Home InsurancePosted By: Marie Park on 2022-07-22
Home insurance is not required by law in New York, but it is highly recommended to protect yourself against any unforeseen issues that might happen to your house. Most lenders will require home insurance to obtain a mortgage loan. If you are in the process of purchasing a new home, lenders will often require that you obtain a copy of the insurance policy for their review before you close on your house.
What does a homeowners insurance policy cover?
- Smoke damage
- Pipe burst - Any flood that is caused by a pipe bursting is covered.
- Theft -- Although there are some limitations. For example, with most insurance carriers jewelry is covered up to $2,500 depending on the carrier. If you have expensive jewelry, such as an engagement ring or wedding ring worth more than that, it is recommended that you get an additional endorsement. The item will need to be appraised and submitted to the insurance company and any claims that are made will be subject to a deductible.
What types of home insurance policies are there?
There are two types of home insurance policies offered by insurance companies: actual cash value (ACV) and replacement cost value (RCV). ACV pays you for what your property is worth today, but in most cases if you have a mortgage, lenders will not approve loans with this sort of insurance policy. RCV is the value of replacing your property with a new property, often factoring in depreciation.
If I rent to a tenant, does my home insurance cover the tenant?
The tenant will need renters insurance to cover their possessions. Any structural damages that may happen to the property you are renting is covered under the dweller's policy.
What should I take into consideration when deciding how much coverage I need?
The insurance carrier will take into consideration things like the cost to rebuild the home, the type of coverage you want or need, the value of the possessions inside, and other structures on the property. The cost of your home will be determined by a cost estimator, which is valued on price per square foot. Any upgraded features such as bathroom or kitchen will change the estimated cost of your home. The value of your possessions inside the home are typically based on a percentage of the cost of your dwelling. If you need additional coverage you can do additional increases through endorsements.
In most cases, what is not covered by home insurance?
- Floods - Any natural flood such as rain, melting snow, hurricane - most home insurance policies do not cover. You would need to purchase additional insurance to cover any floods. Typically if you have a mortgage and live in a high risk flood area, your bank will require you purchase flood insurance to obtain your loan.
- Earthquakes can be covered under a homeowners insurance policy by endorsement only. They are subject to its own separate deductible.
- "Acts of God" -- any event that occurs outside of human control and that can't be predicted or prevented. The term is roughly analogous to a natural disaster. Things like earthquakes, severe weather and floods are all considered acts of God. However, fallen trees and lightning strikes are often covered. Make sure you check with your agent.
- Intentional damage
- General wear and tear
- Rodent or insect damage
- Uninsured vehicles on the property
Do I have coverage if big ticket items break in my house, such as a furnace or AC unit?
These are generally not covered, but some carriers offer equipment breakdown coverage as an additional endorsement to your homeowners policy that would cover replacement costs for big ticket items, such as a furnace or AC unit.
Does my home insurance cover things outside my home?
Yes! Carriers may offer coverage on small boats and trailers up to a certain dollar amount. Any personal property is also covered. Both are subject to the deductible on the homeowners policy.
Am I fully covered if someone is injured in my house?
Yes, but the amount is capped on your insurance policy by a certain dollar amount. For example you might have $75,000 worth of liability coverage, but if someone gets injured and it costs $100,000, you are subject to pay the overage unless you have an umbrella policy which will provide you additional liability coverage, so that if it goes higher than your limit you do not have to dig into your personal savings.
How can I lower the cost of my home insurance?
- Increase your deductible when you can. If you are getting a home loan, some financial institutions require a threshold for the deductible. Most lenders do not want more than a $1,000 deductible on your homeowners policy.
- Limit claims against your policy. The fewer claims you have had the lower your cost will be.
- Add home security or other protections to your home. Some carriers offer home security and protection discounts, which include but are not limited to, a burglar alarm, fire alarms that automatically call authorities, and sprinkler systems in the home.
- Increase your credit score. Credit score can play a big role in the cost of your home insurance.
- Remain with the same carrier. While it is good to check the market every few years to make sure your rate is competitive. Some carriers will give discounts to long-term customers.
- Make home improvements. Any significant home improvements you make will often lower the cost of your home insurance. Some examples would be: updating your electrical, putting in a sump pump, replacing your old roof and adding storm gutters.
- Pay your policy in full. Most all carriers will give you a discount if you pay in full.
- Pay your home insurance bill on time. Paying late can cause an increase to rates in the future.
- Talk with an agent. It is important when you are trying to save money that you understand what you are paying for and what you might be giving up to save a small amount of money. An agent is your advisor and the more they know about you and your personal situation, the more advice they can offer.
Save Time and Money with Lia Insurance
If you are new homebuyers looking to get a quote on a new insurance policy or simply want to talk to a licensed agent about your current policy, give Lia Insurance Agency a call today. We do the hard work for you and shop different home insurance carriers to find the best deal for you!
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