6 Frequently Asked Questions About Homeowners Insurance

Fires, floods, and unexpected damage aren’t something you want to think about. Nonetheless, they do occur. This is why you must do your due diligence when choosing homeowners insurance.

Of course, part of doing this is asking questions. But what questions should you be asking? Here 6 to start you out!

1. How Much Should I Insure for the Rebuilding of My House?

The point of home insurance is to cover the costs of unforeseen damages to a home. In some cases, these damages are nothing more than minor water damage. In other cases, they include the entire destruction of the home.

You want to insure your home to the extent that your insurance will cover its entire rebuilding. Now, what exactly does that mean? Does it pertain to the current market cost of your home, or does it pertain to the actual cost of rebuilding?

In all cases, it pertains to rebuilding your home from scratch. So, figure out how much it would cost to rebuild your home in its current state and make sure you have enough insurance to cover the cost.

2. How Much Should I Insure for My Possessions?

Homeowners insurance doesn’t just cover your home itself. It also covers the possessions within your home. But how much coverage should you take out for these possessions?

In short, you should have enough coverage to replace them entirely. This includes the cost of everything in your home, from clothing to furniture to appliances to electronics and otherwise. Estimate all their costs and then add them to get a single sum.

A ballpark number will generally suffice. However, it’s recommended that you insure each piece of property at the peak of its value.

3. What Is Policy Excess?

When you take out an insurance policy, it comes with a maximum coverage amount. For instance, your policy might cover $300,000 worth of damages.

But, in many cases, it also comes with something known as an excess. This is an additional coverage provided should the cost of home repairs exceed the initial maximum amount.

Generally speaking, if you’re required to dip into your policy excess, you will need to pay an additional deductible amount. This is usually a few hundred or a few thousand dollars. Note, though, that it enables you to make vital repairs that you would otherwise have to pay for in full.

4. Does My Insurance Company Need to Know if I’m Renovating My Home?

Let’s say you’re adding a new room to your home. Does your homeowner’s insurance company need to know? The answer is yes if you want adequate coverage to account for the add-on.

After all, making significant changes to your home will increase its value. You want an insurance policy that protects that value.

Now, what about smaller changes, such as replacing the flooring in your kitchen? Unless the flooring is much more expensive than your past flooring, there’s no need to alert your insurance company. The cost should be covered in your existing policy.

5. Which Factors Affect Homeowners Insurance Costs?

You might also be curious about the factors that dictate the price of homeowners insurance. There are several of them to consider.

One of these is the cost of rebuilding the house should it become destroyed. The more expensive the rebuild cost, the more money you’ll have to pay for your homeowner’s insurance.

Another factor is the area in which the home is located. For instance, if the home is located in a crime-ridden area, the homeowner’s insurance for it might be more expensive. This accounts for the heightened risk of destruction that a crime-ridden area brings.

Another example would be if the house was built in a floodplain. A heightened risk of flooding would result in a higher homeowner’s insurance cost (flood is not covered under a typical homeowners insurance policy, this would be separate coverage).

There’s also the age of the home. The older the home is, the more expensive its homeowner’s insurance costs will be. This is because old homes are often built in ways that make them ultra-susceptible to damage.

The cost of your deductible will also affect your monthly premiums. If your deductible is higher, your monthly premiums will be lower. The converse is also true.

Finally: security measures. If your home has a security system installed, you might receive a lower rate on your homeowner’s insurance. That said, situations vary.

Other minor factors can affect the cost of homeowner’s insurance as well. However, these are more situation-specific.

6. Does Homeowner’s Insurance Cover the Cost of Outdoor Possessions?

The answer to this question is that it depends. Some policies will cover the cost of these possessions in the event of theft or damage. Other policies will not.

Those that do will cover everything from furniture to playsets to lawn ornaments and more. So, if you’re interested in having these possessions covered, you need to be sure that you choose a policy that accommodates you.

An insurance agent can help you ensure that your policy includes all the coverages you need. Some of these policies might require additional fees. However, they can be highly beneficial in the long run.

Need Help Choosing Homeowners Insurance?

Choosing the right homeowners insurance is hugely important. That’s why it’s often wise to put the responsibility in the hands of a trained insurance agent.

Looking for an insurance agency in New Jersey? Central Jersey Insurance Associates is the company to call.

Contact us now to discuss your home insurance needs!