What Your Homeowners Insurance Doesn't Cover
By Angela Baca
Photo: © Justin Horrocks/ Istockphoto
According to the Insurance Information Institute, standard homeowner policies do not include certain types of insurance coverage. If you have a Homeowners-3 (HO-3) policy (which is the most common type of policy in the U.S.), then your home is not covered for floods, earthquakes, and water seepage. If you live in areas where these types of events as well as hurricane wind damage are possible, you should purchase additional insurance coverage for your home.
It is also important to purchase high enough limits for each type of basic insurance coverage and each type of additional coverage. For example, if you purchase flood insurance but choose a very low limit, you could be left with thousands of dollars of unpaid damages after a flood destroys your home.
When purchasing insurance, you have to balance the need to adequately insure your home against potential losses with the need to purchase an affordable premium.
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This process can be difficult, but protecting your home should be your top priority.
Here are some tips to help you find a reasonable premium for a comprehensive insurance policy:
1. Go to several insurance companies and obtain quotes for the same levels of coverage. Ask for a printout of each company's quote (including a breakdown of coverage limits) so that you can compare them side-by-side.
2. Ask specific questions about losses that are not covered when you speak with each insurance broker. You have a right to understand what you are purchasing.
3. Ask questions about which types of coverage you can carry lower limits on. Consider types of coverage like injuries, personal property, trees, and external structures.
4. Do research on the Internet about the company you decide to go with before purchasing the policy. You can investigate customer complaints and any problems with paying out claims in your state.
5. Find more helpful information from the Insurance Information Institute, HUD, and the Federal Trade Commission if you have more specific concerns. For example, the HUD web site (HUD.gov) offers tips to save money on purchasing homeowners insurance.
Remember, as your home's value increases, you will need additional insurance to cover the replacement cost of the home. Consider increasing your insurance limits as you become able to afford a higher premium. |
