5 Factors to Consider When Buying Homeowners Insurance

Purchasing Homeowners Insurance today can be a confusing task. Many residents are confused about what they are buying, and how much coverage they need to pay for. Here are some guidelines to consider when insuring your home:

1. Location, Location, Location!  As you most likely know, where your home is located can greatly affect your insurance premiums. For instance, if your home is in close proximity to a fire station, exposed to extreme weather or earthquakes, or in a neighborhood more prone to theft, you may pay higher fees.
2. Your Home’s Amenities: Your home’s age, type of structure, wiring, roof, garage, etc., can affect your insurance premium. Older homes can often cost more to insure, and those costs can differ depending on whether your home is brick, frame, stone, has synthetic siding, etc.
3. Security: Burglar alarm systems, deadbolt locks, smoke detectors, sprinkler systems, and fire extinguishers, can lower your homeowners insurance premium.
4. Personal Factors: A number of personal factors may affect your policy. These criteria can include age, gender, occupation, health status, whether you smoke or don’t smoke, marital status, etc.
5. History of Claims: If you have a history of claims on a homeowners insurance policy, you may pay a higher premium.

What Makes Up a Homeowners Insurance Policy?  While they differ in their actual structure and coverage, most insurance policies contain the same basic components, which include the following:

• Declarations Page: Usually, the first page of the policy is the Declarations Page. It typically contains the following summary information:

Name and address of the insured.
Dollar amount of coverage in the policy.
Description of the insured property.
Cost of the insurance.
Name of the insurance company insuring the risk.
Contact information.

• Definitions: Explains the meaning of the terms used in the policy.
• Coverage: Details the extent of protection for both property (house, structures, contents) and liability (bodily injury or property damage to others for which you are liable) in your homeowners insurance policy.
• Exclusions: Explanation of what is NOT covered by your homeowners insurance policy, under both property and liability coverage.
• Conditions: Outline the responsibilities of both the insured and insurance company under the policy. Your duties in the event of a loss and also the procedures the company will follow to settle any losses are detailed here.
• Endorsements: Riders, amendments or attachments that alter the standard coverage provided by your home insurance policy. If you choose endorsements for your policy, you may pay an additional premium for them.

Frequently Asked Questions:

Is Homeowners Insurance Mandatory to Have?  No. You can legally own a home without homeowners insurance. However, if you have financed your home with a lender, they are going to require you to have insurance coverage in place, to protect against fires and natural disasters. If you live in an area that is prone to flooding or earthquakes, your lender may also require you to purchase flood and/or earthquake insurance. Keep in mind homeowners insurance policies differ between single family homes, condominiums, co-ops, and mobile homes. Let a UA Representative help determine what coverage is right for you.

Even if you own your home outright, you really should have homeowners insurance. With the high price of replacement costs and today’s risks of natural hazards, it doesn’t make sense to own a home without it.

Complete a Home Inventory History: When you purchase a home (and a homeowners insurance policy) you should immediately begin to create an inventory of everything in the household. This will help make settling any claims that arise easier to process, plus it’s a lifesaver for your own personal organization (and sanity) especially during a crisis. Start by making a list of your possessions, describing each item, noting the make and model and where each item was purchased, and taking photos and/or videos of everything. Be sure to include sales receipts, purchase contracts and appraisals if you have them. Organize clothing and personal effects into categories for easier reference.

Take Photos/Videos of Your Home: Perform a walk-through of your home, describing the contents throughout the house. The video and photos don’t have to be fancy, as long as they’re clear and easy to view. Your cell phone is more than sufficient to help get the job done. When you’ve completed your inventory, it’s a good idea to put your digital photos, videos and documentation onto a thumb drive or storage device, and place everything, including paper receipts and handwritten documentation, into a safe deposit box or off-site storage location.