Home Insurance BasicsHome Insurance Basics

Insure your house for the cost to replace it, Insure your house for the cost to replace it, then consider add-ons for special then consider add-ons for special possessions.possessions.

Also consider additional coverage that may Also consider additional coverage that may be needed (floods, earthquakes, etc.)be needed (floods, earthquakes, etc.)

If you have a mortgage on the house, you If you have a mortgage on the house, you are required to purchase homeowner’s are required to purchase homeowner’s insuranceinsurance

When applying for home insurance, you When applying for home insurance, you will be asked about your current will be asked about your current occupation and employment history, occupation and employment history, marital status, previous addresses, date marital status, previous addresses, date of birth and Social Security number.of birth and Social Security number.

Your criminal, credit, and insurance Your criminal, credit, and insurance history will be checked to see if you are history will be checked to see if you are a “good risk.” a “good risk.”

Any home insurance claims you have Any home insurance claims you have made in past will be looked at.made in past will be looked at.

• Age of the houseAge of the house

• Materials used to build houseMaterials used to build house

• Location of houseLocation of house

• Square footage of houseSquare footage of house

• Distance from a fire hydrantDistance from a fire hydrant

Determining the premium:

Replacement Cost vs Actual Cash Value CostReplacement Cost vs Actual Cash Value Cost

Replacement cost gives more protection than Replacement cost gives more protection than actual cash value coverage.actual cash value coverage.

Loss Settlement Clause:

List item, value, and serial numberList item, value, and serial number Photograph or video tape each room, Photograph or video tape each room,

closet, drawer ,etccloset, drawer ,etc Keep receipts for major items in firesafe Keep receipts for major items in firesafe

placeplace

Inventory Your Possessions:

If the house is located in a flood hazard If the house is located in a flood hazard area, you may be required to purchase area, you may be required to purchase flood insurance.flood insurance.

If you are concerned about earthquakes, If you are concerned about earthquakes, you can get earthquake insurance you can get earthquake insurance

(Both are additional policies)(Both are additional policies)

Flood and Earthquake Insurance

Terms to Know:Terms to Know:

““Acts of God” – natural disasters (hail, Acts of God” – natural disasters (hail, tornados, fire, lightning; not flood or tornados, fire, lightning; not flood or earthquake)earthquake)

Replacement Cost – amount necessary to Replacement Cost – amount necessary to replace the property at current pricesreplace the property at current prices

Actual Cash Value (ACV) – current value of Actual Cash Value (ACV) – current value of property in terms of cash.property in terms of cash.

Terms - continuedTerms - continued

Umbrella policy – extended liability Umbrella policy – extended liability coverage over standard policycoverage over standard policy

Real property – physical structures (home, Real property – physical structures (home, garage, etc.garage, etc.

Appraisal – estimate of current value of Appraisal – estimate of current value of propertyproperty

Terms - continuedTerms - continued Peril – cause of lossPeril – cause of loss

Risk – chance of lossRisk – chance of loss

Title – record of property ownershipTitle – record of property ownership

Deed – legal document that transfers Deed – legal document that transfers ownership of property; includes ownership of property; includes description and location of real propertydescription and location of real property

Work CitedWork Cited

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