New homeowners will often hear the old adage - "Your home may be the single largest investment you will make in your life, so make sure your investment is fully protected." It may be an overused expression, but there is a lot of truth in it.
Considering there are what seems like hundreds of different insurance companies, all offering different products, services and promises, it's hard to know what to buy and whether you are getting your money's worth.
Once you dissect the basic anatomy of a home insurance policy, it is easier to make the right choice. There are three different policies which cover different risks at different prices; the Homeowners (sometimes called basic or standard), the Broad Form (referred to as broad homeowners) and the Comprehensive Policy.
The Homeowners is the lowest-priced policy available. It covers your home and contents against specifically named perils and unforeseen events. For example, named perils are usually fire, theft, smoke, wind damage or vandalism. You must remember with this type of policy, if the peril isn't named, you are not protected.
This policy covers your home against most risks. That is to say, you're covered for all risks with the exception of those specifically listed as exclusions. Specific exclusions are events such as war, riot and flood. However, the contents of your home are only covered against specifically named perils. There may also be some exclusions of which you may not be aware. For example, some Broad Form policies will not cover water damage during the heating season if you leave your home unattended for a specified length of time. So be sure you are aware of coverage limitations.
This policy offers the most coverage available. It covers your home and contents against all risks, except those specifically cited as exclusions in your policy.
The type of coverage can vary from company to company, as can the cost of your policy. Other factors affecting your policy are where you live, the structure of your home and your proximity to a fire department. Considering the seemingly endless variables, it is next to impossible for the average consumer to be an expert in choosing an insurance policy.
An Agent Can Help
This is when you will find the expertise and experience of an independent insurance agent or broker to be of invaluable assistance. A professional knows who has the best coverage for your home and he/she can also write a custom-made policy suggesting riders (sometimes called endorsements).
A rider is used to extend the coverage of any policy to include unusual or expensive items such as jewelry, laptop computers or fine art. In most cases, a rider will only cost a fraction of a percentage of the insured item's value. You can also get insurance for rental properties for loss of rental income due to covered event.
A professional broker knows how to tailor your insurance policy so that you receive the best coverage for your money. Being informed will ensure the protection of what may be "the single largest investment you'll make in your life."