5 Things to Understand about Homeowner's Insurance
May 9, 2006 A client of mine recently asked me about getting homeowner's insurance -- was it really necessary? Well, besides the fact that the lender will most likely require it, you can only hope it won't be necessary. However, if it ever does become necessary, you'll be glad you have it.
Years ago, my son fell asleep while reading a book in bed. His lamp fell onto the bed and, hours later, I awoke to the smell of smoke. To make a long story short, the heat from the lamp caused the mattress to smolder, but not actually burn. We got the mattress out of the house and had no actual damage (aside from the loss of the mattress). Except that everything in the house smelled like smoke. The insurance company paid to have an enormous number of items drycleaned to get rid of the smoke smell. I'm just grateful that we didn't need the insurance for more than we did.
So, here are some things to understand about homeowner's insurance (also called fire insurance and hazard insurance).
- Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
- Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
- Understand replacement cost. If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you'll only receive $150,000.
- Understand actual cash value. If you chose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value.
- Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.
© 2006 Susan Pruden.
A lifetime Maryland resident, Susan Pruden has the ideal foundation for selling and buying homes. After 8 years working in just about every facet of the mortgage industry, and several years with her own company specializing in marketing for real estate agents, Susan got her real estate license in 1994. Susan has earned several industry awards. The CENTURY 21 Quality Service Pinnacle Award is based on reviews from Susan's clients and is earned by a very small percentage of agents. She has earned that coveted recognition since 2012
Two others were awarded by the Prince George's Association of REALTORS®. The Distinguished Sales Associate of the Year Award is based on a mixture of community involvement, association involvement and real estate education and designations. The other, the Distinguished Service Award, is for "exceptional meritorious service."
Susan is involved in her local community. She was named Cheverly Volunteer of the Year in 2018, even having June 25th designated "Susan Pruden Day" in the Town of Cheverly. She is also a Commissioner on the Prince George's County Historic Preservation Commission and President of the Cheverly American Legion Auxiliary.
Susan Pruden has lived in Cheverly lived with her husband, Joseph, for almost 30 years.
