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Homeowners Insurance Information

If you are like most people, the single biggest investment you will ever make is buying a home. Therefore you want to be sure to protect this investment properly. To do this, you'll need to know some common terminology when discussing home owners insurance.

For example, what is ACV? ACV is Actual Cash Value and it is the value of the property's replacement cost minus depreciation. This is the valuation method used by insurance companies to calculate the value of your loss at the time of need.A better way to insure your home and its contents is to add the Replacement Cost endorsement which changes the valuation of your loss to its full replacement cost, regardless of any depreciation that has occurred. Essentially it's like getting new for old.

If you own a home, then you own the outside structure as well. Those structures, and anything attached to your house, such as cabinets, carpets, and plumbing, are generally insured on the policy under Coverage A. Coverage A is the replacement cost of Dwelling. However, if you are renting your home, condo, or otherwise, then you do not have Coverage A because you don't need it. If you own your condo, then while you do not own the structure, you do typically own the interior wall coverings and floor coverings therefore needing some basic coverage for coverage A. Most insurers will give you $25,000 or some limited amount for Coverage A if you own a condo or town home.

Coverage B covers other structures on your premises that are clearly separated from the dwelling (e.g., detached garages, storage sheds, in-ground pools) but each policy is different so be sure to read your policy closely. For example, your policy may not cover some of those items, or it may limit the amount of coverage afforded for those items.

Coverage C covers your contents or your personal property anywhere in the world.

Coverage D covers the additional expenses you incur to live somewhere else due to damage caused by a covered loss.

Liability coverage protects your legal responsibility for damage to another person's property, or injury to another person that you or your family members may cause. This coverage is usually very cheap in comparison and it's advisable to buy as much as you can afford.

A binder is the notification you get from your agent or your company proving that insurance is in force for a certain period of time until your complete policy is received by you in the mail.

Exclusions are very important to know about and are found in a section of your home insurance policy that specifies the types of losses not covered by your policy. EXCLUSIONS ARE NOT COVERED BY YOUR HOME INSURANCE. Typical exclusions are the perils of earthquake and flood. These coverages are sold separately by specialty insurers or through a State or Federal agency (such as The National Flood Insurance Company) or through www.BuyQuakeInsurance.com for earthquake insurance.

Policies may include a grace period, which is the period of time beyond the due date of your policy premium during which your home insurance coverage will continue to be in force. It is not advisable to rely on the grace period because your check may not make it in time and insurance companies are quick to cancel policies that are not paid on time or within the grace period.

Inland Marine is a little known coverage but includes coverage for such valuable and movable property like furs, jewelry, stamp collections, guns, collectibles, computers, etc. and better insured by policies called floaters. Your standard homeowners policy will contain a sub limit for these items and it may not be enough to replace them at the time of loss.

A Rider is simply an endorsement, which is a written form or statement that alters or restricts your insurance contract in some fashion. Be sure to read through these carefully. They may or may not be of any consequence.