Before Renewing Your Home Insurance, Ask These 3 Questions

When was the last time you renewed your home insurance? How well do you understand what you are and are not covered for? 

Many people get insurance and then don’t really think about it too much. This makes sense, in a way, because home insurance is supposed to provide peace of mind! 

But you do not want to be complacent, either. After all, if your home is damaged or destroyed by a fire and you only learn there was a gap in your insurance coverage afterwards, you’ll be devastated and left paying for things out of pocket. Nobody expects it’ll happen to them, but it’s best to be prepared for the very worst.

The insurance process can be complicated, and the last thing you will want to do is to be navigating the paperwork after experiencing the emotional and financial stress associated with housefires. Thankfully, industry-leading insurance lawyers like those at can guide you safely to the other side, ensuring you get a fair settlement within a reasonable time.

However, even with the best assistance, you still need to ensure you are comfortable with your home insurance. Before renewing it, ask these three questions first.

1. Are Your Deductibles Affordable?

It’s important to ensure you have a healthy balance between your premium and deductible. First, let’s do a quick review of what these terms mean.

A deductible is the dollar amount you’ll have to pay before the insurance kicks in. You only need to pay a deductible after launching an insurance claim. In contrast, the premium is what you pay every month to keep your insurance active.

You should have enough cash on hand to cover your deductibles at any given time. Otherwise, they’re too high. If this is the case, it’s wise to either boost your emergency savings or trade lower deductibles for higher premiums. 

2. What Type of Coverage Do You Have?

Usually, policies have either Actual Cash Value or Replacement Cost coverage. Actual Cash Value coverage will make you whole for what was damaged by paying you what it cost to buy at the time. This may lead to a lower settlement since it factors in depreciating costs for construction materials or personal belongings. 

In contrast, Replacement Cost coverage ensures you get compensated at the same rate these things cost to buy today. That’s why premiums are usually higher for this type of coverage. Be mindful that if you opt against the higher premiums, the insurer may not replace everything you had before the fire.

3. Today’s Costs Exceed Yesterday’s Limits

Most insurance policies have inflation guards that boost your coverage to account for the inflation that occurred from the date of your policy renewal to the date of the loss event, but this won’t be enough if things like the cost of construction rise faster than inflation. Between the price of lumber and labour, construction costs are soaring in many regions. This also does not help you recover fully if your coverage limit is drastically too low to begin with. 

Home insurance also covers additional living expenses incurred in the wake of a house fire, such as moving to a rental unit while the home is being repaired or takeout meals you need to eat while you don’t have a kitchen. These costs have also increased dramatically and may exceed your coverage limits.

Double-check that your home insurance coverage is sufficient, and you should feel more confident if a loss were to occur that you are protected as best as you can be. 

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