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If you’re a new or prospective homeowner, your mortgage lending company will likely require that you obtain home insurance, also known as homeowner’s insurance. While the policy itself is not required by law, having home insurance is still highly recommended: it can protect you from enormous financial loss as well as legal woes. Picture it this way, if you lost your home and everything in it, would you have the means of starting all over? Hence why home insurance is an especially crucial coverage homeowners should have. It’s not a luxury, but a necessity. Read on to learn all about home insurance.
What Is Home Insurance?
What is home insurance? It’s a coverage that is designed to protect you, your property, and possessions if an event that is under your policy results in damages to, or destroys your home. Home insurance also provides coverage to you if another individual sustains injury on your property.
What Does Home Insurance Cover?
Home insurance covers your home, other structures on your property (such as a shed or guest house), and personal property, while also providing liability protection should someone sustain injury while on your property. The most standard coverages are described below.
Personal Property Coverage
If your home and covered property sustains damage or destruction as a result of fire, hail, lightning, etc. your insurance company compensates you for the costs of repairing damage or rebuilding your home. In addition to covering physical structures such as your home, personal property coverage also protects your possessions within the home. For example, if your TV or laptop suffers electrical damage due to a lightning strike, personal property coverage pays to repair or replace the damaged items.
Personal liability coverage protects you from lawsuits filed by others as a result of injury or damage sustained while on your property. For example, if one of your party guests slips on your icy driveway, injures their hip, and tries to sue you, you’ll be covered. This type of coverage can also extend to pets. If your dog or cat bites your neighbor, your insurer will be the one to pay medical expenses. Experts usually recommend having $300,000 worth of coverage, though coverage low as $100,000 is available as well.
If you have other structures on your property such as a tool shed, fencing, a detached garage, etc. other structures provides coverage. For example, if heavy winds and hail damage your fencing, other structures may help in paying for repairs.
Loss of Use
Should your home become uninhabitable due to damage or destruction that is covered by your policy, loss of use pays for ALE (additional living expenses), such as staying at a hotel until your home is rebuilt. Other living expenses, such as going out for meals, are covered as well, but it is important to note that Loss of Use has limitations, and may even have a time limit.
How Much is Home Insurance?
How much is home insurance? The answer is, it depends. Home insurance premiums are determined by location and what exactly your policy is covering. In 2021, for a home with a dwelling coverage limit of $250,000, the average annual premium cost is about $1,312, or $109 per month. Prices change based on insurance company used to provide coverage, size of home, extent of policy (replacement cost or actual cash value), and many more factors.
How Much Home Insurance Do I Need?
Your home is a large investment. Likely, it’s the largest investment you’ll ever make. So, it’s absolutely crucial to know how much home insurance you need. The answer varies by homeowner, but think of it this way. You want enough coverage to rebuild your home, replace your possessions, cover any damages or injury that occur on your property, and reimburse any living expenses, should you need to put in an insurance claim on your home.
Home Insurance Myths
There are several myths about home insurance regarding what is and is not covered. Of course, ever policy and company is different. However, knowing the facts behind these home insurance myths not only helps you better understand your policy, but also saves you money.
Myth #1: Home Insurance Covers Flood and Earthquake Damage
Too often, folks assume that damages or destruction caused by flooding or earthquake are covered by home insurance. Flood insurance and earthquake insurance are both separate policies from home insurance, so if you live in area prone to these natural events, you need to consider obtaining these coverages.
Myth #2: All My Belongings Are Covered
While home insurance covers many of your belongings, valuable items or collections such as jewelry and furs are usually not covered in a standard policy. You need additional coverage for high-value items. Standard home insurance policy has limits, so be sure to fully read and understand what is and is not covered by your policy.
Myth #3: Home Insurance Covers Home Maintenance Issues
It’s also important to note that poor home maintenance is not covered by home insurance. The upkeep and care of a dwelling is the responsibility of the homeowner. Not maintaining a home is considered “neglect,” and voids policy coverage for damages sustained from the neglect. For example, mold infestation is not covered by most base home insurance policies (though they are sometimes offered as a separate rider). The idea with mold is that since it takes a long amount of time to grow, and homeowners are responsible for preventative maintenance measures with their home, mold is excluded.
Myth #4: My Medical Expenses are Covered by Home Insurance
Don’t confuse the medical portion of liability insurance within your home insurance policy as something that covering injuries sustained by you. Instead, this portion of the policy is to protect you should a guest injure his or herself on your property. When you injure yourself on your property (an in-home injury), your health insurance – not home insurance – covers you.
Myth #5: My Policy Will Replace My Belongings Like New
Refer to your policy once again to understand exactly how your possessions will be replaced should your home sustain damage. Your belongings may be covered by actual cash value (ACV) instead of replacement cost. This means your belongings are considered at their current, depreciated value, not at what they originally cost when brand new. In other words, what you receive for your items may not be enough to fully replace them.
Myth #6: An Inventory List of Belongings is Unnecessary
Homeowners may assume compiling an inventory list of their belongings is unnecessary, but the opposite is true. An inventory list serves as your proof of ownership. Should you file a claim, the insurance company will ask for a list of the items damaged and/ or lost. Creating a thorough inventory list before a damaging event can help you maximize reimbursement. It also helps you avoid the headache of trying to remember what was damaged, and their monetary value.
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All About Car Insurance
You know car insurance is important, as it protects both you and other drivers on the road. In fact, most states require that drivers possess car insurance. Having insurance protects you financially and legally if you are involved in an accident, and covers damages to your vehicle. However, that’s about the extent that most folks know about car insurance, if at all. Whether you’ve just received your license or have been driving for years, it’s crucial to not only know what car insurance is, but as to how it actually works, what is and is not covered, and how to obtain insurance in the first place. Keep reading on to learn all about car insurance.
What is Car Insurance?
Car insurance, also referred to as auto insurance, is an insurance policy for drivers. Car insurance basically protects you financially and legally should you be involved in an auto related incident; it also covers damages to your car.
How Does Car Insurance Work?
Car insurance works in that you pay a certain amount, or premium, to the insurance company, for coverage. As long as your policy is active, your insurance will help you with what is covered in the policy. Depending on your policy, you’ll pay your premium monthly, quarterly, or semi-annually.
How Much is Car Insurance?
Car insurance has no set price, as so many factors---age, gender, vehicle, state, accident history, etc.---determine the cost of premiums. As of a study made in 2020, the “average” cost of car insurance is $119 a month---but that is based on a 40-year driver with a good driving record. Know that this “average” will vary greatly due to the above factors. So, to really know how much car insurance will cost for you: get quotes.
Types of Car Insurance and Riders
There are several types of car insurance policies, to meet the varied needs and situations faced by drivers. What exactly is and is not covered in different policies can vary state to state, but below are the most basic definitions.
If you are the cause of an accident, then you are liable, hence the name of this policy. If, for example, you rear end another vehicle, liability insurance will pay for the expenses for the party not at fault. This type of insurance is mandatory in most states.
What is Comprehensive Car Insurance?
Comprehensive coverage is for instances when a vehicle sustains damage in non-collision events. Examples include hail/ weather damage, hitting a deer, vandalism, theft, etc. This coverage entails paying a deductible, or a set amount out of pocket, before an insurance company reimburses you for a claim that is covered by your policy. Comprehensive is usually an optional coverage, but if you have an auto loan, your bank may require you to obtain this policy.
Also referred to as Med Pay, Medical Payments provides coverage for hospital visits, ambulance rides, surgery, etc., should you and/ your passengers be injured in an accident---regardless of who caused the accident. Note: some states require this coverage, while it is optional in others.
Uninsured and Underinsured Driver
You’re involved in an accident, and while you may have car insurance, the other driver may be not insured, or is underinsured. This policy can help pay for medical bills if you’re injured, and also possibly for vehicle repair (varies state to state). If a person is underinsured, meaning their policy isn’t enough to cover damages, Underinsured Driver policy may help. As with Medical Payments, Uninsured and Underinsured Driver is mandatory in certain states, and optional in others.
You may think this refers to passengers, but riders is a car insurance term that refers to an additional policy or endorsement that provides more protection or features. Riders will vary company to company, but some examples of riders are rental coverage, roadside assistance, and glass coverage. However, be sure to talk to your insurance agent or company to fully understand what riders they carry and what exactly they cover.
Common Insurance Terms
Comprehensive coverage is for non-collision events, whereas collision coverage is for when vehicles sustain damage from another vehicle or object.
In the event of a comprehensive/ collision loss, this is the amount you pay out of pocket, before your insurance company pays the remainder of the bill. The amount will vary depending on what insurance policies you have. The most common deductible is $500, but can range from $100 to $1000.
A professional who works for an insurance agency and sells the company’s insurance products, while making commission. Agents help clients find the right insurance.
Also known as a claims adjuster, an insurance adjuster looks into claims, so they can determine the liability of the insurance company.
The individual who owns the insurance policy; you can also add other people to your policy, such as your spouse or children.
The amount you pay to have insurance coverage, every month or every six months, depending on the company.
How To Get Car Insurance
There are three methods in obtaining car insurance---online, over the phone, or in person with an agent. In this digital age especially, it’s pretty common for folks to shop online for quotes on car insurance. But before you browse online or contact an agent, you will want this crucial information, listed below, at hand to make the process easier.
Check Your State’s Car Insurance Laws
Be sure to familiarize yourself with your state’s car insurance laws, as such laws will vary state to state. It’s important to know that if you’ve moved to a new state, your coverage will not “move” along with you; you most likely will have to switch to new policies. In general, most states will require that drivers carry Liability Insurance. Though you may be tempted to go with the minimal requirements for coverage, this can be risky, for should you be in an accident, expenses may not be fully covered. It is always advisable to have coverage that extends beyond the minimum set by state laws. Note, too, that other types of car insurance, such as Uninsured/ Underinsured Motorist, is mandatory in some states, while in others it is optional. Regardless of the exact laws by state, know that failing to have car insurance as a driver can result in fines, loss of your license, and/ or jail time. Don’t wait till an accident to get car insurance---having it now instead can save you time, money, and legal woes.
The benefit of shopping online for quotes is that you can compare prices, and there is no pressure to make a quick decision. Simply provide your information---age, vehicle make and model, gender, etc.---and you will receive a quote. The downside of buying car insurance online? Quotes are just that: quotes. The numbers you see may not be the amount you’ll pay in reality. Plus, if you have questions, and/ or are new to purchasing car insurance, you’ll most likely benefit from talking over the phone, or in person with an agent.
Over the Phone or In Person
Speaking to an agent over the phone or in person is a great way to answer questions you may have. An agent will help assess options and policies available to you, and can explain more complex aspects about car insurance.
How to Lower Car Insurance
Also mentioned before, car insurance has no set cost, as so many factors come into play: state laws, driver history, agency, broker, etc. There are several ways to lower car insurance premiums, the crucial one being: have a safe driving record. This may seem redundant, but it’s true: avoiding accidents and fines will keep your premiums lower. The more accidents and speeding tickets you have, the higher your premiums will be.
The make and model of your vehicle also affect premium rates as well. Generally speaking, sporty or very pricy cars often have higher premiums. So if you’re in the market for a new vehicle, keep this mind, and know that vehicles with higher safety ratings can help lower premiums.
Less known is that having a good credit score can help lower premiums. When agents and insurance companies see that you are financially responsible, they are more inclined to view you as a responsible driver, and determine lower premium rates. In fact, studies have shown that drivers with higher credit scores have less accidents. Being both financially savvy and a responsible motorist can help you end up saving money.
Lastly, to lower premiums you’ll want to have a higher deductible. When you have a lower deductible, you have higher monthly costs.