Homeowners insurance isn't a luxury; it's a necessity. And not just because it protects your home and possessions against damage or theft. Mortgage companies generally require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price), and won't make a loan or finance a residential real estate transaction without proof of it. Homeowners insurance costs can vary by insurance carrier, and there are many things that can affect the cost of covering your home. Let’s explore some of those.
Put it all on video
In the unfortunate event of a burglary or fire, making sure you get full value for your belongings is always a challenge because your insurance company will want a complete inventory. And they’ll want proof of claims relating to any lost expensive items. So don’t try to commit your home inventory to memory. Instead, put it on video. Walk through your home – opening doors and drawers, and don’t forget your clothing – and talk through the belongings in your home as you record everything on video. Don’t skip the garage. Take all the time you need to make sure you capture everything. And keep receipts for all major purchases. Be sure to upload your video and receipts to the cloud in the event of a fire or other disaster.
Personal liability for damage or injuries
Liability coverage protects you from lawsuits filed by others. This clause even includes your pets! So, if your dog bites your neighbor, your insurer will pay the related medical expenses. And speaking of dogs: Certain breeds can preclude coverage and lead to larger insurance premiums. Damage doesn’t even have to happen to your property for it to be covered.
Install a security system
There are many inexpensive and effective options on the market. You can get a break on your insurance premiums, and if the house next door doesn’t have a security system, but yours does, guess where thieves are going to go first.
If you have (or want) a swimming pool, you better love it, because it will increase the cost of your homeowners insurance. And you’ll need to have a fence around your pool, and not just your yard. Your pool needs to be always secured, and the better you secure it may have a positive effect on your premiums. Here’s what insurers will tell you about trampolines: Don’t get one. Few companies will insure a home with a trampoline. On the lighter side, exotic animals are another bad idea. Although a city or homeowners’ association may not specifically prohibit it, a tiger in your backyard will put you in the doghouse with an insurance company.
Fences make good neighbors, sometimes
If you share a fence or a wall with a neighbor and it falls or blows down, the coverage on your insurance policy is likely 50%. If you and your neighbor are on good terms, it usually works out. If not, or if you have a difficult neighbor, you could wind up paying more than your fair share. And note that trees and other items that could damage your property. A dead tree in a neighbor’s yard could become your problem if it falls on your fence or your house.
Many policies cover food spoilage
Power outages happen, and when the fridge shuts off, most of the food inside will spoil within a few hours. Contrary to popular belief, you can file a claim and have the food’s value covered. Also, if your house burns down, you should add the food’s value to the list of insured items.
What isn't covered by homeowners insurance?
Although homeowners insurance covers most scenarios where a loss could occur, some events are typically excluded from policies, such as natural disasters or other "acts of God," as well as acts of war. If you live in a flood or hurricane area, or an area with a history of earthquakes, you'll want riders for these, or an extra policy for earthquake insurance or flood insurance. There’s also sewer and drain backup coverage you can add on.
Weird items that may be covered
The chances of a plane falling from the sky are slim to none, but it’s covered in many homeowners insurance policies. There’s a line that covers everything falling from the sky, ranging from airplanes to tree damage. Check your policy to see if you’re covered. Whether you live in a rural or urban area, there’s a high chance your home insurance policy protects you from damage caused by wild animals. Your policy also likely covers meteor damage. That’s right; a rock from outer space can’t break your insurance policy. Before you look outside and wait for it to show up, keep in mind the odds are less than 1 in 1,000,000. Although it’s not as common, some insurance will deal with ransom requests and demands.
We realize it’s a lot
There’s a lot to know about homeowners insurance, and rules of coverage change all the time and can vary by carrier. It’s best to carefully read through your policy every year and note any changes. Have any questions? Ask your agent to explain anything that you have questions about. And be prepared to shop around for the best deal on the best coverage.