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The Basics of "Homeowner’s Insurance" Explained by Farmers Insurance Agent of Waterford, MI

Services for Real Estate Pros with Pillar Financial Corporation

Your home is one of the largest investments you will ever make.  Homeowner's Insurance is essential for protecting your investment.  It is also important that you have adequate liability coverage to protect all of your other assets as well.



Basic Coverage: 

A standard homeowner's policy will cover damage to your home and contents caused by fire and smoke, ice and snow, lightening, theft and frozen pipes.   Your policy will also cover you in the event of liability claims if someone is hurt on your property, medical payments to third parties, and legal costs should you be sued.  Most people have $100,000 - $300,000 in liability coverage on their homes; however, the very wealthy sometimes carry more as they have more to lose in the event of a lawsuit. 

Additional Coverage: 

You should read your policy carefully to find out exactly what is covered so you're not caught by surprise when you file a claim and it is denied.  Most standard insurance policies do not cover damages caused by floods, earthquakes, war & terrorism and nuclear accidents.  You may be able to purchase additional coverage for these items. 

Other Valuables: 

If you own a lot of valuable jewelry, such as an engagement ring or other valuables like antiques or furs, you will need to have these items appraised and itemized on your insurance policy in order for them to be covered in the event of a fire or theft.  

How Much Coverage is Necessary? 

Mortgage lenders require a minimum amount of coverage equal to the appraised value or the purchase price of the home; however, this is just for their protection.  You may need additional coverage for your home and its contents.  You should ask for replacement cost coverage to adequately protect your assets.  Otherwise, you may just receive the actual cash value less depreciation for the years you owned the item.  Replacement cost coverage provides the amount needed to replace the lost item today, regardless of how long you've owned it. 

Discounts on Coverage: 

There are several types of discounts you can get on homeowner's insurance premiums.  One common discount is if you carry multiple policies with the same company, such as auto insurance, investment property insurance, life and health insurance.  Many insurance companies give a discount for having good credit or if you have a home security system.  A discount could also be offered if the occupants of your home are non-smokers, or if you live close to a fire department or fire hydrant.  Some insurance providers offer discounts if you own a newer home or one that is built out of fire-resistant materials. 

Shop Around: 

If you are a first time home buyer, you probably have a lot to learn about homeowner's insurance.  It's a good idea to shop around and get several quotes so you will have an idea of how much you should be spending.  Annual insurance premiums vary from company to company and also from one neighborhood to another.  A home located in a high-crime, urban area may cost more to insure than one in a more rural area where there is less crime.   Don't necessarily go with the cheapest price; be sure you are getting the coverage you need.  Also, check with your state's department of insurance to make sure the company you're dealing with has a good reputation in the industry. 

A good insurance agent will interview you, the client, to determine just how much coverage you need.  Many will come to your home to evaluate your needs and take photos.  Be sure to ask the appropriate questions about coverage and read your policy carefully to be sure you are adequately covered.  Do not simply take the word of your agent as mistakes could be made in processing your policy.  Your agent should continue to be available to answer any concerns you may have once your policy is written.  It is not difficult to upgrade when necessary.  Also, be sure to review your coverage from time to time as you accumulate more assets or your home increases in value. 

This article was written by Ted Lewicki, a Farmers Insurance agent located in Waterford, Michigan.  Ted has been an insurance agent for nearly 50 years.  He has been a member of the Better Business Bureau with no reported complaints.  Ted interviews his clients to learn just what type of policy they need so that they are adequately covered in the event of an unfortunate accident where they may be sued.  http://www.a-oneinsurance.com/ services Oakland County, Michigan with many clients in Waterford, Pontiac, Rochester, Auburn Hills, West Bloomfield, Keego Harbor, Milford, White Lake, Walled Lake, Wixom and neighboring cities and communities.