If you are a homeowner, chances are pretty good that you have a homeowners insurance policy. Many homeowners are not fully aware of how their policy works. If you have a homeowners insurance policy and are unsure of how it works, continue reading. Here, you will learn the basics of homeowners insurance and the answers to a few of the questions that you may have.
How do you know your insurance company is the right one for you?
The company quoted you the best price on the right policy. To determine if you are getting the best price, get a quote from a few different agencies in your area. Be sure that the policies that the providers are quoting provide equal levels of protection.
The insurance company carrying your policy must be well-established and have trustworthy and personable agents working for them. You must be able to contact your agent when you have a question, concern or claim and get the assistance you need right away.
What kind of damage is covered under a homeowners policy?
Generally speaking, homeowners insurance covers the cost of repairs or replacement of items or property damaged by vandalism, fire, smoke, hail and wind. The policy will also cover loss from theft and damage that was caused by vehicles and aircrafts.
If you live in a high-risk flood zone, you should purchase additional flood insurance. This is because homeowners insurance will not cover the cost of repairs or loss when it is caused by flooding.
Earthquakes are another issue that is likely not covered by a basic homeowners insurance policy. You may need to add additional coverage if you live in an area where earthquakes are a fairly common occurrence.
What determines the claim payout amount from the insurance company?
There are two main types of policies – actual cash value and replacement value policies.
- Replacement value policies cost a little more each year, but they provide a higher payout when you file a claim. When the insurance company determines the amount to pay you for your losses, they will use the original property values.
- Actual cash value policies are more affordable, but that is because you will receive less money for your losses when you file a claim. The insurance company will calculate how much value the property has lost since the day that you purchased it.
Knowing the above information can help you upgrade your policy to better protect you or decrease your policy to protect you adequately without costing you more than it should. Talk with an insurance provider like Diamond Insurance Agencies to learn more about how your homeowners insurance policy is set up and how it will protect you from financial losses.