Your home is one of your biggest investments. It is important to protect your home with the best insurance coverage that suits your needs. Your agent can help you to buy the correct amount of coverage and can suggest important coverage enhancements to provide protection that is right for you. If you buy an insurance policy simply based on price, you may not have enough coverage when it's time to make a claim.
Your lender will require you to purchase homeowners insurance. No mortgage company will lend the large amounts of money needed to finance your home without requiring an insurance policy to protect the investment. Below is a list of recommended optional coverages.
Guaranteed Dwelling Replacement Cost Endorsement
Your lender may request that you add the guaranteed dwelling replacement cost endorsement to your policy. This endorsement provides additional protection to the dwelling limit on your policy. If your house is insured for $600,000 and is completely destroyed, your policy will pay up to $600,000 plus an additional 25% or $150,000 to rebuild the house if necessary. Without the endorsement, the policy will pay only $600,000 even if the rebuilding costs are higher. In order to qualify for this endorsement, you need to buy an amount of dwelling coverage equal to 100% of the replacement cost.
Personal Property Replacement Cost Endorsement
Your homeowners policy provides coverage for your personal property such as furniture, clothes, appliances etc. Another important policy endorsement to add is replacement cost coverage for your personal property. A standard homeowners policy will provide coverage on an "actual cash value" basis. If a five-year-old television is stolen from your home, a policy providing actual cash value coverage will pay the claim minus 5 years of depreciation. If you have the personal property replacement cost endorsement, the five-year-old stolen television will be replaced with a new television similar to the old one without deduction for depreciation.
Open Peril Type Coverage For Your Personal Property
A standard homeowners policy provides coverage for your personal property on a named peril or named risk basis. A named-perils policy covers only those losses specifically listed in your homeowners policy. An open peril type policy or special form works the opposite way -- unless a peril is specifically excluded, coverage is provided. This policy is broader and this means that your personal property is covered in most situations, regardless of the cause of loss. Ask your agent about specific exclusions that apply.
Valuable Items Plus Endorsement
A standard homeowners policy provides limited coverage for items such as jewelry, money, silverware, fine arts, furs, cameras, firearms, musical instruments and home computers. For example, a diamond ring may be covered for theft at a limit of only $1,000. If you were to misplace your diamond ring or lose the diamond from the setting, your policy will not provide coverage. A valuable items endorsement will provide coverage on the value of your ring on an all-risk basis and without a deductible.
The key to getting the best homeowners insurance protection is to ask your agent questions about how to modify a standard "off the shelf" policy so that it will provide coverage designed for your specific needs. If you have a question, please do not hesitate to call our office.