Have you reviewed your home insurance since buying your home?

Homeowner's insurance is a necessity and not just because it protects your home and possessions against damage or theft. All mortgage companies require borrowers to have insurance coverage for the full or fair value of a property and won't fund a real estate transaction without it. The DuPree Team knows that the world of insurance can often be confusing, and we have provided a guide for you below to explain the benefits and limitations as well as some helpful tips on how to reduce your insurance costs.

All polices are not created equal so make sure you read the fine print on your policy before you sign on the dotted line. The following guide will cover what a typical homeowner's insurance policy will cover but is not meant to be an all-inclusive guide. For specific questions regarding your potential or current policy it is best to contact your insurance representative directly.

What is Covered?

Damage to the interior or exterior of your house – In the event of damage due to fire, hurricanes, lightning, vandalism or other covered disasters, your insurer will compensate you so your house can be repaired or even completely rebuilt. Damage from floods, earthquakes and poor home maintenance is generally not covered and you may require a separate policy.

The contents of your home are covered if they're destroyed in an insured disaster. Additionally you can get "off-premises" coverage, so you could file a claim for lost jewelry, for example, no matter where in the world you lost it. However, there may be a limit on the amount your insurer will reimburse you. If you own a lot of high-priced possessions, you might want to purchase a separate policy for those items.

Personal liability for damage or injuries caused by you or your family – Liability coverage protects you from lawsuits filed by others. This clause even includes your pets! So, if your dog bites your neighbor your insurer will pay their medical expenses. While policies can offer as little as $100,000 of coverage, The DuPree Team recommends having at least $300,000 worth of coverage. For extra protection, a few hundred dollars more in premiums can buy you an extra $1 million or more through an umbrella policy.

Hotel or house rental while your home is being rebuilt or repaired – If you do find yourself a situation where your home in uninhabitable this will undoubtedly be the best coverage you ever purchased. This part of your insurance coverage, if purchased, will reimburse you for the rent, hotel room, restaurant meals and other incidental costs you incur while waiting for your home to become habitable again.

Different Types of Coverage

• Actual cash value – This value covers the house plus the value of your belongings after deducting depreciation.
• Guaranteed (or extended) replacement cost/value – The most comprehensive, this inflation-buffer policy pays for whatever it costs to repair or rebuild your home—even if it's more than your policy limit. Due to the fluidity of our market, it's a good idea to buy coverage for more than your home is worth. A guaranteed replacement value policies will absorb the increased replacement costs and provide the homeowner with a cushion if construction prices increase. 

• Replacement cost – This is the actual cash value without the deduction for depreciation, so you would be able to repair or rebuild your home up to the original value.

What Isn't Covered?

While homeowner's insurance covers most scenarios where loss could occur, some events are typically excluded from policies, namely natural disasters or other "acts of God," and acts of war. If you live in a area where disasters are likely it is a good idea to purchase a separate policy that covers these scenarios.

Cost-Cutting Insurance Tips

Maintain a security system and alarms: A burglar alarm monitored by a central station or tied directly to a local police station will help lower the homeowner's annual premiums, perhaps by 5% or more. In order to obtain the discount, the homeowner must typically provide proof of central monitoring in the form of a bill or a contract to the insurance company.

Smoke alarms are another biggie. While standard in most modern houses, installing them in older homes can save the homeowner 10% or more in annual premiums. CO₂ detectors, dead-bolt locks, sprinkler systems and in some cases even weatherproofing can also help.

Raise your deductible: Like health insurance or car insurance, the higher the deductible the homeowner chooses, the lower the annual premiums. However, the problem with selecting a high deductible is smaller claims/problems such as broken windows or damaged sheetrock from a leaky pipe, which typically will cost only a few hundred dollars to fix, will most likely be absorbed by the homeowner.

Look for multiple policy discounts: Many insurance companies give a discount of 10% or more to customers who maintain other insurance contracts under the same roof (such as auto or health insurance). Consider obtaining a quote for other types of insurance from the same company that provides your homeowner's insurance. You may end up saving on two premiums.

Plan ahead for construction: If the homeowner plans to build an addition to the home or another structure adjacent to the home, he or she should consider the materials that will be used. Typically, wood-framed structures will cost more to insure. Conversely, cement- or steel-framed structures will cost less because it is less likely to succumb to fire or adverse weather conditions.

Pay off your mortgage: Homeowners that own their residences outright will most likely see their premiums drop because the insurance company figures if a place is 100% yours, you'll take better care of it.

Make regular policy reviews and comparisons: No matter what initial price you're quoted, you'll want to do a little comparison shopping, including checking for group coverage options through credit or trade unions, employers, or association memberships. Once per year compare the costs of other insurance policies to their your current. Review your current policy annually and make note of any changes that might have occurred that could lower their premiums. Notifying your insurance company of the change(s) and providing proof in the form of pictures and/or receipts could significantly lower insurance premiums. 

            The DuPree Team hopes that you and your family have a successful year and are so happy to have you as part of our real estate family. We hope that you found this information useful and look forward to providing you with curated and informative email blogs on a monthly basis. If there is any topic you think we should cover, please let us know! Please keep us in mind the next time you or anyone you know is looking to buy or sell in South Florida.

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