Home insurance might not be your favorite thing to contemplate. The jargon, the policy, the premium. It’s a lot. The thing is that insurance can be overwhelming, and you might wonder whether you have the “right” home insurance – whatever the “right” home insurance looks like. Insurance is a big deal, and you certainly don’t want to have the wrong home insurance. Here are eight questions on our home insurance checklist for you to ask yourself.
Your home insurance checklist.
1. Is the house insured for its replacement cost?
There’s a difference between a home’s replacement cost and its market value. Replacement cost is what it would cost to rebuild the house from the ground up if it were destroyed by something like a fire – and that can include costs like the building materials and the cost of the contractors’ labor. The market value is the amount the home would sell for on the, well, market. These two amounts are not the same, and your insurance should cover your home for its replacement cost. (That’s the coverage you’d need if a fire burned your home to the ground, after all.) So, that’s why it makes the home insurance checklist.
2. Do you have the coverage you need for your belongings?
You also have to consider your possessions and how much it could cost to replace them all. (Taking a home inventory is also a good idea.) Are your belongings insured for their replacement cost value? (That can help you replace your belongings at today’s prices, unlike their Actual Cash Value, which covers only their depreciated value.) You also have to consider whether you have any valuables, like jewelry, that could require some specific coverage. Home insurance typically only includes a limited amount of coverage for these things – for example, $1,000 for jewelry.
So, that’s another thing for your home insurance checklist.
3. Do you have the right liability coverage?
You should also check the liability coverage on your policy. Is it sufficient for what you need? Lawsuits can get extremely expensive, after all. You can consider a personal liability umbrella policy if you’d like to have coverage that goes above and beyond the coverage on your home insurance policy. (You never know – it could come in handy.)
4. Do you have the home insurance discounts you qualify for?
It’s also not a bad idea to look at the home insurance discounts you qualify for. Do you have the discounts you’re eligible for? Have you made any changes to your house or in your lifestyle that could help you get lower rates through a discount? (Some common discounts include having a home security system.) Part of your home insurance checklist can be making sure you’ve got all the discounts you qualify for.
5. Have you considered bundling your home and auto insurance?
If you also need to get auto insurance, too, you might consider bundling your home and auto insurance. (All that means is that you’re getting both coverages from the same carrier.) There are a few reasons this might be a good idea. You could save money, for starters. Lots of carriers offer a discount if you have multiple lines of coverage with them. Plus, you can enjoy the convenience of only having to manage one home insurance company. You might want to add bundling to your home insurance checklist.
6. Is your deductible right?
You can also take a look at your home insurance deductible (which is the amount you agree to pay if you have a claim – you pay your part, the insurance company pays the rest up to the policy’s limit). There’s a relationship between your premium and your deductible. If you have a higher deductible, you could see a lower premium. But take care if you want to raise your deductible – you don’t want to raise it so high that it would be a major problem if you ever had to pay it in the event of a claim.
7. Do you check your policy regularly?
You’ve also got to ask yourself how often you actually look at and check your policy. Life changes from year to year, after all. One way to make sure that you’ve still got the right homeowners insurance is to check your policy and give it a review on a regular basis. It’s important to make sure your policy suits your needs.
8. Have you shopped your rates recently?
It’s always nice to have options, right? If you haven’t gotten quotes on your home insurance recently, it might not be a bad idea. You can see what’s out there. Maybe you’ll find coverage that’s better suited to your needs, or coverage that’s less expensive but just as robust.