Owning a home is a big step, but protecting that home against calamity is even more important. Insurance agent Tom Graceffa, of COUNTRY Financial, explains a few questions to ask before insuring your home.
Homeowners have many factors to consider when purchasing a home. What kind of improvements will be made in the future? What work needs to be done immediately? And, most importantly, how can the home and its contents be adequately protected?
First-time homeowners and experienced homeowners who wish to upgrade their current insurance policy should consider the following options when purchasing homeowners insurance.
First, consider the causes of loss to insure against. There are several types of coverages to choose from, but the two most frequently purchased are broad form coverage and risk of direct physical loss coverage.
The broad form coverage provides protection for perils that are specifically listed in the policy declarations. Examples of such perils include fire, lightning, windstorm, hail, vandalism and theft.
The risk of direct physical loss coverage is more comprehensive than the broad form coverage. In addition to the perils named above, it also covers accidental losses, such as paint spills, ice damage and countertop burns. However, there are exclusions to this type of policy, such as earth movement, certain types of water damage and intentional losses.
Secondly, homeowners should decide the level of coverage to purchase. Additional replacement cost is an option available on qualifying homes. If you qualify for this coverage and your home is destroyed, your insurance company can rebuild your home, even if rebuilding it costs more than the amount of insurance you have purchased.
The COUNTRY Financial group is among only a handful of insurers offering additional replacement cost coverage with no caps for qualified homes. That means COUNTRY will pay the costs (less your policy deductible) to rebuild your house to the way it was, should it be destroyed – even if the cost is higher than your policy limit. With a no-cap replacement cost policy, you can maintain the financial security of your family, even through tough times.
Homeowners might also consider purchasing replacement cost coverage for their personal property, such as televisions, DVD players, stereos and computers. Replacement cost coverage allows for the replacement of personal property without depreciation.
A third consideration for homeowners is the deductible for their insurance policies. Higher deductibles result in lower premiums.
When deciding upon a deductible, homeowners should consider their ability to pay the out-of-pocket expense at the time of the loss. The minimum deductible suggested for homeowners is $500. However, homeowners should also consider increasing their deductible to $1,000 to reduce their premiums.
A fourth area of consideration is the amount of liability coverage to purchase. Liability coverage provides protection if someone is injured on your property, or you are responsible for damages to someone else’s property. A minimum of a $300,000 limit is recommended to protect your assets, however, coverage can go as high as $1 million.
Buying homeowners insurance is a very important step in maintaining a household. Different homes warrant different policy coverages. With the help of an insurance representative, finding the appropriate policy coverages does not have to be a difficult decision.
Contact your financial representative for help in determining the right coverage for you.
Tom Graceffa is a licensed financial representative at COUNTRY Financial, 4190 W. Euclid Ave., Rolling Meadows.