All Insurance Policies Are Not The Same

September 18, 2013 in Legal Advice Blog

All Home Insurance Policies are Not the Same

This is a cautionary tale.

My friends lived in hotels for one whole year before getting their house back. They chose to use their own contractor instead of the contractor that the insurance company preferred. As a result, they paid the contractor directly, using savings or borrowed money.

The insurance company has made some payments to my friends, but only after long and protracted hassling.  Before they will pay the difference, the insurance company must come to an agreement with my friends on the value of the loss . They still have not settled.

What is Home Insurance?

In a nutshell home insurance is a policy you get to

  • cover losses of property contents
  • provide funds to repair damage caused to your property and
  • provide you with liability coverage should someone get hurt on your property.

There are a multitude of choices out there and they are all not created equal. Everyone needs home insurance in order to close a purchase or a refinancing.

Choosing the Right Insurance

I dare say that many people choose insurance on the basis of price alone. I suggest that this is a mistake. Certainly, cost is a factor. However, there are other equally important considerations, such as:

  1. What is covered?
  2. If some coverages are optional, what are the additional costs?
  3. What is excluded from coverage?
  4. What is the deductible should you have a claim?
  5. If you do have a claim, which insurance companies work with you and which ones present more adversarial challenges?

Insurance is an intangible. That is one of the reasons why people don’t like to pay for it. The contents of a policy are just so many words on a page — until something happens that gives rise to a claim. It is only then, when your coverage is put to the test, that you find out how good your coverage is.

My best advice to you is simple: do your homework. I also suggest that you seek out an independent insurance broker. Independent insurance brokers almost always represent more than one insurance company. They ask questions and can be very helpful sorting out the differences between policies. Pick the company and the policy and the coverage that best meets your needs. My best wish for you is also simple: that you pay for peace of mind and never have to make a claim.

The foregoing is intended for information purposes only and is not legal advice.

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