Last summer's wildfires in California and the brutal winter visited on the East and Midwest this year serve a potent reminders that homeowners and renters alike need to be sure they have not only enough insurance but also the right kind of insurance.
Here are some tips from California Insurance Commissioner Dave Jones:
1. What type of coverage do I have?
Homeowners or Renters. A homeowner’s insurance policy covers the structure, belongings and legal obligations if someone is injured at your home. A renter’s policy does not insure the structure, but otherwise provides similar coverage. To review a list of coverage’s that are in a typical homeowners or renter's policy, go to www.InsureUonline.org, select the appropriate life situation on the right, and then click on the "Home" tab.
Replacement Values.Check the type of replacement value provided in the policy. Actual cash value (ACV) is the amount it would take to repair damage to a home or to replace its contents after allowing for depreciation. Replacement cost is the amount it would take to rebuild or replace a home and its contents with similar quality materials or goods, without deducting for depreciation.
Liability Limits. Liability insurance protects you from legal obligations arising from accidents involving visiting non-residents. An umbrella policy can increasethe liability limits of a homeowners or renter’s policy if the policy limit is insufficient.
Medical payments. Homeowners and renter's polices typically include limited medical expense payments for injuries occurring on your premises to visiting non-residents.
2. How much coverage do I need?
Make a home inventory. A home inventory is the best way to determine the appropriate level of coverage needed for contents. It is also a useful tool to have in case of a loss. When doing the home inventory, make sure to include as much detail as possible about the items. Click here for a home inventory worksheet and tips to get started.
Do not over insure. Homeowners do not need to insure the value of the land a home sits on, but coverage should include any outdoor structures on the property. For both homeowners and renters, concentrate on an accurate list of belongings and be sure liability limits are at a proper level.
3. What are my deductibles and discounts?
Save money on homeowners or renter’s insurance. Deductibles and discounts are generally the easiest places to save money on this type of policy. Most companies offer discounts for people who have more than one type of insurance policy with them, and for people who have had few claims or are long-term customers. When it comes to the deductible – which is the amount you have to pay if there is a loss – usually the higher it is, the lower the premium. It's normal to consider raising a deductible to save on premium, but remember, the bill will be that much more following a claim.
Insurers may change policy terms at renewal, but they must notify you first. Read all notices and information sent from the insurance company. When talking with the agent, ask if there are any anticipated changes when the policy renews.
4. What additional coverage may be needed?
Neither flood nor earthquakes are covered by a standard homeowners or renter’s policy. There are optional insurance policies for both disasters. Ask about available options or visit www.Floodsmart.gov for details on flood insurance.
