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Understanding Your Home Insurance Policy

By Charles Hopkins Published 09/20/2007 | Finance
Mention home insurance and you often feel like you've committed a deadly sin. People glare at you and most will immediately start telling you a horror story. Some complain bitterly about their experience when having to claim on their home insurance policies. Listen to the whole story and quite often it is clear that ignorance or carelessness on their part cost them dearly.

Being informed and understanding what your home insurance policy is all about can make a whole lot of difference.

When looking for an insurance company you should check on a few things before making your final decision.

Always make sure that the company is licensed to do business in your state.

Compare packages, taking into consideration the premium, what is offered, speed in settling and quality of service.

Take the time to do some research on the financial strength of the company. Insurance rating services such as Moody's, A M Best etc. can help you in this respect. Make sure the information is up to date.

By asking your neighbors and friends you could find an insurer with a good track record and good rates in your neighborhood.

Once you have found the company of your choice, make sure you fully understand the conditions of coverage as well as the correct claims procedure.

Replacing household items cost more every year. To make sure you have the correct coverage, it is necessary to update the information and amount insured at least once a year.

When purchasing new items, keep the receipts in a safe place. Should you ever have to claim, your insurer might need these. Check with your insurer on things that you remove from the house occasionally, such as cameras, laptops etc. You will most probably have to specify them separately.

Keep an inventory of your household goods. Taking photos or making a video is a good way of keeping record. Many people also engrave their household goods with an identification number. This makes it a lot easier to identify your possessions should you have to.

Make sure you adhere to the conditions of your policy. If a condition of your coverage is to have an alarm system, make sure it is working perfectly at all times. Arm the alarm when the house is empty. Remember that your insurer will not pay, should there be a burglary, if the alarm wasn't armed or working properly.

Always give true and proper information. Should you ever have to claim, even something you did not consider as important might affect your claim. All the members of the household must me noted, even lodgers.

Make sure your premiums are paid on time. A typical grace period after payment is due is 5 days. Should you suffer a loss while your premium payment is outstanding, your insurer could refuse to pay.

If your home will be empty for an extended period, inform your insurance company. If you make changes to the property, notify them. Certain structures might have an influence on you premium (such as adding a lapa with a thatched roof).

Household insurance might be a necessary evil where many people are concerned. However, how you handle it can make the difference between having a pleasant or very nasty experience, should you ever have to submit a claim.