Looking for Homeowners Insurance? What Questions Should You Ask an Agent
By Stephen Davis
Special to USInsurance.com
Insurance was invented by those who loved taking risks in order to earn greater benefits. Initially meant as a means to protect the wealth of businessmen, landlords and industrialists, it then began serving the common man. It is important that you learn and understand all the policies of an insurance plan and are aware of all the options before you sign with an agent. Here are a few questions to ask before you sign on the dotted line.
1. The first thing you need to know is what type of insurance policy you are covered under. Insurance policies have been standardized by ISO. Homeowners' insurance policies start with HO1 and end at HO8, where:
HO1- Basic Form Homeowners Policy
HO2 - Broad Form Homeowners Policy
HO3 - Special Form Homeowners Policy
HO4 - Renter’s Insurance
HO5 - Premier Homeowners Policy
HO6 - Condominium Policy
HO7 - Mobile Home Owners
HO8 - Older Houses
Once you know your homeowners insurance policy category, find out who and what is insured by that policy.
2. Is the insurance enough? You need to make sure that all your important household assets are insured. If the policy doesn’t cover the entire building and property you may end up with considerably losses. And worse still, you may still owe your bank a mortgage.
3. Your Monthly Premium. This is the most important thing for a customer. The premium should be affordable enough for you to pay in the long-term. Don’t try to over-negotiate with one insurance provider, check multiple insurance companies and you will usually end up with a premium that is comfortable to you.
4. Exclusions. It is important to know which specific items are excluded from coverage in your deal. The agreement should clearly state all the things that are excluded from insurance. Ask about all the items that you are in doubt of. Many customers end up in problems in event of a claim because of unclear wordings in the agreement.
5. The Deductible Value. The deductible is the initial amount that you’ll have to pay in event of an insurance claim. For example if you decided on a $500 deductible and suffered a $2000 loss, you’ll have to pay the first $500 before the insurance company pays the rest of the amount.
The higher deductible you decide on, the lesser the premium that you’ll have to pay. This can save a lot of money on monthly premiums and is usually the wiser choice.
6. At what value will you be repaid? There are usually two options in which you are repaid. One is the market value of your property and the second is the replacement value. The market value pays you back the market price of your house. The replacement value pays all that it costs to replace your original property. The market value is the more economical option because usually rebuilding the ‘exact’ house costs more than it is worth in the market.
7. To what amount are valuables and special items covered? You may need to buy extra coverage if some of your expensive electronic appliances or jewelry are not covered. It is important to remember that high-value paintings are also not covered by home insurance.
8. Liability. In case you are sued, this is the amount that your insurers will pay in legal bills and damages. Try to get the highest number you can get for this. In case you are sued by someone who suffers losses because of your property (say, an injured guest), your company will pay the medical bills and other costs you are sued for.
9. Coverage for natural disasters. Though not very relevant to a lot of places, but for some people it is important to insure against natural disasters like earthquakes, floods or hurricanes. Damages due to these disasters are usually not covered in basic insurance policies and need to be added as extra options.
10. If you install safety features will it save me money? Or if I live near a fire station? Because usually it does save a fair amount from your premiums. Many companies also offer discounts if you purchase another insurance from them like, your car for instance.
11. How long will it the company take to pay a claim? Many top insurers have a 24-hour claim policy, but some don’t. Check records for any complaints and situations where the company delayed payment. Some companies delay payments for special cases, be sure to note them.
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