Homeowner's Insurance Policy
What is a homeowner's policy?
A homeowner's policy protects you, the purchaser, against a loss that
may occur from a fault in your ownership or interest you have in the
property.
What does a homeowner's policy provide?
1. Protection from financial loss due to
demands that may be charged against the title to your home, up to the
cost of the title policy.
2. Payment of legal costs if the title insurer
has to defend your title against a covered claim.
3. Payment of successful claims against the
title to your home covered by the policy, up to the cost of the policy.
How to save on homeowners insurance
• Figure out what limits you want on your
homeowners insurance, and what value you need to insure, then call several
insurers for quotes.
• Sometimes you'll get a better deal if you buy your homeowners and
auto insurance from the same company.
• Make sure you get a quote for insurance that would pay to replace
your belongings, rather than pay you based on their depreciated value.
• Update coverage for the value of your home and its contents, if needed,
every five years.
• Raise your deductible to $1,000 or $2,500. You'll pay less in premiums,
but more importantly, you'll reduce the risk that your insurer will
cancel your coverage because you made too many claims.
• Ask your agent what documentation you need to substantiate a claim,
in case of theft or fire. Iit's easiest to videotape your house and
describe your possessions. Don't store the tape in your house.
• Carry enough liability coverage to protect you against a lawsuit if
someone gets hurt on your property.
How much should homeowners insurance cost?
One question insurance customers never fail
to ask is, "What's it going to cost me?" The cost of homeowners insurance
is influenced by a broad range of market factors:
• Rising construction costs to the
• Increasing number of liability lawsuits.
• Customer's needs, policy choices and habits.
Homeowners insurance is one of the most important
investments you'll make. You should keep in mind the difference between
market value and replacement value, and make certain your home is insured
"to value." In many cases, it costs more to reconstruct a house than
the house would bring on the open market.
You can take steps to lower the cost of your
premiums.
Most Insurance Companies offer special discounts and credits for such
features as fire extinguishers, sprinkler systems, and burglar alarms.
These are factors in loss prevention, which ultimately help control
insurance costs.
Ordinance or Law Coverage
One of the most needed types of coverage
is also one of the most commonly overlooked, or even known about, by
consumers. It's called Ordinance or Law Coverage.
As your home becomes older certain changes
in your county's building codes and ordinance change to reflect new
standards for home construction. If your older property suffers a substantial
loss, fixing it may require a higher construction standard to reflect
new laws, therefore simply replacing your home as it was just isn't
good enough to meet these new laws and codes.
Let's say, for example, your home was built
in 1972 and the building code called for your home to be built 5 feet
off the ground, and in 1993 the building ordinance was upgraded to call
for the same building to be 10 feet above the ground following a minor
flood a few years earlier.
Complying with this code requires a change
in design and building materials, and will incur substantial additional
costs for labor and materials. As this occurs the cost of replacing
your dwelling is greatly increased. If these new laws are not met during
re-construction the codes inspector must stop construction and name
the dwelling as uninhabitable until such time as these building standards
are properly met.
If your insurance doesn't cover this increase
in government standards then you risk being in a "catch 22" situation
where you will have to pay for these upgrades before completing the
repairs and resuming residence.
Please review your policy to find out exactly
what it offers for ordinance or law coverage. The price you pay is influenced
by how you pay.
