Since purchasing a home may be the biggest investment you ever make, it’s no surprise that you should acquire homeowner’s insurance to protect that investment from damage, theft or natural disasters like a hurricane – especially here in South Florida.
While homeowner’s insurance sounds simple enough, don’t be fooled. There are a lot of working parts to a homeowner’s insurance policy. So if you’re in the market to buy a new home or condo, read more below to learn about the basics behind policies, premiums, claims and little bit more.
Policies and Coverage Varies
Depending on the insurer and where you live can affect the type of policy available to you. However, an HO-3 policy is the most common type of home insurance found and it provides you with what is called “open perils coverage.” What that basically means is that it protects your home from all disasters, except those that are explicitly omitted in your policy. An HO-5 covers a little bit more than the HO-3, including your personal belongings. Condos have a specific policy called an HO-6.
In addition to the different policies available, there are also different levels of coverage and the more substantial the coverage, the more expensive the policy.
Cash Value Coverage pays to fix or replace your property and possessions up to the policy limit, with a deduction for depreciation. While this is the least expensive option, take note that in many cases you won’t receive full repayment to rebuild or replace items should a massive disaster occur.
Replacement Cost Coverage pays to fix or replace your property and/or possessions up to your policy limits, with a deduction for depreciation. While more expensive than the aforementioned cash value coverage, replacement cost coverage means you could get full repayment for what was lost.
Guaranteed Replacement Cost Coverage is the most expensive option, but it guarantees that your coverage will cover the costs to restore your home to the way it was before the disaster, regardless of your policy limit.
It’s important to note that flood insurance is not typically covered in your home owner’s policy and you’ll more than likely need to purchase flood insurance separately if you live in flood prone areas.
Limits on Personal Belongings
In most cases there is a limit on coverage of personal belongings should a disaster or theft occur in your home. For example, if you lose a ring worth $5,000 dollars, chances are you will not be fully reimbursed for that loss. So, when your shopping for a home owner’s insurance policy, pay special attention to the coverage details before making a final decision.
Maintain Your Home
A neglected home can raise a red flag to an insurer if damage has occurred and your seeking reimbursement. Insurers will often make the case that your home was damaged because you neglected to maintain your property resulting in your claim being denied. It’s common sense – but if you have a leak, fix it.
Your Credit Matters
Similar to a credit score, insurance companies use credit-based insurance scores to grade you and determine which customers are more likely to file claims. This score looks at your debt, length of credit history, whether you pay your bills on time, etc. The higher your score, the lower your premium will be. So yes, your credit matter a lot when it comes to the type of homeowner’s insurance available to you.
Document what you Own
Create an inventory of everything you own and their appraised value. Because if and when a disaster strikes, having those receipts, contracts and appraisals in a secure and protected location will make it much easier when it comes to filing a claim.
Your home is a major investment and homeowner’s insurance is smart an effective way to protect one of the most valuable assets you own. However, if you have sustained damage and losses in your home or business following a disaster, or are currently involved in a claim that is being denied, underpaid or delayed, contact our Miami property insurance claim attorneys at the Acle Law Firm today at 305-447-4667 for a free consultation.