Homeowners Insurance Questions and Answers
Know Your Deductible
Question: What does it mean when you have meet your deductible?
Answer: Most insurance policies, whether home, auto or health use this method of meeting your deductible. For example, if your deductible is $250, you must spend $250 for doctors' visits or for prescription medications before your health insurance company will start to pay. Insurance policies can have a wide variance of deductibles. We have seen them as low as $250 and as high as $50,000 (however, both of those are few and far in between) depending on the location and circumstances. A typical family household most likely has a deductible of about $1000. Here's a good explanation of why insureds are required to pay a deductible. If something such as a computer, cell phone or tablet were stolen, there is going to be coverage for that, but the deductible may exceed the value of the loss item.
Know Your Limits
Question: Does my homeowner’s policy have any limits of coverage?
Answer: Most insurance carriers do place limits on the policies that they write to protect themselves financial. It's equally important to know that, whether it's during a move or not, any property covered by homeowner’s insurance will only be protected up to the limits on your policy on the day the damage occurred. Your policy may also include a lower limit for your personal property while it's away from your residence premises. Another example of limits to policies would be mold removal. Many carriers choose to have $10,000 limits for claims requiring any work relating specifically to mold remediation work.
In addition, there are different standard limits depending on the category of property. An example would be jewelry or collectibles; your policy may state maximum coverage amounts for such items. However, your agent may suggest purchasing extra coverage and creating a scheduling for items that are of significant value so you get protection for them up to their appraised value, not just the standard personal property limit. No one wants to spend $15,000 for a diamond ring only to get $10,000 for it when it comes time to file a claim!
Know Your Costs
Question: How Much Does It Cost to Insure a Home?
Answer: The types and amount of coverage you need depends on many factors. These factors include your home's size, location, and amenities. Meaning there isn't a simple answer that works in every case. Hint: How much you pay for your home may not be a key factor in the cost of the cost of insurance coverage. The formula for determining good insurance coverage takes many factors like the cost to replace it if something happened.
Question: Does My Location Change the Cost of Insurance?
Answer: Geographic location often affects the type of risks your home is exposed to. For instance, if you own a home on Cape Cod, Nantucket or Martha's Vineyard, you may be required to have different insurance coverage limits than those set by the owner of the exact same home in a neighborhood in the Taunton area of Bristol County. Why? Dwelling coverage limits are based on replacement cost, which can vary by location due to different construction or material costs in each area.
Another factor is the cost of labor and materials in different geographic areas. Since homeowner’s insurance typically helps cover the cost of repairing or rebuilding a home if it's damaged or destroyed by a covered peril (water, wind and fire damage are examples of peril), the amount of insurance you may need partly depends on what it would cost to complete the work in your town. Labor costs, in particular, vary significantly in different markets.
And why wouldn't you simply choose dwelling coverage limits that match the purchase price of your house? The actual labor and material costs to repair or rebuild your home could end up being less than what you paid. Or it could be costlier to rebuild your home. A local agent can help you understand the options, so you can choose the coverage that's appropriate for you.
We hope this information has taken a little of the mystery out of the frequently asked questions we receive. And because insurance policies vary so greatly, we strongly suggest that people ask their agent the specifics of their policy. And of course, if you ever need help with a water or fire damage please give us a call at 508-824-0200.