MY HOME INSURANCE

My Home insurance is a serious necessity and not a luxury. This is not just because it protects my home and my possessions against damage or theft but for other benefits it offers me. One of these benefits is that it serves as security for my mortgages. This is because virtually all mortgage companies require borrowers to have insurance coverage to facilitate mortgage transaction. More so, I may not be able to secure a loan from banks and other financial institutions without having a home insurance coverage for the full or fair value of a property (usually the purchase price).

Meaning

My home insurance is a class of insurance policy which protects my home against destruction and damage to it.  It also covers the home’s interior and exterior, possessions, and personal liability in the event of damage or injury to third parties.

There are three basic levels of coverage that I can buy for my home and they are; actual cash value, replacement, and extended replacement cost/value.

Determinants of Premium Rates for My Home Insurance

The costs of the Policy depends on the level of the risk for which the insurance company undertakes and the probability of its happening. The insurer will assess the risk in my home on the basis of past claims with respect to the same type of my home, the neighborhood and the general condition of the home. The assessment is necessary because while Insurers are there to pay claims, they’re also in the business to make money. Therefore, if the nature of my home is same with a home that has had multiple claims in the past, it can make my premium very high. And in some cases, the insurance company may even decline to accept my offer to insure.

Similarly, my neighborhood, the crime rate, and building material availability will also form part of the factors for consideration by the insurer before accepting my insurance proposal or the rate of the premium I will pay. other coverage options such as deductibles or supplemental riders for art, wine, jewelry, etc. And the coverage amount I want is also a factor that will determine my annual premium.

Also, the rate of my home insurance premium may also vary depending on an insurer’s love for certain building construction, roof type, condition or age of the home, heating type, the proximity to the coast, swimming pool, trampoline, security systems, and more.

Different levels of insurance Coverage for my home

There are essentially three levels of coverage.

Actual cash value coverage

This is the coverage for cost of the house and the value of my belongings in my home after deducting the value of depreciation. That is to say that this serves to determine the current value of the property. And the items and definitely how much I acquired them.

Replacement cost coverage

This is the type of coverage for my home that covers its actual cash value and my personal effects in my home but does not deduct depreciation. This type will enable me replace my home to the original value.

Guaranteed replacement cost/value

The type represents the most comprehensive type of my home insurance. It pays for whatever costs necessary to repair or rebuild my home notwithstanding that such cost may be more than the limit of my home insurance policy.

Also, some insurers may provide more coverage than I may have paid for. This is what is known as an extended replacement. However, the extended replacement limit may not be more than 20% to 25% higher than the actual limit in the policy.

What my home policy will cover

Damage to the interior or exterior of my house

My personal liability for damage or injuries to third parties

Alternative accommodation during rebuilding or repairing of my Home

What my Home Insurance does not cover

My policy will generally not provide insurance coverage for natural disasters or other “acts of God,” and acts of war.

The same scenario applies to when I live in a flood or hurricane area or an area with a history of earthquakes, in this circumstance, I will need additional policies for them.

How to reduce the cost of home my insurance premium

• Maintain a security system
• Seek policy discounts
• Increase my deductible
• Pre-Plan my renovation works
• Pay up my mortgage
• Make regular policy reviews and comparisons

Home Insurance Companies comparison tips

• Talk to a Person or other policyholders
• Check existing Policyholder’s satisfaction
• Making wide comparison of costs and insurers
• Do Insurance Company health check
• Look at claims response to older policyholders
• Look beyond price of premiums