Home Insurance: What you need to know

 

Whether it's your first home or tenth, updating your homeowners insurance is vital to protecting your property and possessions. Yet according to a 2017 NAIC survey, 56 percent of homeowners haven't reviewed their insurance policies in more than a year; and 14 percent are unsure when they last reviewed their policies.

The facts:

According to the NAIC Homeowner's Report, a typical U.S. home valued at $250,000 costs about $1,100 per year to insure. However, that cost could vary due to features of the home, nearby development, construction costs, population density, and/or risk of catastrophic natural disasters.

Flood is not covered by a standard homeowners policy:

Water damage from a home's plumbing or a leak in your roof is typically covered. However flood damage or destruction from ground-water or rain runoff and snow-melt is not. Flooding is a risk homeowners face everywhere in the U.S. and you must get additional coverage through The National Flood Insurance Program (NFIP) or private insurers in addition to your standard homeowners policy. According to Kiplingers, the average cost of flood insurance is about $700 a year.

 

 

The Basics

  • Always shop around and compare the costs of coverage from different insurers to get the best value.

  • For homeowners, insurance protects your home's physical structure, as well as your personal property.

  • In contrast, renter's insurance only protects your personal property. Your landlord's insurance only protects the building, not your personal belongings.

Types of Protection

It's important to read the fine print to really understand what coverage you are getting. Find out more about the types of coverage usually listed in your insurance policy.

Understanding Premiums

Your home insurance premiums may be affected by a number of factors including:

  • Your home's characteristics
    • Age
    • Building materials
    • Wiring
  • Location

  • Protective devices, such as alarms and smoke detectors

Personal characteristics can also affect insurance premiums. Nonsmokers and those with good credit history may pay less. You previous claim history may impact your premium. You may get a discount for purchasing your auto policy from the same company as your homeowners.

Review your coverage

Home ownership changes over time. Re-evaluate your risks at least once a year to ensure your policy meets your needs. An easy way is to create a home inventory and go over it with your insurer to be sure your policy covers your stuff.

While nearly half of homeowners (44 percent) have a home inventory, many haven't updated it in more than a year. Maybe you've expanded your family, renovated your home or added smart technology. Discuss these changes with your insurer so your policy reflects your needs.

What is not covered (in a typical policy):

Flood — water damage from leaky pipes, siding and roofs is likely covered, but ground-water damage from rain, run-off or snow-melt is not.

Earthquakes — damage from earth-movement is more common than you think and may not be included in your policy.

Mold — homeowners policies often exclude covering the cost of damage from mold.

Infestations — damage caused by termites, rats or other infestations are not typically covered.

Home Office — if you store business inventory or supplies at home, it is not likely covered. Failing to disclose a home-business to your insurer could lead to a cancelled policy. Be sure to discuss any use of your home for business and secure appropriate coverage.

Pets — your policy may exclude liability coverage for certain breeds of dogs or exotic pets.

What may not have enough coverage:

Jewelry, art, or heirlooms — a typical policy includes limited coverage for valuables. These limits could fail to fully cover an expensive piece of jewelry, antiques or artwork.

Detached buildings or pool — a shed with lawn equipment is likely covered, however, an in-ground pool or a detached garage with classic cars may require an additional coverage.

Ask yourself:

  • Am I at risk? Are earthquakes, wildfires or other disasters a threat? Do I need a flood insurance policy?

    Floods and earthquakes are not covered by a typical homeowners policy. To cover your home for these risks you'll need to purchase a specific named-risk policy. Recovering from a catastrophic loss requires preparation.

  • What has changed in my home? Did the number of people (and belongings) increase or decrease?
    Have I made any major purchases?


    Be aware that personal property items such as jewelry, antiques and artwork, may need added coverage. If your adult children or aging parents move home, they will likely bring their stuff with them. Evaluate whether more content coverage is required. Maintaining a home inventory can help you recover if disaster strikes.

  • Have I updated my home with a kitchen renovation, new security system or other improvements?

    Many insurers offer a discount if you have a burglar alarm, deadbolts on doors or other security devices for windows. But a new wood-burning fireplace or wooden deck can have the opposite effect.

  • Should I be looking at different coverage? Can I save money by bundling my home and auto insurance?

    Always shop around to compare coverage options and prices.

  • Do I have a home inventory?

    A home inventory is an invaluable tool to use before disaster strikes. Create one to catalog your personal property and include photos or video of each room.
  Home Inventory Checklist ScrAPPbook iPhone App ScrAPPbook Android App  
  Download Home Inventory (PDF) Download myHome Scr.APP.book for iPhone® Download myHome Scr.APP.book for Android®

Life is unpredictable. It pays to know your stuff.

 

Home insurance is important for both homeowners and renters. Homeowners need to purchase insurance to protect their homes and personal property. Those who rent need insurance to protect their furniture and personal property. Everyone needs protection against liability for accidents that injure other people or damage their property.

 

Whether you live in tornado alley, wildfire zones or along coastlines prone to flooding and hurricanes – now is the time to properly insure your home and possessions.

 

Each year severe weather disasters across the country generate billions of dollars in damages. But research suggests more than half of consumers do not have an inventory of their possessions. Now is the time to make sure you have properly insured your 'stuff.'

 

Creating a simple home inventory helps you track what you own and what it is worth, making important insurance decisions easier.

 

How to create a home inventory

  • Group your possessions into logical categories, i.e., by hobby, by room in your home, etc.


  • Your list should include celebration purchases like jewelry and art, as well as everyday leisure items such as televisions and guitars.


  • Don't forget items you use rarely such as holiday decorations, sports equipment, tools, etc.


  • Pull together copies of original sales receipts and/or appraisal documents. Also note model and serial numbers.


  • Carefully photograph or videotape each item and document a brief description, including age, purchase price and estimated current value. Download a home inventory checklist (PDF).


  • Store your home inventory and related documents in a safe, easily accessible place online, on your computer or in a fire-proof box or safe deposit box. Consider sharing a copy with friends, relatives and your insurance provider.


    • The NAIC's free myHOME Scr.APP.book downloadable app lets you quickly photograph and capture descriptions of your possessions room by room, then store your inventory electronically for safekeeping. The app is available for Android devices. Click here to watch the demonstration video.

A home inventory can be invaluable when deciding how much insurance coverage fits your life situation and makes sure you are adequately protected should you need to file a claim.

 

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