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Whether buying the mansion on the hill or a condominium,
your insurance needs are sure to change. Make sure you don't forget
to address some important insurance needs. In particular, review
your home insurance, life insurance, disability insurance and auto insurance needs.
If you are like most people and have financed your
home, the lender will require a minimum level of homeowners insurance.
Even if you paid cash for your home, it's a good idea to protect
your investment with a good homeowners insurance policy.
There are many different types of homeowners insurance
coverage, but three of them are the most common. The first type
is HO-1, which is basic coverage. HO-1 covers your home from specific
perils such as fire, wind, lightning and theft. HO-2 also covers
your home from specific perils, but it offers expanded coverage.
HO-3 offers the most coverage. Unlike HO-1 and HO-2 policies which
name only specific perils for which your home is covered, HO-3 policies
cover all perils except for those that are specifically excluded.
Other types of homeowners coverage include HO-4 to insure condominiums,
HO-6 for renters insurance and HO-8 for old homes.
Home insurance policies provide specific types of
coverage. You should make sure your home insurance policy has the
following major coverage provisions:
Dwelling Coverage - This is the most important
coverage because it covers your homes structure.
Personal Property Coverage - This covers any
household valuables such as jewelry, personal possessions and furniture.
Liability Coverage - Provides protection if
you are sued because someone is injured by your family or pet on
or off your property.
In addition to the above-mentioned provisions, you
should get a separate flood insurance policy because homeowners
insurance policies do not cover damages caused by floods. Flood
insurance is backed by the federal government and covers homes in
more than 18,000 communities that have agreed to stricter zoning
measures to control floods. The National Flood Insurance Program
(NFIP) provides flood coverage through many insurance companies
and the rates are all the same since they are set by the federal
government.
If you are like most people and finance your home,
you should consider obtaining life insurance to cover your mortgage.
When you finance a home many mortgage companies will attempt to
sell you life insurance to cover your mortgage; however, this coverage
is often more expensive than buying an individual policy on you
own. A level premium term life insurance policy is a good choice
for affordable protection that lasts the length of your mortgage.
These policies offer level premiums and protection for durations
of 5 to 30 years. Make sure the policy you buy has guaranteed level
premiums for the entire duration.
Disability insurance is one of the most important
types of insurance because it protects your most valuable asset,
your future earnings ability. Over your life you will earn hundreds
of thousands of dollars unless you become disabled. If you financed
your home you are responsible for making monthly payments to your
lender, and you need to make sure you're protected in the event
that you become disabled and have a loss of income. A good long-term
disability policy will provide you with a sufficient income stream
in the case that you are disabled. Check to see if you have adequate
coverage through work, and if not, contact an agent to obtain an
individual policy.
Once you buy a home, it's a good idea to review your
auto insurance policy if the home will be your primary place of
residence. Your auto insurance policy covers your car assuming it
is kept at a specific location. If you move to a new home, you should
notify your insurance company. Your rates may go up or down based
on the location of your home. Also, you may want to consider obtaining
your home and auto insurance coverage from the same insurance company
since many companies offer discounts for multiple policies.
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