While many homeowners and renters try to find the cheapest insurance on the market, that bargain basement policy can be extremely costly in the long run. You want an insurance policy with enough coverage to give you peace of mind, but you also don’t want to spend too much on an overpriced policy. If you’re trying to strike a balance between cost and coverage, here are five things to consider when choosing a homeowner’s or renter’s insurance policy.
Natural Disasters
Natural disasters racked up $91 billion dollars’ worth of damages in the year 2018 alone, so it’s important to make sure your policy covers Mother Nature’s wrath. It may be difficult or impossible to get coverage for natural disasters that frequently occur in your area, but state programs usually pick up the slack.
Personal Belongings
What would you do if your expensive new television or your grandmother’s antique broach were stolen or destroyed? If you’re concerned about pricey or precious belongings, it’s important to make sure your policy covers them. However, items that are exceptionally valuable may need to be insured under their own policy.
Liability Protection
The cost of replacing or repairing your home and belongings isn’t the only expense you can incur. Liability protection is an important consideration if you own hazards like a swimming pool or aggressive dog, but even slips and falls or trespassers getting injured on your property can cost a fortune if you’re found at fault.
Coverage Cap
Most homeowner insurance policies have a maximum amount they will pay out when you file a claim. Generally, this amount goes up in proportion to monthly premiums. To determine how low of a cap you can tolerate, do some math to calculate the highest expense you expect to incur and subtract what you think you can afford to pay out of pocket.
Monthly Premium Cost
If you think a higher premium means better coverage, think again. While extremely cheap policies usually skimp on coverage, very pricey ones are rarely the best deal. Stick to mid-priced plans if you want the most bang for your buck. Remember to break out your calculator before you sign that contract.
Are you thinking about foregoing a homeowner’s or renter’s insurance policy? Think again. Most mortgage lenders and some landlords require insurance, but you can end up in deep trouble without it even if you own your home out right. Insurance premiums might be expensive, but one major disaster can bankrupt you.