What are some common home insurance tips?

Management of problems and regular maintenance go a long way toward preventing costly homeowners claims and stopping very steep increases in your home insurance policy prices.

If you think that costs have risen just to cover your house over the past decade, you are not imagining it.

In ten years time, double-digit increases have plagued homeowners everywhere.

In particular, Minnesotans have been given the brunt of increasing premiums because of storms. However, if you are a millennial, then you likely missed the past 10 years of joys and pain of home ownership, and are new to owning a home. Not to mention the struggle that you may face in finding the right real estate agent.

Use the FREE comparison tool above to start searching for home insurance quotes.

Purpose of Homeowners Insurance

Home owners insurance is an obligation most people are forced to buy as a contingency to their mortgage, or even their homeowners’ association. In other words, if you buy a house and are financing it through a mortgage, the bank does not want to be stuck with a loss.

If a house burns down and there’s no insurance, how would you rebuild? Your bank knows you probably are financing because you did not have the cash to buy the structure and land in the first place.

Maintenance Responsibilities and Preventive Measures

The idea is to not make claims on your homeowners insurance policy unless it is a major catastrophic loss. Yes, you make a claim on theft if all your fine jewelry is stolen.

However, it is better to not have to make the claim because you were able to protect your belongings.

Basically, insurance is for emergency and disaster situations. Therefore, everything you can do to prevent claims is wise.

There are four main areas that a homeowners policy covers:

1. Domestic Structure
2. Property Structures
3. Liability
4. Personal Property

The domestic structure coverage solely protects your house. Other structures include fences, jungle gyms, decks, gazebos, sheds, and anything else that is built on your property, beyond your house.

The liability coverage pays out on valid claims if anyone is injured on your property or within your house.

If you have a tremendous personal net worth, you may want to purchase additional insurance policies, such as umbrella insurance, which may provide upwards of 1 million dollars in liability.

Rather than get sued, your insurance company’s lawyers go to bat for you, additionally paying out on claims for you.

Personal property is covered to specific limits. If you have any antiques, fine jewelry, expensive recording equipment, or sports memorabilia, just to name a handful of expensive items, consider getting additional riders and insurance.

To ensure that you get claims paid in a timely manner for the items you actually have, make an inventory complete with photographs and receipts. For the most part, theoretically, if you make a claim for 30,000 dollars and you have paid for the insurance, yes, the insurer should pay it. But, that’s not really how insurance works. They have to validate your losses and will pay out accordingly.

In particular, with the increase in storms and increased population living at hurricane-prone coastal areas, damages are expensive these days. The insurance carriers work is to monitor risk.

Here are measures you can take to lower your insurance premiums, prevent damage, and prevent claims:

1. Install a burglary and fire monitoring system and subscribe to a monitoring company
2. Install and activate alarms
3. Have working smoke detectors with fresh batteries
4. Have fire extinguishers
5. Purchase fire-proof safes and put high-ticket valuables in them with unit bolted to cement floor
6. Take Fido to dog training classes until he learns how to stop biting
7. Repair leaky roofs, broken siding, and windows as soon as they break

Start by making regular maintenance a priority. Every quarter or half-yearly, inspect siding, roofing, windows, and heating and air units for wear and tear, and signs of problems.

Here is the reasoning behind these suggested moves. Most claims that are preventable include dog bites and mold removal and remediation. Both are considered unnecessary and will be questioned by your insurance carrier’s claims adjuster if you claim them.

It can result in delayed processing of claims, non-renewal of your policy, and other less-than-stellar consequences. Not to mention claims result in huge hikes in insurance policy rates.

Prevent dog bites and mold damages. Period.

Making an Inventory

Tips to creating an inventory are few but are labor intensive. For one, take a video or pictures of your belongings. Get serial numbers and model numbers as well.

Keep receipts as a way to prove that you owned the items and how much they cost.

Of course, you will have something called replacement value insurance, rather than actual value.

Replacement value ensures that you are remunerated for the value that it costs to buy your same items today. Actual value pays you as if the items were in used condition.

Generally, replacement value is the only coverage offered these days.

However, you can never be careful enough, and it is therefore advisable that you read the policy details.

In addition, be sure to purchase something called inflation guard. It assures that the carrier will cover changes in costs to rebuild over the years. For instance, if your area is ravaged by a terrible windstorm and everyone’s roofs are torn off over five square miles, your carrier would cover the roofing and rebuilding costs.

What often happens when there is widespread damage to one area is that there is a run on building materials.

This in turn causes price gauging, because there is a shortage of available construction goods.

Without inflation guard, your insurer would turn to you to fill in the financial gaps.

Inflation guard guarantees that your home gets rebuilt regardless of how much the materials cost.

Shop Around and Compare Quotes

When you are looking to buy coverage, put in the honest and most up-to-date information about your house and situation. Be mindful of any changes in your belongings, and adjust accordingly.

If you recently added on an addition, be sure that the costs to rebuild your house are upgraded to reflect the addition or any other renovations.

1. Only do business with carriers who have a high creditworthiness rating
2. Make sure you can afford the deductibles
4. Buy plenty of insurance to rebuild your house
5. Be sure you are comparing equal limits and deductibles across carriers

From there, choose the carrier that demonstrates a commitment to providing services when you are under duress.

For instance, it means paying out valid claims efficiently, rather than dragging its feet and attempting to skip out on its obligation, as defined in your homeowners insurance policy.

Review customer service comments and ask around among family and friends to find out what companies were useful in times of need.

Insurance is necessary and is there for you in an emergency. That’s its most basic purpose. Prevent claims and shop around for coverage to make sure you get the best rates. Use our FREE tool below!