Affordable Home Insurance - Traps To Avoid In Your Policy

by Chimerenka Odimba
in Insurance / Home Owners (submitted 2010-06-10)
http://www.goarticles.com/cgi-bin/showa.cgi?C=2985828

Many people know that home insurance policy is very important. At least so they've been told. Sadly though many do not know what their own home insurance policy entails. Many have not bothered to really read through their policy to know what it says and what coverage they really have. They just know what the agent told them. The light only comes on when there is a claim to make and then all the ugly details begin to surface. We would look at some simple things to note to help you get more out of your policy.

You really need to read your policy document to know what your coverage is all about. You should not be surprised at the extent of your coverage when you make a claim. A simple example is this. You may be eager to reduce your rate and then your agent tells you you can get lower rates if you get a policy that would pay actual cash value. Would you be smart if you accept without first really understanding what this means? In home insurance, policies always talk about either actual cash value or replacement value. Let me explain the two.

ACTUAL CASH VALUE

Actual cash value talks about the current value of the insured item. Remember that this puts into consideration depreciation with time and wear and tear so an item you bought for $1000 could now be worth a mere $200 given depreciation and wear and tear. What this means is that if you insured this item and then made a claim, you would be paid the current value of $200 which would of course not be enough to replace it. Is this what you really want? Yes this policy would cost less but you should only get it if you understand this and still want it. At least you know what to expect when you make a claim.

REPLACEMENT VALUE

A policy that offers replacement value would cost more because it offers to replace the insured item regardless of depreciation, wear and tear and its current market value. The policy would pay you what it would cost to replace that item. This is of course what many people go into home insurance thinking they are getting. You would only be getting this if that is what your policy says. Now you know.

In making claims, you need to prove that the said items were really owned and damaged or lost. This simply means that you need to have proof of ownership. You can't start thinking of this when the disaster has occurred and you are making a claim. Once you get a home insurance policy, you need to keep a detailed list of the items in your home. To further strengthen your claim, you can make video recordings of your home and the items in them. Keep this recording and list somewhere safe. Preferably in a safe deposit box or somewhere safe like in a fire proof box. With these documents, your claim process would be much easier. You have to be ready before the evil day comes.

Please, do not just get your policy and leave it there. You need to constantly review your policy to update yourself on your coverage so you can always be sure you are adequately covered. Review it constantly.

Another reason for reviewing your policy is that you can monitor to know when you are beginning to pay more than you should. You can know this if you constantly compare free home insurance quotes. You can just go to quotes comparison sites and get free home insurance quotes and with these compare your policy to know if your insurance company is charging you more than other insurers are charging. You can really make savings if you review your policy regularly.