Top 10 Questions To Ask About Your Homeowners Insurance Policy

It’s true that buying homeowners insurance is not a requirement. Unless your home were financed through a mortgage, home insurance would always be optional for a homeowner.

Still, if you take all the benefits of having homeowners insurance into account, you might want to consider buying such a policy. Life is very unpredictable, after all. Your home could be in the path of a disaster or the target of burglars. A home insurance policy can protect you in the aftermath of both, and then some.

When shopping for home insurance, you need to ask your home insurance advisor several questions to make sure you’re making the right decision. Here are the top ten questions to ask about your home insurance policy.

1. What specific perils does homeowners insurance cover?

Your homeowners insurance policy usually covers loss and damages caused by fire, lightning, smoke, windstorms, hail, explosion, theft, and vandalism.

2. What about flooding and earthquakes?

A standard home insurance policy does not provide coverage for any damage or loss caused by flooding and earthquakes. You have to get a separate flood or earthquake insurance policy if your house is in a flood or earthquake-prone area.

3. What are other perils not covered by home insurance?

Aside from flooding and earthquakes, homeowners insurance also does not cover damage or loss caused by neglect, power failure, war, or a nuclear explosion. Intentional damage or loss will also not be paid for by the policy.

4. Can you tell me about liability coverage under home insurance?

A home insurance policy also provides liability coverage, which will come in handy when a visitor gets hurt within your property and files a personal injury claim.

The liability component of your home insurance will also kick in when you or any member of your family damages another person’s property.

5. How much liability coverage should I get?

Generally, a home insurance policy provides $100,000 liability coverage, but you should consider getting more, as personal injury claims or suits typically bring substantial legal and medical expenses.

6. Will I get actual cash value or replacement cost when I make a claim?

Your policy will dictate whether you will be compensated for actual cash value or replacement cost.

If your policy’s terms say it provides for replacement cost, then you’ll receive a payment equal to the amount required to replace the damaged or lost items. If it’s actual cash value, then your compensation will only be equal to the depreciated value of a property at the time it was damaged or lost.

7. What is ALE?

A basic home insurance policy provides for your additional living expense or ALE in case you need to stay somewhere else because of the damage to your home. ALE coverage will pay for hotel stays, restaurant meals, and other expenses you and your family might incur until you are able to return home.

8. How much personal property coverage should I get?

If you want to determine your actual personal property coverage needs, perform an inventory of all your belongings. Your dwelling protection can also serve as a basis for your personal property coverage. Most insurers provide personal property coverage equal to fifty to seventy percent of one’s dwelling protection.

9. Will I need a home inspection before getting home insurance?

Before you can buy homeowners insurance, your provider needs to inspect your home to assess risks and come up with an accurate assessment of your rates.

10. Is my home insurance policy tax-deductible?

Home insurance is not tax-deductible. However, there are some instances where you may be able to deduct some insurance costs when filing your taxes. Operating a business out of your home is one. Renting out your home to other people is another.

There are just a few of the questions you can ask when purchasing a home insurance policy, but they’re an excellent place to start. If you can, think up some more questions, write them down, and ask them when the opportunity presents itself.

About the Author

Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.