How to Determine the Best Insurance Policy

Posted by on July 26, 2013 in Tips and Tricks | Comments Off on How to Determine the Best Insurance Policy

insurance policy, homeowners policy

Keeping your home safe from weather should always be a priority, but this is especially true during hurricane season. That’s why it’s so important to take an active role in your home’s insurance before disaster strikes. Here are some ways to determine the best insurance policy for your home.

What are the types of insurance policies?

  • Named Perils Policies cover all losses caused from perils specifically named in the policy
  • All-risk Policies cover losses from any perils that are not explicitly excluded from the policy.

Your coverage may come in the form of replacement cost or cash value. Replacement cost pas for the cost of rebuilding your home, based on cost of construction, whereas cash value would only reimburse you for it’s current value. While cash value is the more affordable option, it may not cover the complete reconstruction of your home.

What does homeowners insurance cover?

  • Dwelling – the structure of the house, including all structures attached to the house such as garages, patios, etc. 
  • Personal property – items within the house such as furniture or appliances, but may exclude valuables such as jewelry
  • Loss of use – covers partial cost of living expenses for a period of time if you are unable to return to your home
  • Personal liability – covers court costs or damages if you are found legally responsible for someone else’s injury or property damage
  • Medical payments – pays partial cost of medical bills for anyone hurt in your home

When it comes to natural disaster, basic homeowners insurance generally covers:

  • Fire or smoke
  • Lightning
  • Windstorms including hurricanes and tornadoes
  • Hail
  • Weight of ice, snow or sleet

Most insurance policies DO NOT cover:

  • Earthquakes
  • Landslides, sinkholes or other “earth movement”
  • Floods and mudslides
  • Other water damage not caused as a result of covered damages

Hurricanes may also be under a separate policy, depending on where you live and the level of risk. These storms also tend to have much higher deductibles.

Is flood insurance worth it?

Flood insurance may protect you from massive financial damages after a hurricane, but how do you know if it’s worth it for you?

There are a few things to consider. For one, you should learn more about your home’s elevation and if you are in a high-risk zone for flooding. Next, find out if there’s a history of flooding in your neighborhood and keep up with projected flood levels. Keep in mind that it only takes a few inches to cause thousands of dollars worth of damage. Finally, take an inventory of items in your home and research the costs of flood damage compared to the cost of paying for insurance.


Home insurance isn’t something you should take lightly. Whatever policy you choose, be sure to do your research and make sure it is the most reasonable policy with the right coverage to keep you and your home safe from natural disasters.