Whether you own your own home or rent, insurance is a very important way to protect yourself.
Homeowner's insurance protects both the structure of your home and the things inside it. Renter's insurance, on the other hand, only protects your personal belongings. Everyone, including renters and homeowners, needs liability insurance to protect them financially if someone gets hurt on their property or because of something they did.
You can choose to insure your home and belongings for either how much it would cost to replace them or how much they are worth right now. After depreciation is taken into account, the actual cash value is the amount it would cost to fix your home or replace broken items. Replacement cost is the amount it would cost to fix your home with materials of the same kind and quality or to buy new things without taking into account how much they have lost value over time.
It's a good idea to make a list of everything you own and keep receipts for big purchases, as well as a picture or video of each room. In case your house burns down, keep copies of the documents in a safe deposit box or somewhere else safe.
The National Association of Insurance Commissioners (NAIC), a group of state insurance regulators who work on their own time, has given the following tips:
Important Considerations
If you have expensive items like jewellery, antiques, or works of art, you may want to add a "rider" to your policy because basic policies have limits on how much they will cover.
Most homeowner's policies do NOT cover damage to your home or belongings caused by flooding. Ask the National Flood Insurance Program of the federal government about flood insurance if you live in a flood-prone area (NFIP). You can get flood insurance with the help of your insurance agent.
Advice on Insurance for Different Stages of Life
At different times in your life, you may need different kinds of insurance. As an example:
Young singles who share an apartment with roommates who are not related to them each need their own renter's policy to protect their own things.
When adding a swing set or trampoline for their kids, young families should think about getting extra liability insurance.
Families who have lived in their homes for a while and may be remodelling or adding on should update their homeowner's policy to reflect these changes.
Seniors should check to see if they can get discounts. And if you just paid off your mortgage and your homeowner's insurance was paid for by your mortgage company, make sure to pay the premiums yourself so your policy doesn't lapse.
Remember that before you sign an application for insurance, you should take a few minutes to call your state's insurance department and make sure that the company is real and allowed to sell insurance in your state.
