Help With Homeowners Insurance

By Chelle Cordero

June 7, 2016 6 min read

Homeowners insurance is a wonderful thing. It gives homeowners a peace of mind to know that their families are protected in the event of a catastrophe. Your home is likely one of the largest financial investments you will make in your lifetime -- if not the largest. So, naturally, it makes sense to be proactive and set up a homeowners insurance plan. As with many things in life, when it comes to owning a home, it's best to expect the unexpected. And when it comes to homeowners insurance, it's important to do the legwork and figure out which plan makes sense for you and your family.

Standard homeowners insurance policies offer pretty standard protections, depending on your area's vulnerability to natural disasters and the local cost of construction. In some states, if a person has a lien, or claim, on a property, that person (the lien holder) may be able to add some additional protections to the insurance package. Speak to your insurance agent to find out exactly what each policy covers and learn about policy limitations and any coverage that is optional, but good to purchase. Consider the possibility of threat and the cost of premiums as opposed to the cost of replacement to determine which insurance policy will be money well spent.

If you have an existing homeowners insurance plan, it's a good idea to take stock of how effective the plan will be in the future. For example, look into your replacement cost coverage (what the insurance company would pay to rebuild your home after a disaster). See if that coverage includes an inflation guard endorsement, which adjusts your dwelling coverage limit annually in line with inflation. If you don't have it, coverage will be limited to the original purchase price of your home and possessions.

One New York insurance company says its policies typically cover theft, fire, smoke, windstorms, hail, falling objects, frozen plumbing, a car crashing into the home, and water damage from plumbing, furnace, air conditioner or water heater. A few types of coverage offered in this company's insurance plans are:

--Dwelling protection. Covers your home, (most) possessions and attached structures.

--Other structure coverage. A necessary add-on if you want to protect free-standing structures like separate garages, sheds and gazebos.

--Personal property protection. Covers the loss of belongings (subject to limits and deductibles) stolen or damaged.

This company also offers certain optional coverage, such as extended coverage on jewelry, watches, cameras and furs; water coverage, to cover damage from clogged drains or broken sump pumps; and coverage for business properties if business items are kept or sold from your home.

Coverage against floods and earthquakes is never standard in homeowners insurance plans, and may not even be available in your area if there is a high likelihood that these events will occur. If your area is prone to earthquakes or floods, monthly insurance premiums will probably be high, or you may need to seek coverage from a government-backed agency rather than a private insurance company. It's not surprising, though, that the homeowners who find the most need for this coverage are willing to pay the most for it, if it is available. In some areas where recovery costs have been high, some of the flood and earthquake coverage may even be discontinued for new policies and renewal.

Other natural occurrences, such as windstorms, are not covered in several states. Some events like a tree falling onto a house, are construed as an "act of God," in which case only the actual damage done to your home is covered, not removal of the tree or pool or garden structural damage.

To learn more about the insurance coverage you need, download the "Homeowner's Insurance Guide to Natural Disasters" created by the Federal Alliance for Safe Homes and The Actuarial Foundation. The guide covers all the bases and offers plenty of detail to make you feel confident you are ready to find the perfect plan.

Now, there are more preliminary steps you can before even buying a home to help set yourself up for success. When you are looking at homes, ask the Realtor if the home has ever flooded. If so, how many times has it flooded, and how frequently did the floods occur? Also, ask if there has ever been any structural damage due to earthquake activity.

Other resources available include the FloodSmart website, the official website of the National Flood Insurance Program. Local flood-insurance rate maps will tell you how susceptible your area is to water damage. Read newspapers, look at documents from the National Weather Service, visit your local city hall, talk to neighbors and your insurance agent. There are plenty of sources you can access to become well-informed about your area.

Homeowners insurance sure is an investment, but you know what they always say: Safety first. When it comes to protecting the livelihood of you and your family, you can never be too prepared.

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