Home Owners Insurance  

When you are considering the situation with your home owners insurance, there are a number of very important things you need to know: 

Home Owners Insurance: Suggestion

Firstly be very aware that there is not any home owners insurance provider at all that is offering you a home owners insurance policy in order to protect you or your home. Home owners insurance is an immensely profitable business because the policies are designed to catch unsuspecting homeowners out. It is only by virtue of the fact that most of us are lucky, and don’t have our homes regularly washed away by mudslides, sandstorms, race riots etc, that we generally think that home owners insurance is provided for our benefit. 

Take the ‘Guaranteed Replacement Cost’ policy which is one that has come under serious scrutiny recently but is still being sold as the answer to all the home owners insurance problems suffered in recent disasters such as Hurricane Katrina. Guaranteed replacement cost policies are supposed to take account of damage which exceeds the limit on your home owners insurance policy without taking into account property depreciation or appreciation. They do not. Just believing from the title of your home owners insurance policy that you are completely covered, no matter what, is risky. Usually companies still limit the policy to 20 % over the limited coverage cost, despite premiums being as much as 100% higher than traditional policies.

If you have an all-inclusive home owners insurance policy that also covers contents, then consider seriously changing your policy to get separate contents insurance, preferably with a different provider. In the event of major and complete destruction of your home, most guaranteed replacement cost home owners insurance will not pay out a penny on contents if the cost of home repairs exceeds the normal 80% of insured value level. 

Although many of us have rethought our home owners insurance and shopped around for better deals, make absolutely sure you know what you are getting yourself into if you choose a small insurance provider. In the event of massive damage to numerous homes, small companies are just unlikely to be able to pay, especially in a timely manner. The economy of scale works for insurance perhaps more than any other business, as however many disasters occur round the world, they tend not to happen everywhere simultaneously. A company that only insured property in New Orleans when Katrina hit, is never going to be able to provide the same payouts as a company that has policies sold to homeowners across the whole US and Europe, for instance. Bigger is better, but still check the small print and get professional, independent advice.