1. Water Damage Coverage
Property damage due to Water is the most common peril. Yet, it is sometimes the first coverage eliminated when agents try to get you a “discounted” rate on your policy premium. Make sure that your policy always has coverage for water damage and that the coverage is not limited. Most properties over 30 years are subject to insurers forcing these water exclusions or limitations on the policy. Do not accept any insurance policy that does not cover water damage or that is limited to a small amount, which is usually limited at $10,000. Also Water Damage is not the same as Flood Damage, so make sure you are covered separately for both.
2. Personal Contents and ALE Coverages Are Just As Important
When you purchase your new home’s insurance policy, make sure that you insure your home for at least 80% of what the replacement cost of the dwelling value is, if not, you will only receive a portion of what would be full benefits. In addition, make sure your ALE (Additional Living Expenses) Coverage is at least enough to pay for 12 months equivalent of current rental and living conditions. Some claims may take longer than expected. As for your personal Contents, make sure to keep an accurate inventory with receipts, especially high value items. Any funds received under this coverage as well as ALE excludes the mortgagee as a loss payee.
3. Liability Coverage
Your homeowner’s insurance policy is divided into two sections. Section 1: Property and Section 2: Liability. Most homeowner insurance policies offer $100,000 Liability coverage without giving you the option to choose a greater amount. The most common Liability would be $300,000. For most companies, it only costs $28 annually to increase your liability from $100,000 to $300,000. Liability Insurance protects the homeowner in case the homeowner becomes liable for someone else’s injuries or property damage. This part of your insurance would pay for attorney representation and indemnification of the plaintiff. Talk to your agent about how much more you will pay a year to increase your liability coverage.