposit box.
Once you have the basic information like the age and square footage of your home and you decided on the amount of coverage you want it's time to start getting quotes and comparing the rates. Many websites online allow you to enter this information once and then get multiple quotes from several different insurance providers. Doing this type of a home insurance rate comparison allows you to easily choose the company that offers the coverage you need at the most affordable price.
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Filed under Home Insurance by on Mar 21st, 2010. Comment.
Gerry Tyack is no stranger to a challenge. He served with the Royal Air Force in the Second World War, having lied about his age to join up as a 16-year-old in 1939. After working as a fitter on Wellington bombers, he joined a mobile radar unit driving deep into Germany to pinpoint bomber targets.
More recently, Gerry combined a career as a garage owner with a weekend passion for motor racing. In the Sixties and Seventies he set international hill-climb and sprint records in a series of Porsche, BMW and Brabham cars.
But Gerry's latest challenge has been coping with the aftermath of last summer's flooding. His Cotswold stone home in the town of Moreton-in-Marsh, Gloucestershire, was badly affected as 18 inches of water swept through the ground floor.
The water also flooded into the Wellington Aviation Museum that Gerry, 84, founded in former school rooms adjoining his home in 1990 as a tribute to the RAF personnel who trained at the wartime air base in Moreton-in-Marsh.
Unique books, documents and pictures were ruined. Gerry says: 'The water turned these records into an unidentifiable pulp.'
Fortunately, the building itself was almost unscathed. Gerry says: 'I had every reason to close the museum for good after the floods, but something kept me going.' After some disinfecting and cleaning, the museum was open again within a fortnight.
But repairing Gerry's house took longer. Plaster had to be stripped off the walls, warped floors needed to be ripped up and the kitchen required a complete rebuild.
Gerry parked a caravan in his garden to act as a sitting room and kitchen while the repairs were under way. His insurer, NFU Mutual, paid £60,000 to restore the property and to replace damaged contents. The final recarpeting and redecoration was not completed until May.
Gerry's story is one among many of the lives turned upside down by the flooding. More than 130,000 homes and 30,000 businesses were flooded and 20,000 vehicles were damaged.
Insurers will end up paying more than £3bn to settle claims. Uninsured losses total up to £2bn. Even now, thousands of families are living in temporary housing or caravans. The scale of the floods represented a huge challenge for insurers and loss adjusters. Some managed to handle claims efficiently while others struggled.
Government adviser Sir Michael Pitt was commissioned last year to report on the lessons from the flooding. His final findings are expected at the end of the month but his interim report says: 'There were highly variable experiences of insurers' responsiveness.
'Most homeowners received an immediate response, though some tried for several days to reach their insurer before being able to make contact. The timing of visits from loss adjusters was also crucial... many received visits very quickly while others were forced to wait due to a lack of available loss adjusters.'
Pitt says home insurance companies must adopt common standards in assessing flood claims so householders can get on with clearing out wet and rotting items without waiting for a visit from an adjuster.
Simon Black, head of flood mapping at Norwich Union, says: 'A flood claim isn't like any other claim that we deal with. Homeowners have to live with the aftermath for months on end.
'We have learnt lessons on how we communicate with customers. When someone is going to be out of their home for months, sitting down to discuss rebuilding one week after the shock of a flood is difficult. It may be better to let someone settle in alternative accommodation, then a month later start planning for the future.'
Many of those who were flooded now face increased excesses - the amount they have to pay towards the cost of any future flood claims. Black says: 'We have had to look at £5,000 excesses where someone has a big house and lots of assets to protect.'
NU has increased household premiums by about 10% since last summer, though it says this is not only because of floods. For flood victims unhappy with the deal being offered by their insurer or the claims service they experienced last year, getting another quote is not easy.
The comparison website moneysupermarket.com recently analysed quotes for high-risk postcodes across the UK. It found that in cases where a property had been flooded within the past year, on average only three out of a total of 60 insurers were willing to quote.
The huge losses have also raised questions over whether insurers can continue to provide universal cover against floods. Under an agreement between insurers and the Government, insurance companies promise to offer flood cover to all homes where the risk of flooding is less than once every 75 years and to those in higher-risk areas where flood defences are planned.
In return, insurers asked the Government to boost flood defence spending and to change planning laws to stop building on flood plains. Insurers are reviewing the agreement and there is a chance that some homes may be left without cover.
Black says: 'Newly built properties in high-risk areas will become increasingly hard to insure unless they are built with flood resilience measures in mind.'
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Article Source: ArticlesBase.com - Home Insurance Will be a Struggle for Natural Disaster Victims
Filed under Home Insurance by on Jan 14th, 2010. Comment.