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Homeowners Insurance

01

Overview

02

Homeowner Policy

03

Helpful Terms & Tools

04

What’s Covered

How Your Homeowner Policy Works

Did you know… there are two main categories of property insurance:

One type that covers you for most perils, and excludes only certain ones. The risks that most companies exclude are: floods; sewer backups; earthquakes; damage from termites, pets, or other animals; damage from mold, mildew, dry rot, and wet rot (unless the damage was the result of a covered peril, such as a water-pipe burst); war; and nuclear accidents and explosions.

Another type of policy is designed to cover only specific, named risks that are listed in the policy. What kind of policy do you have? The only way to know for sure what you have is to look at your policy, or ask your insurance company to spell it out for you.

3 Steps to Get Started

01

Choose only a reputable insurer. Insurance protection is one of the most important investments you can make, and you must be able to trust the company whose help you will need in a disaster. Insurance premiums are usually a good value when you consider what your policy will provide in the event of a loss. A reputable insurance company will make sure you are taken care of when you need it most. A bad company will make your loss even worse.

02

Make a home inventory. It is proof of the value and condition of your items. It can be as simple as taking your video camera and walking slowly through your entire home to show every item of value. Narrate as you go to describe the items. You can make a spreadsheet of items and scan receipts, then store this data on a cloud drive such as Google Drive or Dropbox. You can also photograph your home, rooms, and belongings if you don’t have access to video. Make it a fun family project! Record and keep serial numbers for TVs, computers, and other valuable electronics. Make it a habit to do this whenever you buy something new, and again, type or scan the information and store it on a cloud drive or at a trusted friend’s house. A good insurance agent may also store the inventory for you!

03

Find out what types of damage are covered under your policy. Look over your policy and then call your agent or insurance company and go through each coverage. That way you know what to expect in case you need to make a claim.

Things to consider:

  • When you thought through your calculations, did you estimate the cost to replace the house and items in brand NEW condition—or the cost to replace the house and items at the value you could get for them on the open market?
  • When most of us think about having to replace our belongings, we think of “brand new” replacements. After all, if we lost our entire living room set, we’d likely prefer to buy a new set, not scour Craig’s List looking for used furniture that’s exactly like what we had.
  • However, if your homeowner’s or rental insurance policy is an actual cash value policy, then that “used” item is all the policy would pay for. That is, an actual cash value policy will only pay you the fair market value of every item being replaced, taking depreciation into account. This is important for you to know when you are purchasing your homeowner policy.

Did You Know

If you have an “Actual Cash Value” policy, your insurance company will only pay you the fair market value of every item being replaced, taking depreciation into account (which means you won’t get the total dollars needed to replace items at what they cost today).

This Guide

01

Homeowners Insurance Part 1 - Overview

02

Homeowners Insurance Part 2 - Homeowner Policy

03

Homeowners Insurance Part 3 - Helpful Terms & Tools

04

Homeowners Insurance Part 4 - What’s Covered

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