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Best tips on your home owner insurance

Date: Nov 28 2010
Filed In: Home Insurance

Watching earthquakes, hurricanes, floods and wild fires on TV and if you got a home you got to worry sometimes if you have the right home owner insurance and enough of it just in case for an emergency. It is a lot to figure out but we are here to walk through it.

Many home owners feel safe because they have home insurance but can this be a false sense of security if you don’t really know your policy?

Currently 64% of US homes are under value of the amount of home owner insurance they need and the average homeowner only has about 81% coverage. Meaning if their home was destroyed, they would only get coverage about 81% of the cost of rebuilding it.

How much home insurance should the average person should have?

It depends on many factors: the average home owner insurance policy includes several layers of coverage. One of that is reliability coverage which means if somebody gets injured in your property. The cost for medical bills will be covered from your home owner insurance policy. So you don’t have to pay out-of-pocket for that, also if there is any structural problems to the home or any of the belongings inside your home were destroyed. That will be covered as well.

However there are other factors to consider as well. If you’re close to a flood zone, if you’re close to a area that is prone for earthquakes, if you have a basement that is prone to flooding. These are all factors in most cases are not covered by a traditional home insurance policy.

What is reliability for home owner insurance?

If somebody comes to your home and gets injured, for example they slipped or fall down and injured him or herself. You are responsible for the medical costs for that person but by having home owner insurance policy that will cover that person’s medical costs.

Also if you have a pet or you have a dog and the dog attack someone. Or if you have a pool in your home and somebody got injured in the pool that home insurance policy will help pay for the medical expenses. As opposed to you having to pay for it out of your own pocket.

If you’re in a higher tax bracket and in a higher income, if the umbrella liability program a better way to go, if so why?

You definitely want to have your basic home insurance policy but if you are in the higher income bracket you would want to supplement with umbrella policy. That’s because when people have more money and other knows that you have more money and they get targeted.

For example, somebody come to your home and slipped. They know that you made a lot of money, that you got big expensive home, chances are you’re more prone to hit with a lawsuit than to a person who has a middle income lifestyle. Also higher income homeowners have more luxurious lifestyle and it is more likely to see they have a pool in their home. It is more likely to see more grounds for risk of somebody getting hurt.

What about living in a place like California in earthquake fault zone?

You have to do your homework before buying a place like that. California currently is the most popular state for earthquakes and many home owners are surprised to hear that.

Home owner insurance policy did not cover damage by earthquakes and this could be really devastating for homeowners who lose the house in earthquake. The homeowners are essentially responsible for all the out-of-pocket costs to pay for rebuilding it.

However, what you can do is speak to your lender to see if you are near an earthquake fault zone or even on one and then you can go ahead and purchase your earthquake insurance.

Another way to figure out is to do your homework to see if you really need this or not. Go to the US Geological Survey. Go to the website and it will show you the map of areas in the US that are prone to earthquakes.

How much would it cost for a home in Seattle built on earthquake fault zone which cause around $250,000. How much would it cost to have earthquake home insurance each year?

Their home insurance premium in Seattle will cost about $350-$500 per year, that’s the middle range.

If you take that same value home in Buffalo New York you’re only going to pay about $100. Now take that same home into California and the home insurance costs will start at least at $500 per year. It could also easily go up to $1000 dollars or more.

If you live in a flood zone, your insurance option seems to be limited as well, what do you do there?

If you live in a flood zone there is only one real option available to you and that is to get a flood insurance policy which is offer only by FEMA. Thats the Federal Emergency Management Agency. To find out if you live in a flood zone asked your lender or contact FEMA.

If you find out that your home has at least 1% chance of flooding per year, that’s pretty low but that give you a sense of how devastate even for a small flood.

How much does a flood policy cost year?

The average float policy cost about $600 per year. That may sound like a lot but if you think about potential damages that could damage your home, $600 really go a long way when talking about thousands of dollars of damages.

If your home have a basement do you absolutely need a flood policy?

If the home has a basement or crawl space, you will need something separate from flood insurance. You actually need sewer backup coverage, home owner insurance and flood insurance will not cover this. What sewer backup coverage does is when there is a lot of rain and the sewer backup in your home and the basement flood. That’s when the sewer backup coverage comes in and essentially helps you restore your basement or restore anything that was destroyed in your basement.

The sewer backup coverage is the cheapest option to add-on your home owner insurance policy. It cost about $40 per year and $40 per year can go a long way when we’re talking about restoring a damaged basement.

What about insuring expensive jewelries and other expensive items in your home?

This is something home owners might be surprised about the basic home owner insurance policy. Home owner insurance policy only covers about $1000-$2000 of jewelry or furniture’s, fur, silverware.

What you may want to do is purchase a floater and that gives you the basic coverage for those additional items if they were stolen or destroyed in a fire or a hurricane.

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