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How to Get Better Homeowners Insurance

By Jason Markum

Insurance tends to be a complicated issue to discuss. People find it hard to understand the fine print in most of their policies and in fact most people don’t understand how the insurance industry even works so they tend not to ask questions when they should and not to prod when they should.

This doesn’t necessarily mean that you will be taken advantage of with your insurance policy, but it does mean that you might not be getting the best policy for your money; because after all, what do you know?

A case in point I like to talk about is homeowners insurance. Almost everybody buys their house with a mortgage. Hardly anybody pays with cash these days, at least nobody that I know! The point of this whole thing is that if you buy your house with a mortgage the bank is going to require you to have home insurance before they give you the loan. The reason why they do this is in case something happens to the house they are covered because in most circumstances the house is the major form of collateral for the loan and if house disappears the collateral disappears and the bank loses its money.

But I’m getting off track here…

The fact of the matter is since banks require you to have a homeowners insurance, people often just buy whatever homeowners insurance the insurance company tells them to. They don’t necessarily realize that they can negotiate and get better homeowners insurance. I know, when you’re borrowing a lot of money from the bank like that it’s a nerve-racking situation and the last thing you want to do is nitpick over homeowners insurance… but the fact is, you can save yourself a lot of money especially in the long run if you do nitpick over that homeowners insurance!

Another fact is, most people overspend for homeowners insurance. They do this by protecting themselves against minor losses that you really are better off not wasting your money on covering because the replacement costs for these things aren’t significant to begin with.

So what should you have covered in your homeowners policy? Well first off make sure that you’re protected against the total destruction of your house. The bank may only require you to have 80% coverage but you’re better off with 100% destruction coverage.

If you have lots of items in your house like expensive silverware, expensive jewelry, expensive electronic devices like big-screen TVs, surround sound systems and things like that, you’re going to be tempted to ensure those things in your homeowners policy but I strongly suggest you don’t. If you’re worried about replacing those things, purchase separate insurance solely for those things as it will almost always be less expensive than clumping those things onto your house policy.

Finally I suggest you stay away from policies that only cover a certain amount of liability protection for personal liability. Many policies will only cover hundred thousand to $150,000 in personal liability which is hardly ever enough money. Instead, go for an umbrella policy that picks up where your homeowners insurance leaves off.

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