Shopping Saves Money on Buildings and Contents Insurance
October 5th, 2009 by Jamery ClarcksonBuildings and content insurance vary dramatically in price, even though you often get the same coverage. This means that a higher priced policy isn't always the best policy. If you compare policies within one company, the higher the price often indicates a better product. However, when you shop a policy price with several companies, keeping the same coverage, higher cost is not an indication of a better company.
Standardized homeowner's insurance offers building and content insurance. While most people have an HO3 or HO3 special policy, people with older homes often carry an HO8. There is a difference. Of course, the term special is a good indication that the policy covers more. The HO8 policy is for people that own older homes whose market value is far less than the replacement cost. A new home with 2500 square feet of living space might cost $200,000 or more. An old home with the same amount of space normally doesn't cost that much and may even cost less than $100,000. HO3 policies require that you insure at least 80 percent of the replacement cost for them to pay 100 percent of any claim. If you only insure 79 percent of the replacement cost, they only pay 79 percent of any claim, even small ones. HO8 policies only require you insure to market value, not to 80 percent replacement cost.
An outlined of the buildings and contents insurance coverage is standard in every homeowner's policy unless you increase it and described in percentage of the amount of insurance on the house. Coverage A is the house. This is the base to find the coverage for the other parts of the policy. Coverage B covers outbuildings and appurtenant structures. The amount of coverage for these buildings equals 10 percent of coverage A. Section C covers your personal property or contents of the buildings. The base limits on this coverage is 50 percent of your house, section A. Finally, section D offers insurance that pays if you can't use your home because of a loss. It pays the expense for you and your family if you have to live elsewhere while you have the damage to your home, from either fire or other disaster, repaired. Unless you increase the amount, the base is 20 percent of part A coverage.
Of course, there's also liability coverage that's standard on building and contents insurance policies. The higher your limits of liability for the policy, the more it costs in premiums. However, the increase is often minimal compared to the amount of additional coverage you obtain.
Building and contents insurance policies are baseline policies you can increase. If you have a detached garage, several sheds and a green house or two, ten percent of the coverage on your home may not be enough. Talk to your insurance representative about increasing the amount.
Some companies provide an automatic increase in the amounts of coverage for their building and contents insurance policies. Instead of the standard 50 percent coverage for personal property, they may offer 70 percent coverage. When you look for contents coverage make certain the company offers replacement cost. If you don't have this and a fire or disaster destroys all your personal property, the insurance company depreciates the items and pays considerably less.