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Top Ten Questions To Ask When Shopping For Home Insurance

What are the most important home insurance concepts you should understand before purchasing a new home insurance policy? This article looks in-depth at the top ten questions you should get answered before buying or switching a home insurance policy. With answers to the top ten home insurance questions, you will be able to pick a home insurance provider that will provide you with the best coverage, strong financial stability, excellent customer service, and a very reasonable price.

What I Should Know Before Buying Home Insurance

If you are like millions of Americans out there, then to you insurance is a big black box. When it comes to home insurance, what are you covered for and what should you really be concerned about? To help you make the right decisions about home insurance, I've compiled a list of the top ten most important questions to get answered before you buy a home insurance policy. If you can get the answer to each of these 10 questions (and understand that answer), then you have armed yourself with all the knowledge you need to pick a home policy, or upgrade the one you currently have. So what are you waiting for? Read on!

  1. Is my home insured at actual cash value or replacement cost? A word to the wise; get a replacement cost policy. The main difference between actual cash value and replacement cost is that a replacement cost policy will make you whole after a claim with nothing more than your deductible out of pocket. Actual cash value factors depreciation into the amount you receive for a claim. What does this mean to you? Well, in addition to your deductible, you could be forking out hundreds to thousands of dollars to repair your home to the state it was in before the damage. A replacement cost policy doesn't factor depreciation into the equation, and thus will repair your home in its entirety regardless of age with only your deductible as your payout.
  2. Is my personal property insured at actual cash value or replacement cost? I have a close friend who got robbed in college. He had an actual cash value renter's policy. After his home insurance company factored in deprecation for his 52 inch TV, all his clothes, his laptop computer, and his leather couch, he received a check for ,000. Moral of the story? Pay the extra few bucks a year to make sure you will get full value on your stuff if something happens.
  3. What type of home policy is this? As you may already be aware, not all home insurance policies are created equal. In fact, there are five different tiers of home insurance policy you can buy. From the most basic coverage to the most extensive, the policy types are HO1, HO8, HO2, HO3, and HO5. My recommendation would be to stay away from the HO1 and HO8 policies, because you might be sorry later. A good solid policy is the HO3. It will protect your home from everything with a few minor exclusions, and will protect your personal property from the most common causes of loss.
  4. What endorsements, if any, are on the policy? Endorsements are add-ons that make your policy more bullet-proof. Examples of endorsements that can be added are residential glass coverage, water backup coverage, or additional coverage for electronics such as computers and LCD TVs. If you have any special add-ons, or want coverage that you're not sure is included, ask your agent or forever hold your peace.
  5. What is the company's AM Best rating? In an ever changing economy, I'm assuming you'd like to know that your current home insurance company is not going to be the next AIG. AM Best is an organization that rates insurance companies' financial stability. Although financial strength doesn't always tell the whole story, it's a good indicator of what claims and customer service might also be like.
  6. How can I be sure the home insurance company will provide great claims and customer service? This is probably the toughest question to answer, because there is no sure fire way of knowing exactly how a company will respond when you file a claim. The Better Business Bureau publishes complaint information on most reputable insurance companies, and this is what I would check first. Also, most state websites publish a customer complaint index on all insurance companies registered in the state. Search for your home insurance company to find out how they stack up against the competition.
  7. Have all discounts been applied that pertain to me? Lets face it. You are not a professional insurance agent, nor do you want to be. You don't have time to research whether or not every possible discount that could possibly be added has been put on your home policy. By asking your agent this simple question, it might cause her to rack her brain and find another discount you might qualify for. It's worth a try anyway.
  8. What is my deductible? The higher the deductible, the lower your premium, yet the more you have to pay if you file a claim. Are you more comfortable with a high deductible and low insurance payments, or the other way around? Decide what your comfort zone is, then get quotes based on what you prefer.
  9. Is there anything that could cause my home policy to cancel when they come to inspect the property? You want to make sure to ask this question in the beginning to avoid headache down the road. There are many things that could cause a policy to cancel shortly after it's written. Depending on the company and its underwriting guidelines, "cancelable offenses" could be vicious dogs, farm animals, unrepaired damage, missing roof shingles, trampolines, diving boards on pools, and much more.
  10. As my agent/insurance company, what hours are you available in case I need to contact you? Why do you have home insurance? Ok ok, because the mortgage company requires it. But home insurance is also there to protect you and make you whole if something happens. You need to make sure that your agent and/or insurance company is reliable and will be reachable by phone or in person when disaster strikes.

Do you wonder if you could be getting the same coverage at a better price? Complete our online insurance form and receive four or five free quotes from top insurance carriers in your area. Learn and save on insurance at Insurance Education Group.

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Last modified: Mon Jan 27 10:57:11 MST 2014