Protecting Your Investment
When you look over your lifetime, the odds are that buying a home will prove to be the biggest single investment you’ll make. If you were wise, you saved some cash and paid a reasonable deposit. That way, you had a lower mortgage and could manage when the variable rate went up. Just think about all that money in the building itself and any other structure on the land. Then, whether you’re a homeowner or a renter, you need to protect the money you have tied up in the contents - all those one-hundred-and-one things that go into making empty rooms a home. The first line of defense is homeowners insurance.
The standard policies cover you against damage to the building(s) and to most of the contents. But you need to read all the small print to find out exactly what kind of damage is covered. Insurance companies are very good on the big promises and then find different ways to exclude or limit the amount they have to pay out. It’s in your interests to spend the time necessary to read policies before you buy one. That way you understand exactly what protection you are getting. If there is any doubt, ask someone at the insurance company for an explanation. It’s far better to get everything clear before you start. If you leave it until your first claim, the whole atmosphere has changed. You’re no longer a customer to be wooed. You’re one of those dangerous people claiming money and the whole relationship changes. Hard though it may be to understand, the company becomes much less willing to explain what you can claim after you’ve made a claim.
The usual events covered are damage from storms (that’s “ordinary” wind and rain, lightening, etc. - but watch out for the terms that get written in if you live in states prone to flooding, hurricanes or tornados), ice and snow (including frozen pipes), fire and smoke, and theft. If you live in an area at risk from earthquake or flooding, there may be special cover available. Make enquiries before you buy the house. The usual run of furnishings and contents are covered without you having to list everything. Mostly, you can give a ballpark estimate of value. But you must identify anything that is particularly valuable or special for some reason.
Finally, look carefully at the third party liability cover offered. If someone comes into your home and is injured, you could face a claim. With medical expenses rising fast, you should carry at least $100,000 to guard against this kind of risk.
