ERIE, Pa. – March 16, 2017 – How much to do you know about the homeowners' insurance policy protecting what is probably your biggest investment?
Robin M. Margosian, owner of Laskowski Insurance Agency in Harborcreek, has been in the insurance business for more than 25 years, and she shared some advice on insurance issues:
Question: Does homeowners' insurance cover possessions? Is there a rule of thumb for how much insurance coverage you should have?
Typically, homeowners' insurance is a package policy that provides property coverage to your home and contents as well as providing liability coverage. Usually the coverage on contents is 50 to 75 percent of the dwelling amount. You can, of course, buy higher coverage or insure specific valuable items such as jewelry, guns, collections, fine art, etc.
Question: What is the biggest mistake you see people make when buying homeowners' insurance?
Not understanding what they are buying. There is a big difference between "guaranteed replacement cost," "replacement cost" and "market value." Guaranteed replacement cost will replace your home to its pre-loss state regardless of the cost. Replacement cost will replace your home, however it will not exceed the coverage limit listed on your policy (many companies have a penalty if your home was not insured to at least 80 percent of the actual replacement cost). Market value is the current market value of your home, which is typically based on how much homes similar to yours in your neighborhood are selling for.
Question: What are some ways people can reduce their insurance costs without sacrificing coverage? What corners should they never cut?
I recommend homeowners take the highest deductible they are comfortable with to save money on premiums. Taking care of the small claims under your deductible will save you in the long run. Consumers should never skimp on coverage. When insuring your home, the value should reflect the amount it would actually cost you to rebuild your home, not the market value of the home.
Question: What are the consequences of filing a claim? Do insurance companies always raise your insurance after a claim?
Unfortunately, most all companies do increase premium rates after one or two losses. The type of claim and the amount paid may affect what the increase will be. It is best to contact your insurance agent for advice before filing a claim.
Question: What would people be surprised to know about homeowners' insurance?
Homeowners' insurance policies do not cover flood damage. Because floods can be devastating, insurance companies are not able to cover flooding at reasonable rates. The federal government offers it through the National Flood Insurance Program.
Question: What about renters? Are possessions covered under the landlord's policy?
No. Renters' insurance is highly recommended. It is very affordable and, in addition to protecting your belongings, a renter's policy also provides some liability protection and may pay for additional living expenses, too.
Heather Cass is the publications manager at Penn State Behrend.
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