Insurance Blog

Finding the right coverage to protect your most important investment

Anybody who’s ever had to take out a loan on their home knows that they’re required to get mandatory insurance. The thing is, there are some states that have raised this mandatory home insurance to punishing levels. It has to do a lot with economic factors as well as issues pertaining to the increasing number of natural calamities. Although flooding, earthquakes and other natural disasters are not usually covered in most insurance policies, these have affected most homeowners’ finances and subsequently the profit margins of insurance companies. This is true for instance in Florida where rates are going to increase by as much as 15% according to a report by the Miami Herald.

For those however, who are more intent in securing insurance for their homes to protect it as an asset, here are some basic guidelines:

1.      Analyze your area. As a business built on actuarial or statistical data, insurance companies base their premium rates on factors surrounding the property in question. They take into account the risk factors that could affect your home and therefore their bottom lines. Home insurance premiums in tornado prone areas are generally higher than others.

2.      Make your home insurable. Let’s make this simple, the more risks that your home is prone to, the higher the insurance premiums you might have to pay for it. Mitigating those risks with measures such as installing burglar alarms and fire alarms could give you some leverage with the insurance companies. It also tells them that you’re genuinely trying to protect your home rather than looking forward to getting insurance claims.

3.      Avail of insurance that covers floods. Almost all basic types of home insurance exclude floods in their coverage. The few private insurance companies that do, look at this as a high risk segment and place high premiums on it. Flooding can cause very significant damage specially if you live in a hurricane prone area. A specific type of insurance that covers this is the National Flood Insurance Program created in 1968. Several measures are now being mulled over in the legislature to further expand and make this type of insurance better for everyone.

4.      Check if your living expenses are covered. Your house gets burned to the ground and you have nowhere to stay. You can’t work, you have to find shelter for your kids, and basically live like a nomad until you have a new place to stay in. Look for the clause that specifically covers your living expenses during times when your house is unsuitable for living after a conflagration.

5.      Check for exclusions in your policy. Exclusions are the main ways by which insurance companies can avoid to pay claims made by the insured. Sometimes, the littlest of details matter and not paying attention to them, could lead to tragic results. If possible, make a simple checklist comparing the exclusions of one policy to another to see which one is the most realistic.

Getting the right insurance policy is all about getting adequate protection for your home. The price of the premium, though important, should not be the guidepost for your decision. Make it a point to choose the policy which you think could cover the things that might happen to your house.