21 century insurance
Insurance protects your investment in your home. It can also protect you if you are sued for damages or injury you're accused of causing. You want to be sure you have the right amount and type of insurance , so you're protected when there's a loss. Homeowner's insurance covers your house and its contents, including your personal possessions and valuable articles, against damage or loss. If you rent, you can get insurance just for the contents. There are also special policies for condos and co-ops.
Most homeowner's insurance is sold by agents representing one or more insurers, or you may be able to buy coverage online. You can get bids from several insurers to find the best prices, but you'll also want to check each insurer's reputation before you choose a policy.
Whats covered
Policies vary in terms of the kinds of perils or hazards they cover, and how they compensate you for a loss.
Standard, or named perils, policy provides limited protection and lists the specific perils (for example, fire, theft) that are covered.Broader coverage gives you insurance for all types of losses except those excluded from the policy.
The insurance industry codes homeowner's policies from HO1 to HO8 to reflect the range of coverages, with higher numbers indicating more comprehensive policies. The broader the policy, the higher the premium you'll pay.
You can also get additional insurance for valuable articles such as jewelry, art work, and collectibles for which you pay a separate premium.
Whats excluded
Virtually no basic policy covers losses resulting from war, riots, police actions, nuclear explosion, or "acts of God." You can sometimes get a rider, or an endorsement to your policy, to cover situations that are normally excluded, such as floods and earthquakes, but you'll pay an extra premium for this coverage.
Liability coverage
Liability coverage can protect you if you're sued for causing property damage or injuring someone. Excess liability increases the amount of coverage and may give you added protection for a wider range of activities, such as a leadership role in community or government organizations.
Whats a deductible
Every policy has a deductible, an amount you pay to settle a bill or replace lost or damaged property before you receive a payment from the insurer. Deductibles may vary from a few hundred to a few thousand dollars. You can reduce the cost of your insurance by choosing a larger deductible, but you'll have to pay the amount of any loss up to the deductible.
The coverage you need
You should insure your house for at least 80% of its replacement value what it would cost to repair or rebuild the house at today's prices. But it probably makes better sense to insure your house for its full replacement value. Most companies will automatically increase your coverage and raise your premium each year to cover rising costs. It can also pay to get replacement cost coverage for the contents of your home. Remember, though, that the replacement value is less than the market value, or the price at which you could sell. That's because the market value includes the price of the land on which your home is built.
After a loss
What you receive after a loss depends on your policy's terms the fine print which you should read carefully, and discuss with your insurance agent, before you buy the policy. Not learning how much or how little you'll be reimbursed until after a loss can lead to an unpleasant surprise.
Some policies require you to replace the damaged or stolen property, and then reimburse you for the expense. Others give you the money for the agreed-upon value, but don't require the replacement, so you can spend the money as you see fit.
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