5 Home Insurance Decisions to Make With a Professional

5 Home Insurance Decisions to Make With a ProfessionalDIYing life can be liberating. A good Pinterest project every now and again can save time, money, boost creativity (and maybe a little bit of your ego too!)

When it comes time to shop around for insurance, there are plenty of companies that allow you to choose your own insurance policy. This includes choosing coverage limits, deductibles, and optional coverages.

While it may feel nice to take the reigns on your insurance coverage, this is one DIY project you'll want to get right. If you repair that sink wrong the first time, for example, you'll at least be able to redo your repair. Your insurance doesn't really get a test run.

It is a good idea to use an insurance professional for advice, instead of doing it yourself. A good professional will be able to guide you through the process, while working directly with you to ensure key decisions are in your best interest. Zillow recommends working with a professional on these 5 parts of the insurance process to ensure you are covered in all areas that you'll need.

1. Setting Dwelling Coverage

This part of your coverage protects the structure of your home from disasters such as fire, wind, and hail. Dwelling coverage plays a major role in how much you will be paying for protection.

For this reason, it is easy to see why it is temping for setting the amount of dwelling coverage as low. However, this is a poor decision, as the amount of dwelling coverage you purchase directly affects the amount of coverage for your possessions, structures on the property, and additional living expenses should you not be able to use your home.

These coverages are the bread and butter of your home insurance policy. Lowball this coverage and you're putting yourself in an extremely risky situation.

How much coverage should you buy? Enough that you will be able to rebuild your home from the ground up. Your insurance agent will multiply the square footage of your home by local building costs to determine this cost. They will also examine this cost against other parts of your policy to ensure that you are safely covered.

2. Deciding On A Deductible

A deductible is the amount you agree to pay toward a covered claim. Setting a high deductible will reduce your annual premium, but what happens when your deductible is to high that you can't afford to pay it? You won't get coverage.

An agent will work with you to help you select a deductible that is reasonable for your income level, and prevent you from being at risk.

3. Protecting Possessions

Standard home insurance includes coverage for your possessions. The limit is usually set between 50-70% of your dwelling coverage limit. For $200,000 dwelling coverage, you would have between $100,000 and $140,000 worth of protection for your belongings.

However, this is only on the surface.

Certain high-value items (like jewelry, furs, collectibles, etc.) can have limits on payouts, meaning they may not be replaced in the event of being stolen or destroyed.

A licensed agent will be able to help you extend your coverage limits for these important items.

4. Liability Limits

Standard home insurance policies additionally cover two types of liability insurance which will help in the event of someone getting hurt on your property:

  1. Personal liability protection - This can assist you if the injured person sues. It can help pay for legal defense and any award. This is only up to your coverage limits. The limit is typically $100,000. If your case exceeds $100,000, you will be responsible for the remainder.
  2. Medical payments coverage - This helps pay medical costs if the injured person doesn't sue. This limit is typically set at $1,000. You would be responsible for any expenses that exceed this amount.

DIYers often miss these limits, or are unaware of the ability to extend them for a small additional amount. A licensed agent can help you with these items.

5. Dropping Coverage After a Mortgage is Paid Off

There isn't any law that requires you to have home insurance. However, your mortgage lender will insist upon it in order to protect their investment upon your property.

If you decided to drop your home insurance after you've paid off your mortgage, you would be left with no help in the event of fire or another covered peril damage that could entirely destroy your property. Note the average claim amounts, as listed in the Insurance Information Institute:

  • Fire: $34,306
  • Liability: $18,804
  • Wind/hail: $7,307
  • Theft: $3,428

Without adequate coverage, you could bear the full cost of these claims.

Don't leave your DIY policy up to chance! Work directly with a licensed insurance agent to ensure you are appropriately covered. Check out our recommended Chicagoland agents here.

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