The purchase of a home is the largest asset purchase that you will make during your lifetime. This fact alone makes a good case for you to make sure that you insure it properly with the very best coverage to protect your investment. You do not buy coverage for the benefit of the mortgage company you buy it for your and your family. I want to give you some suggestions as to how to buy the coverage you need.
Total Replacement Cost
Total Replacement Cost or Replacement Cost is a term that you will hear over and over here and from your agent. Today in Whiteside and Lee county you can buy a home at 33% to 50% of it's replacement cost. If after a major claim would you like to have perhaps 1/2 of the funds necessary to repair or replace your home? NO!!! If you have a claim your have a reasonable expectation that the insurance adjuster will write you a series of checks that will pay you to completely repair or rebuild your home with you just having to pay the deductible.
Insure your home correctly
Now, how do you correctly insure a home. The first thing is to contact a professional agent with a great deal of experience in doing Replacement Cost Appraisals. His job is to come to your home and measure it, photograph and inspect the exterior, then inspect the major mechanical components of a home: electrical, plumbing, and heating. He needs to make sure that your components are reasonably up-to-date and are installed safely. When the agent returns to his office he will have all the information that he will need to determine the Replacement Cost of your home. We have access to the most up-to-date internet programs that he will imput your information and get a final figure that both he and the insurance company can depend upon to be resonably accurate. The final piece of the information is to find a company with a great rate that fits your home as surveyed.
How to cut your rate
You have one major item that you can use to cut your rate. The deductible. The days of $100 or even $250 deductibles are long gone. Now we are looking at a standard $500 deductible with $1,000 being a valid option for larger homes. Most mortgage companies and banks will accept the $1,000 deductible if you make them aware of your intention and the reason. You may be able to save 20% by going to a $1,000 deductible. It does not only a couple of years to same the difference. If you get resistance you can ask them why are you going to loan me $XXXXX if you feel that I am not responsible for the difference of $500.
The other big way you can get a better rate is to have an excellent credit score, perhaps insuring your house with the same company as you insure your car or at least with the same agent. That works part of the time and only if your auto agent is local and is an excellent homeowners underwriter. The third thing you can do is to install an alarm system wired to an off-site service. They should protect you from burglery and fire. Make sure that your agent gets the information about your system.
Beware of "quick quotes" or very cheap rates
Do not buy coverage based upon a cheap rate quote. Many agents will give you a "ballpark" rate on the phone or even an agent that will write your a policy based upon that rate even though they have not inspected or even measured your home. Those companies agents depend upon inspectors that will come to your home at a later date and determine what coverage and what plan you need. At this point you can get a cancellation letter, a large adjustment billing, or even a new policy (the one that the insurance company determines that you should have not the one your signed for). We have 50 years of experience writing homeowners with what is described as an exceptional job of underwriting. One company feels that Jon Mattox does such an excellent job that they appointed him to their Board of Directors.
How to get free additional coverage on your home.
When you have Replacement Cost coverage on your home it generally means that if your home is destroyed by a covered peril you can rebuild on your lot with up to 125% of the insured value of your home. Sure there are some stipulations but if you work with your adjuster you will be close out your claim with a new home. Just think of Joplin, Mo, Moore, OK or now Dallas, TX. Do you think they could use this coverage?
In addition to your home your personal possessions (contents) can be covered for Replacement Cost. This is so important that we will not write even a renters policy with out this endorsement. You do not want to think about how much they can depreciate your possessions. We want you to be made "whole" if you have a claim. Again, you need to carefully work with your adjuster as you replace your possessions.
Automatic additional benefits within your policy.
Everyone knows that your homowners policy covers your home and its contents but it has a lot of other benefits. Generally it has 10% of the value of the home for other structures such as a lawn shed or a detached garage. My times there will be coverage on your backyard pool but there can be limitiations so you need to read your policy carefully or speak to your agent. You may need to purchase additional coverage for the pool. Remember too that most insurance companies requre that you have a 6' fence with a locking gate to protect the pool and your youngesters.
You will also have additional living expenses that will pay the extra expenses that you would encur if you were forced to live outside your home due to a claim. The adjuster may offer you a flat dollar amount per day or you can opt for actual incured extra expenses. Please note that you may go on vacation and collect additional expenses.
There are built in limitations on luxury items such as furs, art, and jewlery. You need to consult your policy for the limitations. My advice is that you schedule the luxury items and purchase "all risk" coverage on them to cover accidental breakage.
Personal Liability and Medical
Your liability will cover personal injuries and property damage that you or your family cause. Yes, there are exceptions but it is pretty comprehensive coveerage that can be expanded with you bundling both your home and auto liability under and into an Umbrella Policy with a minimum limit of $1,000,000.
Your coverage should be at least $300,000 with $500,000 or $750,000 a better limit. You Medical coverage is for small injuries that occur on your property that you and your family are responsible for paying. These may result in a liability claim but the adjuster will try to work with the injured party to settle the claim within your medical limits. Your medical limits may be $2,000 to $10,000.