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When Do You Need Home Insurance?
Home insurance covers the cost of your home should it be damaged or destroyed. Usually the policy also insures all of your furnishings and other contents, and should protect you from paying someone who is injured in your home out of your own pocket. If you have jewelry, valuable collections, art, high-end entertainment or computer equipment, you should consider adding a rider to the policy. They will cost you some additional premium money but it will be well worth it should you lose something of extraordinary value. It's amazing how much replacing lost items can end up costing you.
Read Your Policy
All insurance policies are long and confusing documents. In spite of that it's a good idea to read the fine print. There are often exclusions that the agent or salesperson doesn't tell you about. Too many people find out the hard way that a particular event or item wasn't fully covered or even covered at all. Losing your house and not having the right kind of home insurance could leave you devastated and unable to make up for it the rest of your life.
Most home insurance policies have the term "Acts of God" included. These usually refer to events that happen due to a natural event. An example would be the recent hurricane activity in southeastern states. Generally, you pay extra premiums for coverage for these events which also include earthquakes and floods. If your area is at risk for a particular event, you'll want to check out available coverage.
There are a couple of things to be especially aware of with your home insurance or any other type of insurance. Deductibles are amounts that you agree to pay for up front when you buy a policy. For instance if you have a $500 deductible on your home, the insurance company would automatically deduct that amount from what they pay you as reimbursement. Usually, the higher the deductible, the lower your premium. It's important to carefully weigh the best route for you to take when you're looking at policies.
The other thing to seriously think about is the replacement value of your property. Replacement cost will give you enough money to replace the item and won't depreciate it for wear and tear or past market value. Cash value means they will pay you what the item was worth at the time of purchase and not take into consideration the fact that it probably costs a lot more in today's market.