When purchasing a new home, you will want to purchase homeowners insurance alongside it. This insurance will protect you in the case of disaster, ensuring that you will be financially compensated according to the coverage you chose. Here’s a list of six questions to ask before signing your home insurance policy.
1. What Does My Home Insurance Cover?
A standard policy often covers six areas of damage:
- Dweller’s Coverage: This covers the building itself and any attached structures. For example, a porch or attached garage may be included in this.
- Other Structures Coverage: Structures that are not attached to the primary home, such as a shed or standalone garage, are covered through this.
- Personal Property Coverage: Your personal belongings located within the home are included under this. Outdoor possessions may also be covered.
- Loss of Use Coverage: This covers your expenses if a disaster forces you to evacuate for repairs. For example, if you must stay in a hotel while your home is being rebuilt after a fire, this may cover the hotel fee.
- Personal Liability Coverage: This will pay for damages caused to another person on your property. It may include legal fees, medical bills, and lost wages.
- Medical Payments Coverage: Typically not as large as your personal liability coverage, this helps to pay the medical bills of any guests who are injured on your property.
Assess the standard coverages included in your home insurance before deciding what additional insurance may need to be purchased.
2. How Much Home Insurance Do I Really Need?
Not all homes require the same amount of insurance. Some homes may need more expensive insurance due to building costs, whether from the size of the building or from pricey building materials. Different areas on Long Island have different building costs including some local zoning requirements so that will have an impact on cost. Your local Long Island insurance agent (Us!) is equipped to determine the rebuild cost of your home. Others may necessitate a larger personal property coverage when considering the number of valuables stored within the home. Make sure you are comfortable with your coverage in the worst-case scenario, such as if a fire completely destroys your home.
3. Do I Need Additional Insurance?
Standard home insurance does not cover every possible disaster. Flood insurance is a common example of insurance that will need to be purchased separately. Research the area the home is located in to determine what other insurance you will want to purchase. If there is a history of earthquakes where you are purchasing a home, you’ll want to consider buying separate insurance to cover this type of natural disaster.
4. What Will My Deductible Be?
Your deductible is how much you need to pay out of pocket before your homeowners insurance starts to pay for damages. If your deductible is low, you won’t need to pay much of your own money before your insurance kicks in. This value is calculated based on the value of your home, but you should also consider your personal finances before deciding on a low or high deductible. A high deductible will save you money, but you must be prepared to pay your maximum deductible in the case of an emergency.
5. What Is My Policy Limit?
Even after your deductible kicks in, your homeowners policy may not pay for everything. Your policy limit is the maximum amount your home insurance will pay after an expensive claim. A higher limit will be helpful for large damages, such as if your home is completely destroyed. This ensures that you do not need to pay an exorbitant amount of money during an already stressful time. However, a higher limit will also raise your premium payments. If your finances allow for it, you should look for a limit that would comfortably pay for your expenses in the worst situation.
6. How Is My Homeowners Insurance Calculated? Can I Save Money?
Finally, find out how the price of your home insurance is calculated. For example, a home within an area with a high crime rate may have a higher cost in all areas of coverage. For Long Island, NY in particular, proximity to water can have an impact. You can try to save money by mitigating possible risks, such as investing in a security system. Also, make sure to ask your homeowners insurance agent directly about ways to save money. They may have suggestions based on your risk assessment or even a discount for new customers.