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Home Security Systems and Shopping for Homeowners Insurance

March 10, 2016


Homeowners insurance is a necessary purchase for any homeowner. Not only is homeowners insurance important for covering what most likely will be the biggest purchase of your life, it is required by mortgage lenders. If you fail to obtain homeowners insurance or let it lapse, the mortgage company will purchase a policy themselves and pass the cost on to you. These policies are typically much more expensive if they purchase it, so avoid that cost by maintaining your own policy. Like most types of insurance, there is a wide variety of options, coverages and discounts available. There are six main types of coverage for policies.

  • Dwelling – Covers the physical structure of your house and any attached structures like sheds or garages. Permanently installed fixtures are included in this coverage, plumbing, electrical, heating and air conditioning systems.
  • Other Structures – Any other permanent structures on the property that are not physically attached to the home are covered. This includes unattached garages, sheds and fences.
  • Personal Property – Covers the value of your belongings including appliances and electronics. Some policies will even cover belongings that are not on your property such as items in off-site storage.
  • Loss of Use – If your home becomes uninhabitable due to covered reasons, this pays for the cost of an alternate location to stay while your home is being repaired.
  • Personal Liability – If someone is injured while on your property this can cover any financial loss from being sued.
  • Medical Payments – Covers medical bills for people injured on your property whether there is a law suit or not.

Just as there is a variety of coverage options, the policy itself comes in many variations, called forms.

  • Dwelling Fire Form – This is the basic policy insuring your structure against a few perils. This policy does not cover your possessions, liability or medical expenses. This is the policy your mortgage company will buy in your name if you fail to have your own policy.
  • Basic and Broad Forms – These policies cover a specific list of perils, only the ones on the list are covered.
  • Modified Coverage Form – Designed for older homes where the replacement cost exceeds the value of the structure.
  • Tenant Form – Covers renters.
  • Special Form – The most purchased type of policy. This policy is not limited to a list of covered perils like the Basic and Broad forms. With this policy all perils are covered except those specifically excluded such as major disasters like earthquakes and floods.

Policy Coverage Limits Limits of coverage set a cap on how much a policy will pay out. Limits on the dwelling itself will be set when you purchase the policy. The dwelling limit should be based on the replacement cost of your home. It is important to note that the replacement cost of your home is different than the market value. Market value includes the value of the land your dwelling is built on and listed on the deed. Periodically review your coverage limits as the replacement cost may increase over time and your limits should be raised. Other coverage limits with a policy are based on a percentage of the dwelling limit. Typical limits are: Other Structures 10%, Personal Property 50%, and Loss of Use 20% of the dwelling coverage. This means the payout limit for personal property is 50% of the dwelling replacement cost. If your dwelling is insured for 100,000, your personal property limit would be 50,000. Any losses over that amount would not be covered. Deductibles and Policy Additions Just about everyone who has had auto insurance understands what a deductible is and they apply to homeowners insurance as well. The higher your deductible, the lower your payments will be and vice versa. Additional coverage can be added to a policy to include major disasters and to increase the personal property coverage. Choosing Your Policy Shopping around and comparing policies is a definite must when purchasing homeowners insurance. There is a large range of prices and each company will have different rates for the same coverage. One important consideration when choosing an insurer is their customer service and level of claims service. Most state insurance departments keep a record on their website of complaints against insurance companies. This is called a complaint index and will provide excellent information on a company’s practices when claims are filed. Homeowners Discounts can Save you Big Homeowners insurance offers some of the best discounts to policy holders. They can save you hundreds of dollars a year. The most common discounts are:

  • Claim Free – The longer you go without filing a claim, the bigger the discount is.
  • Storm Shutter – Installation of shutters over exterior windows to protect them during storms.
  • Hail Resistant Roof – These roofs eliminate claims for roof repair due to hail damage.
  • Smoke Free – Fire safety discount.
  • New Home – For homes built within one year of beginning of policy.
  • Home Safety – These discounts are available when you add safety features such as smoke detectors, burglar alarms and water safety alarms.

Home Safety discounts are the largest discount available. With most policies the more devices you add to your system, the bigger the discount. This discount is easy to qualify for and can save you up to 20%. With a 20% discount, your Kuna home security system can easily pay for itself, with the discount applying for as long as you carry the policy. Damage to homes due to fire is much more likely to lead to a claim than burglary claims making a new fire safety system a great buy. Homes without a security system are three times more likely to have a claim from the theft of property. The newest sensors available to complete your home safety system are water sensors. Whether passive sensors, which sound an alarm when they detect moisture, or active sensors which turn off water supply when they are triggered, these are a great credit addition. Some of the newest sensors to qualify for discounts are ones that can detect natural gas leaks. Policy discounts are often overlooked by shoppers when comparing policies for new coverage. However, with such a huge savings benefit, make sure you factor in your Kuna Security System to get savings into your policy costs when shopping around.

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