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4 Important Terms When Buying Homeowners Insurance
Admin • Oct 18, 2019
If you own a home, you should consider purchasing homeowners insurance. Not only does it protect you in the event of a personal injury lawsuit, but it can also pay for some damages related to covered disasters and accidents. Like any insurance policy, you won't need it often, but when you do, homeowners insurance can save you thousands of dollars.
If you would like to know more about protecting your investment, check out these four important homeowners insurance terms you should know.
1. Actual Cash Value
If a covered disaster or accident damages your home, the insurance company may decide to give you the actual cash value or the replacement cost. The actual cash value is the current (minus the disaster or accident) value. Replacement cost refers to how much it would cost to actually get the damage fixed.
It's imperative to understand the difference because actual cash value can be extremely detrimental. For example, if your roof was old at the time of the disaster, the insurance carrier will only give you a fraction of the cost of replacement because the roof's value has significantly depreciated. If you have a policy that pays or replacement, however, the age and condition of the roof doesn't matter.
2. Additional Living Expenses
Disasters can make your home uninhabitable for a period of time. If you don't have a good homeowners insurance policy, this may mean spending your savings or struggling from paycheck to paycheck to pay for a hotel.
If your insurance does cover additional living expenses, it can pay for any increased living expenses related to the covered loss (such as paying for a hotel or paying for extra gas to commute to work). Of course, every policy has a limit. Even if you still can't go home when you reach the limit, your insurance carrier will stop paying.
3. Peril
A peril is an event that can cause damage to your home such as fire, earthquake, flood, and hail. When choosing a policy, you may have the option to choose a named peril or an all-risk policy. Despite the name, an all-risk policy does not cover every peril. Instead, it covers some of the most common like fire. This type of plan will cover everything not listed in the exclusion section.
If you need protection from certain perils that may be more common in your area, such as flooding, you may need a named peril policy. These cover much less, making them cheaper. With a named peril policy, the insurance agreement will list every covered peril. Any peril not listed is not covered.
4. Floater
A floater is something you can add to your policy for extra money. It adds coverage to something that is usually not included. Many people use this type of coverage for expensive items they wear such as jewelry or furs. Others use it to protect any expensive item they bring with them to different places, such as sports equipment.
Floaters may also include water back up from a sewer or drains, and if you are worried about underlying problems with the ground, ask about a sinkhole floater. If you are worried about identify theft, you can also add identify fraud expensive coverage as a floater. Other common floaters cover assisted living care, boats, and yards.
Typical homeowners insurance covers some of the most common perils, but if you need specific coverage, you can purchase a named peril plan or add floaters to your existing policy. For more information about homeowners insurance, or if you need to get a quote, contact us
at S.N. Anthony Inc. today.
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S.N. Anthony Insurance Inc.
104 S. Washington St.
Ripley, TN 38063
110 S. Church Street
Halls, TN 38040
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