Homeowners Insurance Notes PDF

Homeowners Insurance Notes Preview Questions Why do you think people have homeowner’s insurance? Give 3 examples of when you think someone might need to use their homeowner’s insurance. Do you think homeowner’s insurance is mandatory to have by law? What is Homeowner’s Insurance? Homeowners insuranc...

Homeowners Insurance Notes Preview Questions Why do you think people have homeowner’s insurance? Give 3 examples of when you think someone might need to use their homeowner’s insurance. Do you think homeowner’s insurance is mandatory to have by law? What is Homeowner’s Insurance? Homeowners insurance insures the value of your home's structure (the house itself – inside and out) and your items in it (clothes, jewelry, electronics, etc.) in the event of a disaster that strikes or theft that occurs. Homeowners insurance also provides liability coverage against accidents in the home or on the property that others may have. Any injuries or damage caused by yourself or a visitor such as family. Insurance Usually Covers 4 Things Interior damage Loss or damage of personal assets/belongings Injury that occurs while on the property Exterior damage What Type of Events Are Covered? Damage due to: Fire Hurricanes Lightning Vandalism Other disasters listed in your policy plan If one of these events occurs, your insurer will compensate you so your house can be repaired or even completely rebuilt. What Types of Events Are NOT Covered? Destruction or damage from floods, earthquakes, and/or poor home maintenance is generally not covered in your insurance policy. These items normally require separate coverage plans to be purchased if you want that added layer of protection on your property. This means that if you live in an area where floods or earthquakes are common, you’ll want to purchase additional coverage for these items so you can be protected. Freestanding garages, sheds, or other structures on the property may also need to be covered separately using the same guidelines as for the main house. Always check your policy before assuming they are included or adding something like this to your property. © 2020 Business Boss. All Rights Reserved. Imagine This… A tornado strikes your house and it’s completely ruined. The roof is entirely gone, the walls caved in, and even your bed is nowhere to be found. What do you need coverage for? What If You Have Lots Of Expensive Possessions? Most insurance companies will provide interior coverage for 50% to 70% of the amount of insurance you have on the structure of your home. For example, if your house is insured for $200,000 (the actual structural building itself), there would be up to about $140,000 worth of coverage (70%) for your possessions (everything inside of it). Therefore, if you have rare jewels, lots of designer handbags, or famous art pieces, you’ll need extra coverage for that to make you’re covered if a disaster were to occur. The Liability As we previously stated, homeowner’s insurance also provides you with liability coverage for the property. Liability coverage protects you from lawsuits filed by others – it includes your pets too. This coverage protects you from visitors to your property. For example, if your neighbor comes over and falls down the stairs, he/she could sue you for the suffering and lost income she had due to the injury. This liability coverage would protect you from having to pay those charges. On the other hand, if your dog gets out and goes to a neighbor’s house and bites them, that’s your fault. This coverage would pay the medical expenses that resulted from the dog bite. Is Homeowner’s Insurance Mandatory? Having homeowner’s insurance is not mandatory by law. That doesn’t mean someone can’t make you get it though. If you need to borrow money from a bank to purchase a house, they will often require you to show proof of homeowner’s insurance or purchase some through them. This way if something happens to your house, the bank knows they can still get their money back. If you are able to buy a house outright or have a house given to you, you don’t have to get homeowners insurance. This is risky though, because if anything were to happen to your house, you’re not able to claim any of the money that you lost. When You Need to Use the Insurance… Using homeowner’s insurance is similar to using car insurance. If you need to use the insurance, there is a deductible amount that you need to pay with your own money before you get the rest covered by the insurance company. When you decide on a homeowner’s insurance policy, you will decide on the amount of the deductible that you will pay out-of-pocket and the amount of coverage the company will provide you with should an incident occur. © 2020 Business Boss. All Rights Reserved. For example, if your future child attempts to drive your car without you knowing and accidentally drives into your house, you could use your homeowner’s insurance. You would first have to pay the deductible amount yourself, then the insurance company would begin to pay for the remaining damages (up to the amount agreed upon in your policy). Limits Do Exist Remember, when it comes to insurance limits do exist. It’s important to know how much coverage you have. If the costs of those liability medical bills or repairs to rebuild your house are higher than your coverage amount, you’ll have to foot the rest out of pocket on top of your deductible. Example: Your house burns down. Your deductible was $2,000. Your coverage will pay up to $150,000. The damages have been assessed and to rebuild your house it will cost $180,000. You will have to pay the $28,000 difference. How Are Amounts Determined? Policy rates are largely determined by the insurer's risk that you'll file a claim. They assess this risk based on past claim history associated with the home, the neighborhood, and the home's condition. If your house is located in a neighborhood with a history of high crime rates, or an area of the country that frequents tornados or hurricanes, your policy price will be higher since, statistically, the chance you’ll need to use your policy is higher. If you bought your home after multiple people have lived there, your policy rates could be higher if they had lots of previous claims. Insurance Payments Your deductible relates to your premium and coverage. A higher deductible (your out-of-pocket expense when a disaster occurs) = a lower premium (monthly payment for the insurance) = lower coverage from the company (the amount they will give you to cover damages). If you’re looking for a way to save money on these costs, it would be better to search for discounts such as bundling your home and auto. How To Get The Best Price Know what you want. Shop around. Get quotes from a variety of different insurance companies and agents. Be sure to look into these companies' backgrounds. See how easy they are to work with if you really did need to file a claim. Ask your friends and family who they use and what their experiences have been. Go meet the insurance agents. See if you can get along with them. © 2020 Business Boss. All Rights Reserved.