The article touches upon the issue of Known pitfalls in Home Insurance. When you buy a home, you will need to protect it from the unexpected. That’s where home insurance comes in- it protects you in the event that your home is damaged, threatened or destroyed, and it also protects you from lawsuits when someone is injured on your property. Most mortgage lenders require that borrowers have home insurance- after all, with a mortgage, the investment and risk are shared equally between buyer and lender. However, if you own your home, there are some advantages to having insurance, such as:
*Coverage for replacement value. Most home insurance policies cover repair or replacement in the event of destruction or serious damage. In the case of an older house, it can mean construction restoration. For instance, if your damaged home was made with brick exterior, plaster walls and hardwood floors, the insurer will cover that same construction for the repairs.
*Coverage for your yard, any outbuildings, and your personal liability. For example, if a tree in your yard gets knocked over by the wind and damages your garage or hurts someone, you’re covered. In some cases, the insurance will even replace the tree.
*Coverage for personal belongings, such as furniture, art, electronics, and such. Home insurance will cover the replacement value of these items, and it can even cover the food in your refrigerator that can be lost due to power failure. However, exceptionally valuable items such as jewelry, fine art and antiques may need a separate policy because a conventional homeowner’s policy may not provide for full replacement.
*Coverage for loss of use, which means that the insurer will pay for a hotel room in the event your home is damaged to the point where it is unlivable.
As great as home insurance is, it wouldn’t really be fair to gloss over the disadvantages, which include:
*High premiums. Home insurance is linked to your home’s replacement value, so the premium is commensurate with your home’s worth.
*Rarely declining premiums; even if your neighborhood is relatively affordable, the cost of the policy is calculated not by the sale price of the home, but by what the insurer thinks it would cost to rebuild.
*Filing a claim for damage or loss almost inevitably means a higher premium when renewal time comes around.
*The exclusion of some dangers. Damage caused by flood or earthquake is rarely covered by a regular home policy, although there is the option to buy extra policies in areas that are prone to such dangers.
Knowing the advantages and disadvantages of home insurance is the first step in finding the right policy. Before you sign anything, read the policy carefully, and ask as many questions of your agent as you need to. Your home is the biggest investment you’ll ever make, so choose wisely!