Understanding the Essentials of Home Insurance

Understanding your home insurance policy is crucial to avoid costly surprises and to secure peace of mind. According to an article from ProgramBusiness, nearly 50% of homeowners are unsure about the specifics of their insurance coverage. Educating yourself about your policy helps you make informed decisions, avoid gaps in coverage and ensures you’re financially protected when the unexpected happens. Our goal is to help you feel confident in your coverage and make well informed decisions about your protection options.

 

What are Insurance Premiums?

An insurance premium is the amount of money you pay to your insurance company, typically on a monthly or annual basis, to maintain your coverage. This payment ensures your policy remains active and available to provide financial protection in the event of a covered loss. The cost of your premium can vary based on factors like your home’s location, the coverage limits you select, your deductible and your claims history.

How Deductibles Impact Premiums

An insurance deductible is the amount you are responsible for paying out of pocket before your insurance company covers the rest of a claim. A higher deductible can lower your premium, but it also means you’ll pay more if you need to file a claim. When choosing a deductible, consider your ability to pay that amount unexpectedly. Select an amount that balances a manageable premium with what you could comfortably afford out of pocket in an emergency.

“From how deductibles impact premiums to navigating coverage limits and exclusions, clarity builds confidence. I take the time to meet with every client—virtually or in person—to truly understand their lifestyle, risks and goals,” shares Ryan Bird, Personal Insurance Executive.

How to Better Navigate Coverage Limits

A coverage limit refers to the maximum amount your policy will pay for a covered loss. If your coverage limit is too low, you may end up paying out of pocket for repairs or replacement costs. Be sure to evaluate the value of your home and belongings to ensure your limits are adequate. A common challenge homeowners face is underestimating property value. Many homeowners set coverage limits based on the market value of their home, rather than the actual cost to rebuild, which can leave them underinsured if a major loss occurs.

Construction costs can also rise over time, and if coverage limits aren’t adjusted periodically, your policy might not cover the current cost to rebuild your home. It’s important to regularly reach out to your agent to account for these adjustments. When reviewing coverage limit options, be sure to account for your personal belongings. Failing to update or accurately calculate the value of personal possessions can result in insufficient coverage for big ticket items like electronics, jewelry, or furniture.

Common Exclusions in a Homeowner’s Policy

Exclusions are specific events your home insurance policy won’t cover. Some examples include losses caused intentionally by the homeowner and issues like mold, dry rot, termites, or other pest infestations. Often times a separate policy is needed for floods or earthquakes. Normal wear and tear from regular use or aging is typically not covered, so it’s important to maintain your home.

Losses related to business activities conducted from the home may not be included under a standard policy, and high-value items such as jewelry, artwork, or collectibles often have limited coverage.
It’s important to carefully review your policy’s exclusions section so you understand what’s not protected. This knowledge allows you to decide if you need additional coverage or a separate policy for certain risks.

Reviewing a Company’s Reputation

It’s just as important to know about who is issuing your policy as much as it’s essential to understand the ins and outs of your policy. A reputable company is more likely to provide reliable service, timely claims processing and fair settlements when you need them most. One way to assess an insurer’s financial strength is by checking their rating with AM Best, a trusted organization that evaluates the financial health of insurance providers. AM Best assigns ratings based on a company’s ability to meet its ongoing insurance obligations, so a higher rating indicates greater financial security and stability. By reviewing these ratings, you can feel more confident that your insurer will be able to pay claims, even in challenging circumstances.

Lean on a Trusted Partner

Our team is here to guide you every step of the way—from reviewing your current coverage and shopping for the best options to helping you fully understand your policy and what it means for your peace of mind. Let us help you protect what matters most. Ready to take the next step? Get a quote with us today and experience the difference of working with a trusted partner.

Disclaimer
The information contained herein is offered as insurance industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer financial, tax, legal or client-specific insurance or risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.