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Insurance Sense

Insuring a Home for its Real Estate Value Rather than Cost of Rebuilding

With the value of real estate going down, some home buyers may think that they can reduce the amount of insurance on their home. Insurance, however, is designed to cover the cost of rebuilding a home. It is not linked to the sale price of the home. Homeowners should be careful to purchase enough insurance coverage to completely rebuild their home and replace belongings.

A BETTER WAY TO SAVE MONEY: Take a higher deductible. Consider a deductible of at least $500. If you can raise the deductible to as high as $1000, you may save up to 25 percent on many home insurance policies. The average person only files a claim every eight to ten years so most homeowners will save money over time.

Selecting an Insurance Company by Price Alone

When shopping for insurance, it is important to select a company that is financially sound and has a reputation for outstanding service, like the Harry Levine Agency. Check the financial health of an insurance company by using ratings from independent rating agencies. Contact your state insurance department to find whether they make available consumer complaint ratios by company.

Dropping Flood Insurance

Damage from flooding is not covered under standard homeowners and renters insurance policies. Instead, you must purchase a separate flood insurance policy. Most people tend to underestimate the risk of flooding. In fact, 90 percent of all natural disasters in this country involve flooding, according to the National Flood Insurance Program (NFIP).

A BETTER WAY TO SAVE MONEY: Look into the cost of flood insurance before selecting a house or apartment, since flood insurance should be calculated into the cost of a home. In 2007 the average amount of flood coverage was $201,598 and the average NFIP premium was $505; more detailed information on the risk and cost of flood insurance can be found at FloodSmart.gov.

Neglecting to Purchase Renters Insurance

Buying a renters insurance policy can provide a very important financial safety net. Renters insurance covers personal possessions in the event there is a fire or other insured disaster. It will not only pay to replace your belongings, but also provides coverage for additional living expenses and liability protection in the event someone is injured on your property. With the average policy costing only about $200 per year, it is also affordable. Unfortunately, a 2006 Insurance Research Council poll found that only 43 percent of renters had insurance compared with 96 percent of homeowners.

A BETTER WAY TO SAVE MONEY: Look into multi-policy discounts. Purchsing several policies with the same insurer will generally provide some savings in the form of a discount. Check the cost of getting your renters insurance policy with Harry Levine Insurance and see about a discount with your Auto, Life or other policies.