How Does Home Insurance Work?Homeowners insurance is made up of coverage levels that may help pay to repair your home and replace your belongings if they are damaged by hazards, such as theft or fire. It could also help cover costs if you accidentally damage another person’s property, or if someone is injured at your home.
It’s important to understand what your policy actually covers. Standard policies include some causes of loss (such as wind damage, fires or theft) but not others (such as earthquakes and flooding). Save yourself the hassle and avoid filing a claim for an uncovered event.
When to Use Homeowners InsuranceYou Have Significant Damage or Total LossThis is primarily what homeowners insurance is most useful for — when your home suffers a loss so great after an unexpected incident that it becomes unlivable. In a situation like this, you should definitely file a claim to recover your losses.
The Cost of Repair Exceeds Your DeductibleIf part of your roof blows off and the estimate for repair is $5,000, when your deductible is $1,000, file a claim. If you incur an expensive repair or replacement to fix your home, and it was caused by a covered loss, you should use homeowners insurance to help pay for it.
You Haven’t Submitted a Claim in Three or More YearsInsurers take your claims history into account when they decide if they will cover you and what to charge for your premium. Statistically — whether for home or car insurance – if you’ve previously filed a claim, you’re more likely to file additional claims in the future, which makes you riskier to insure. When you do need to file claims, make sure to space them out as much as possible.
What Homeowners Insurance CoversCoverage for the Structure of Your Home
What Homeowners Insurance Doesn’t CoverYour home insurance policy will not cover every possible disaster or mishap that can happen. If your neighborhood is hit by certain types of natural disasters and your home suffers structural damage, the loss will likely not be covered by your insurance carrier.
How to Get the Most Out of a Home Insurance ClaimReport Any Crime to the Police and Take Photos of DamageIf the damage was a result of theft or vandalism, report it to the local police immediately. Take photos of the damage, and make sure to get a copy of the police report for your insurer.
Contact Your Insurance Company and File a ClaimBefore formally filing a home insurance claim, ask your insurance agent the following questions:
Prepare a List of Damaged or Lost ItemsYou will need to substantiate your loss, so make a list of destroyed or damaged items and their estimated costs. Make a copy of the list for your adjuster when they come for an in-person visit.
Have an Adjuster Inspect the DamageYour insurance company will arrange for an adjuster to come and inspect your home in person. They will review the property damage to determine how much the insurance company should pay for the loss.
Make Temporary Repairs and Keep ReceiptsWithin reason, take the steps needed to make your home livable again. Save receipts to submit to your insurance company for reimbursement. If your property is unlivable, most policies provide coverage for additional living expenses, but you’ll need to provide proof of the costs.
Ask QuestionsDon’t be afraid to ask your USA Mutual Insurance agent or your state department of insurance any questions you may have along the way. Once the terms of your settlement are agreed upon, state laws require that your payment is promptly sent.
If you’re an adult with a house, a spouse, kids, or any financial liabilities, and you should consider buying a life insurance policy. With life insurance in place, you won’t have to lose sleep worrying about the financial burden your loved ones would inherit if you were to die unexpectedly. Here are 6 things to look for when buying a life insurance policy:
A 20-year term life insurance policy for $750,000 would set you back $717.50 annually, while a whole life policy with the same amount of coverage would have cost $9,875 per year.
This is obviously a huge disparity, and one consumers should know about when weighing the pros and cons of buying whole life or term life. While whole life insurance provides a death benefit your whole life (until you die), it’s a stretch to say the benefit of perpetual life insurance is always worth the added expense.
however, scoring an affordable life insurance policy is not only important now – it is important for the future, too. That’s because, when life happens and times get tough, life insurance is often one of the first items people stop paying for.
If you buy a policy that’s affordable, you’ll be much more likely to be able to hold onto it if you have to make any serious cuts to your budget.
#2: Immediate Payout
If you see a commercial on TV offering you quick and easy coverage with no medical exam, it’s probably from a company that offers what’s called “simplified issue” life insurance. Because there are few questions on the application and no exam, it’s true that you can easily qualify for these type of policies.
However, there’s often a two- or three-year waiting period after purchase before they’ll pay out 100% of the proceeds upon death. If you want life insurance coverage that starts right away, this is obviously imperfect.
You also want to make sure your policy pays 100% of the “face value” from day one if possible. Stay away from simplified issues policies unless it’s a last resort.
#3: Underwriting Leniency
You could be making a huge financial mistake if you buy a policy from a company that does not treat your particular health or personal activities fairly. Companies range widely on how they price out risks like diabetes, smoking, travel outside the U.S., or your family’s medical history.
Be sure to speak to a knowledgeable independent agent who can ‘shop’ various companies to find the best rates for your particular situation. If you don’t, you risk overpaying for a life insurance policy – or not being accepted altogether.
#4: Automatic Payments
While there are certain bills you may want to pay manually, life insurance is one of those recurring expenses that is usually best set up as an automatic bank draft or credit card charge – especially in the case of term life insurance where your premium stays the same.
The reason for this is simple: If you forget about your life insurance bill and don’t make your payment on time (or within your grace period, which is usually 30 days), your policy may be cancelled altogether. At that point, your issuer may not allow you to pay back your missed premiums, and they’re not required to reinstate your policy, either.
Look for a life insurance company that will let you pay your monthly premium automatically, and you’ll never have to worry about letting your policy lapse or missing a bill.
#5: Conversion Feature
If you’re looking into term life insurance, beware of policies that don’t allow you to “convert” your term policy into a permanent one. This feature typically allows you to exchange your term policy for a permanent plan (such as universal life or whole life) without proving you’re still healthy.
If you buy a 20-year term life insurance policy, for example, and decide after 19 years that you still need coverage but have developed some medical conditions since your initial term purchase, the conversion feature would allow you to keep your coverage, whereas you may not be able to qualify if you were to go back out to the market for a new policy. Most term policies include a conversion feature, but not all, so be sure to find out.
#6: Living Benefits
Thanks to a new wave of life insurance companies striving to meet consumer needs, there are more ways than ever to use life insurance while you’re living.For example, many newer policies give you the option to receive payments if you get a chronic illness or need to be placed in a care facility, Several companies also give you 20- or 25-year windows at which you can get back some or all of your premium paid into the policy if you no longer want or need the coverage.If you want the option to get cash out of your life insurance policy if you get cancer or need end-of-life care, then looking for a company that offers this option is a smart move.
Are you now ready or still unsure about Life Insurance? No worries. Click here to speak with one of our insurance professionals who will take the time to help you better understand these 6 key points.