News & Information
Homeowners insurance--make sure you're covered
Buying a house also involves making sure your house and valuables are protected in case of fire, flood, or some other disaster. Homeowners insurance can protect your property, but make sure the insurance is adequate.
CNNmone recommends looking for the following in a homeowners insurance policy:
- Ask your insurer about discounts. Safety devices like smoke alarms and deadbolts can save you 5%, according to the Insurance Information Institute. Some insurers also give 5% to 15% discounts if you buy two or more policies from them.
- Make sure the insurance covers the cost to rebuild. A cash-value policy may cover only the depreciated value of your home and belongings. A guaranteed replacement clause covers the cost of rebuilding. You may need to purchase more insurance if your insurer's appraisal is low or if your home has handcrafted cabinetry or other expensive features.
- Homeowners policies don't cover flood, earthquake, and, in most cases, sewer or storm-drain damage. You'll have to purchase separate insurance for that--especially recommended if you live in a high-risk area. This additional insurance can be purchased from the Federal Emergency Management Agency (800-427-4661).
- Make sure your insurance contains a loss-of-use clause that covers living expenses for temporary housing (rent) during the rebuilding of your house.
- You may need more insurance to protect what's inside your home. Valuables like jewelry, art, and electronics are usually subject to replacement limits of $1,500 to $2,500 per item. Also, videotape or photograph your possessions and keep a dated record in a safe deposit box or other secure place outside your home.
For more information, read "Federal Insurance Mops Up After Floods," or "Don't Borrow Trouble--Buy Renters Insurance," in the Home & Family Finance Resource Center under the housing section.
What should you keep in a safe deposit box?
There are no laws that limit what you can and cannot put in a safe deposit box. The only restriction may be in the financial institution's contract or lease when a person rents a box.