How to Determine Homeowners Insurance Coverage
Many homeowners are required by their mortgage company to purchase homeowners insurance, but many homeowners fail to read their policy coverage until after disaster strikes. All homeowners should review and understand their homeowner’s insurance policy and should choose the right coverage.
- Determine your current coverage. Basic homeowners insurance typically covers damage by fires, windstorms and ice. Floods and earthquakes are generally not covered by a basic insurance policy.
- Consider what you need. If you live in an area prone to flooding or earthquakes you may want to add extra coverage to your insurance policy. People living in flood zones may be entitled to participate in the National Flood Insurance Program.
- Check your current replacement policy. The replacement policy assists homeowners in replacing the items inside their home. Replacement policies provide the homeowner with a certain amount of money if their belongings are damaged. If you have expensive works of art or jewelry in your home, you may need to name these items individually on the homeowners insurance policy.
- Decide if the basic replacement policy is enough. If disaster struck today, how much money would it take to rebuild your home and replace belongings? If the answer is more money than provided in the replacement policy, you may need to call your insurance company to have the replacement amount adjusted.
- Budget for the deductible. Some policies may have a high deductible, which is the cost you must pay the insurance company before they act on your claim. Set aside money to help pay the deductible in the event of a disaster.