What to Look for in a Homeowners' Insurance Policy

If you’re shopping for the right Houston home insurance policy, the first thing you need to know is that, in the world of insurance, there’s no such thing as one size fits all. Every insurance policy is different, so it’s crucial to find a policy that’s tailored to your individual needs. The best way to find your perfect policy is to ask plenty of questions before you sign a contract.

Find Out What’s Covered

A standard homeowners' policy typically doesn’t cover flood damage, so if you live in a hurricane-prone coastal area, you may want to invest in flood insurance. A standard homeowners' policy also doesn’t include damage due to “earth movement” disasters such as earthquakes or sinkholes — although a handful of states have now made sinkhole coverage mandatory.

If you have any specific concerns about certain contingencies that may not be covered, ask your agent how you can get the coverage you’re looking for.

Reimbursement: Do You Want Cash Back?

Although many insurers offer cash reimbursements, some companies prefer to replace the lost items instead, even if the timing isn’t convenient. For example, if you’ve had a house fire and you and your family are temporarily living in a small apartment, you won’t want to take delivery on a new 60-inch television. Be sure to find out if your policy replaces the cost of the item, or the item itself.

Replacement Value

If you expect to receive full value for your lost or damaged items, then you may be in for a surprise when you find that you’re only compensated for their as-is value in their used condition.

Two terms to remember are Actual Value Coverage (AVC) and Replacement Value Coverage (RVC). The most desirable of these is RVC, which gives you approximately the entire replacement value of your items in new condition. An RVC policy usually costs 25 percent more, but if you want to receive full replacement reimbursement, you’ll find it’s worth it.

An AVC policy will give you the current depreciated cost of the items. For example, you may get only $300 back to replace a laptop that you paid $800 for three years ago.

If you own luxury items such as jewelry, furs and expensive musical equipment, you may need to get a floater policy to provide extra coverage beyond your policy’s limitations.

Liability Insurance: How Much is Enough?

A standard homeowners' insurance policy offers liability coverage worth at least $100,000. If you prefer more, then talk with your agent about purchasing an umbrella policy offering more liability protection.
For more information about finding a homeowners insurance policy that’s right for you, give Reliable Insurance Managers a call at 713-227-7283. and we’ll be glad to answer all your questions.