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OFIR's Tips for Your Annual Home Insurance Check-Up
Questions Michigan Consumers Need Answered on Home Insurance
October 6, 2011 - Without looking, what is the value of the contents of your home covered by insurance? Is a flood covered? If someone is hurt while visiting, will insurance pay medical expenses? Whether a renter or an owner, the Office of Financial and Insurance Regulation (OFIR) suggests Michigan consumers review all of their insurance policies annually. It is a chance to review what is covered, and to evaluate whether the coverage is still adequate (or too much) for your current situation.
“Ensuring that you have the appropriate amount of coverage and are aware of every discount available will protect your home and stretch your insurance dollar,” OFIR Commissioner Kevin Clinton said.
When reviewing your policy, find the answers to these three questions:
1. What type of coverage do I have?
Homeowners or Renter’s. A homeowners insurance policy covers the structure, belongings and legal obligations if someone is injured at your home. A renter’s policy does not insure the structure, but otherwise provides similar coverage.
Replacement or repair cost ? Both the replacement cost and repair cost policies protect you from a wide variety of possible losses, and protect both buildings and their contents; they differ in the loss settlement offered to the insured homeowner. Replacement cost policies will pay the amount needed to replace, rebuild or repair a home to its original condition with materials of the same kind and quality. Repair cost policies will pay the amount needed to replace, rebuild or repair a home to a condition similar to what it was before the damage, using modern materials.
Liability Limits. Liability insurance protects you from legal obligations arising from accidents involving visitors. With a few exceptions, such as auto or boating accidents, all-purpose liability coverage follows you wherever you go. An umbrella policy can extend the liability limits of a homeowners or renter’s policy if the policy limit is insufficient.
Medical payments. Homeowners and renter's polices typically include limited medical expense payments for injuries occurring on your premises to visitors. It may also cover medical expenses of another individual injured by you, a member of your family or a family pet while away from the home.
2. How much coverage do I need?
Make a home inventory. A home inventory is the best way to determine the appropriate level of coverage needed for contents. It is also a useful tool to have in case of a loss. When doing the home inventory, make sure to include as much detail as possible about the items.
Do not over insure. Homeowners do not need to insure the value of the land a home sits on, but coverage should include any outdoor structures on the property. For both homeowners and renters, concentrate on an accurate list of belongings and be sure liability limits are at a proper level.
3. What are my deductibles and what discounts am I receiving?
Deductibles and discounts are generally the easiest ways to save money on homeowners and renter’s insurance. The deductible is the amount you have to pay if there is a loss so choose a deductible your budget can handle. When it comes to discounts many companies offer them for safety features such as smoke detectors, having multi-policies with them, and being a long term customer.
OFIR recently released a public service announcement (PSA) aimed at helping Michigan consumers shop around for more affordable homeowners insurance. To listen or download the radio PSAs, visit: www.michigan.gov/documents/lara/Homeowners_Insurance_359959_7.mp3
OFIR’s website, www.michigan.gov/ofir, has many helpful resources for consumers to use before they shop around for homeowners or renter’s insurance. There, consumers can find interactive buyers’ guides, complaint ratios and other publications and information on purchasing insurance. Consumers can also search for licensed insurance companies, agencies and agents.
Consumers can also call the agency’s toll-free consumer hotline at 877-999-6442 for tips on how to shop around for lower premiums.
For more information about LARA, please visit www.michigan.gov/lara. Follow us on Twitter www.twitter.com/michiganLARA, “Like” us on Facebook or find us on YouTube www.youtube.com/michiganLARA.