. Decide how much insurance you need
You can't stop bad things from happening. But you can protect yourself financially by purchasing insurance. How much insurance you need depends on a lot of factors including how much you owe and own, how much your assets are worth, whether you have dependents, and how much out-of-pocket cost you could afford to bear. You can estimate your coverage needs using calculators or worksheets available on-line, but it's a good idea to sit down with an insurance agent or broker who can thoroughly evaluate your needs.
. Comparison shop
No matter what type of insurance you're buying, the process is essentially the same. Once you've decided what type of insurance and how much coverage you need, you can begin contacting insurance companies directly by phone, or through an insurance agent or broker to obtain quotes. Get quotes from several different insurers because premium cost can vary widely.
But compare the coverage offered, too. A policy might cost less because it offers fewer, or different, features and benefits. And make sure the company you've settled on is reputable, with good customer service and claims-paying ability. All insurance companies are rated by major rating agencies (e.g. Standard & Poor's, Moody's, A.M. Best) on their ability to pay claims. You can access these ratings online, through public libraries, or through insurance company literature.
. Understand what you're buying
An insurance policy is a legal contract that may be loaded with technical terms that are hard to understand, but read it anyway and ask questions if you have any uncertainties. For instance, the policy will tell you:
- Who or what is covered
- What coverage exclusions and limitations apply
- When coverage begins and ends
- How much coverage is provided
- How much you'll pay for coverage (the premium)
- How you report a loss or file a claim
- It's always a good idea to ask an insurance professional to explain any terms, conditions, or benefits that you don't understand.
. Evaluate your insurance needs periodically
As your life changes; your insurance needs change, too. So every once in a while (annually, some experts suggest), review your insurance to see if you need more (or less) coverage or an additional type of coverage. Here are some times in your life when you'll definitely want to re-evaluate your insurance needs:
You're getting married
You're starting a family
You're renting an apartment
You're buying a house or a car, or making a major purchase
Your child is going off to university
You're starting a new job or becoming self-employed
You're buying or selling a business
Your income increases or decreases substantially
You're taking care of an aging parent
. Start off with an Inventory List
If you are just setting up a household, starting an inventory list can be relatively simple. If youíve been living in the same house for many years, however, the task of creating a list can be daunting. Still, itís better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions. Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
. A picture is worth a thousand words
Always photograph or videotape all your belongings and household contents and keep these along with a record of their serial numbers and receipts, where applicable in a safe place. These will become very useful if ever you have to make a claim. This could help make the claims process a lot easier and save precious time.
. Renovations and Extensions
As time and circumstances change such as when you extend or renovate your home, remember always to review your coverage and update the sums insured on your house and contents. You should always let your insurance company know if you are about to undertake renovations or extension works. It is in your best interest.
. Basic Homeowners Insurance Policy
The basic homeownerís insurance policy covers you against losses which may occur as a result of the following incidents:
Read your homeowners insurance policy to find out exactly what is and is not covered. Do this before you suffer a loss, so you won't be surprised. Most insurers exclude damages caused by an act of war, nuclear accident and terrorism.
. Keep your payments up-to-date
Always remember to pay your insurance premium when it is due. Your policy could become lapsed or cancelled if you fail to pay your premium on time. If you find that it is difficult to pay on time, talk to your insurance company or broker about it. They may be able to find a way to assist you. Donít assume your policy is still in force if you have not paid the premium.
. Ensure that you are fully covered
One of the most important things you could do when insuring your home is to make sure that it is fully covered. The amount you insure your home for should be the current replacement value of the property. This will ensure that if and when you have a claim such as a fire or hurricane damage, your insurance will be able to cover you for what you have lost.