Insurance

Safe At Home: The Basics of Home, Property and Liability Insurance

State law does not require homeowners insurance, but your mortgage company almost certainly will require it.

Moreover, common sense dictates that you protect your most valuable asset - your home - against damage from fire, hurricanes, tornadoes, floods, thieves and so on.

Here are some tips and guidelines:

• First, download and read "Insuring Your Home: A Guide for Consumers." Prepared by the Florida Department of Financial Services, it touches on everything you need to know about the types of coverage, selecting a company and agent, filing claims and related issues. Here is the link: www.myfloridacfo.com/consumers/guides/property/docs/insuringyourhome2008.pdf
• If you are in an area prone to flooding, you'll have to purchase additional coverage for flood protection. (The typical homeowners policy does not include flood insurance.) More information on flood insurance is available here:
  www.pueblo.gsa.gov/cic_text/housing/natl-flood/insurance.htm
• Matching the type of construction to geographical conditions and the local climate can save you money - a brick home, for instance, tends to be less expensive to insure because it is more resistant to the wind.
• Ask for all discounts available. If you add safety features such as smoke detectors, fire extinguishers, burglar alarms, dead bolts, security lights, storm shutters or roof reinforcements, many companies will offer credits on your premium.
• If possible, place your homeowner and automobile coverage with the same company. Many companies will offer a 5 percent to 15 percent discount if you buy both policies from them.
• Review your limits annually. If some of your insured items have depreciated, you may need less coverage. Consider increasing your deductible. Although most insurance companies recommend a $500 deductible, raising it to $1,000 could significantly reduce your costs.
• Don't insure your land. Only buy enough insurance to have your home rebuilt in the event of loss.
• Eliminate mortgage insurance on your home as soon as possible -- it can add many dollars to your monthly house payments. Mortgage insurance protects the lender's investment, but you are not required to have it if the outstanding mortgage amount falls below 80 percent of your home's value. To avoid this insurance altogether, make a 20 percent down payment when you buy your house.
• Most primary insurance policies include liability coverage that protects you, your spouse and any relatives living in the household from lawsuits by people who claim to have been injured on your property. Similar coverage is available under a renters' insurance policy.
• In determining how much liability insurance you need, you must consider your exposure - what exactly must you protect? Liability coverage can be one form of asset protection. As a general rule, the more property and wealth you have, the greater your exposure and the greater the need for relatively high limits of liability insurance to protect your assets from third party claims.
• If you have a dog, liability coverage is strongly recommended. Additional amounts can be purchased with your homeowner policy. For instance, a $100,000 liability limit is common, but reasonable rates often can be found for protection worth $300,000, $500,000 or $1,000,000. For more information about lawsuits involving animals, go to: www.dogbitelaw.com/
• A personal "umbrella liability policy" can be purchased to add $1,000,000 to $10,000,000 in liability limits to already existing policies. This "umbrella" coverage is carried over all other liability insurance and is used for a catastrophic loss when primary liability insurance is exhausted.