How To Buy Home Insurance

Householders' insurance is a requisite, something every property should have. If you have a mortgage, your loaner will command coverage -- and if your home is mortgage-free than you should have reporting anyhow.
But not all coverage is alike. Policies and protectives cover differ, then do costs. In essence, you want the most shelter for the least number of dollars.
Householders' insurance broadly comes in exchangeable packages. For instance, the most basic sort, HO-1, proffers protectives cover atomic number 47.

• What form works best in your situation?
• What is included under the form you select -- and what is excluded.
• Do you have a personal office at home? If yes, what is covered?
• Do you have a home-based business? If yes, you may require additional coverage specific to the type of business you operate. In this case, think in terms of clients dropping by, business equipment, inventory, etc.
• Do you have antiques and jewelry? What coverage are you getting? What coverage do you need?
• How much personal liability protection will the policy provide? What is the cost of additional coverage? What about an "umbrella" policy?
• If you have a loss, will coverage be for actual cash value or replacement cost? Have the insurance broker explain the difference.
• What is the policy deductible? (Generally lower deductibles mean higher premiums, higher deductibles result in lower premiums.) ·
• How will the policy be paid? If your lender maintains an escrow account, the insurance policy will be paid by the lender -- remember, the house is security for the lender's mortgage. If you pay for property taxes and insurance directly, you will pay the bill. For details regarding escrow accounts and insurance requirements, speak with your lender.
• Is your home an historic property? If yes, what special coverages are required?
• When a policy says it covers "personal property" what does that term mean? What does it include and exclude?
• How can you reduce policy costs? For instance, if you buy auto and home insurance from the same source will your combined expenses decline?
• What home improvements can you make that would result in lower premiums?
• How are claims handled if you have a loss? For your protection, it's a good idea to photograph or video your home and special possessions -- and then keep such photography in a safe deposit box.

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How to Choose a Planner

You may be considering help from a financial planner for a number of reasons, whether it’s deciding to buy a new home, planning for retirement or your children’s education, or simply not having the time or expertise to get your finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.

You should interview and evaluate several financial planners to find the one that’s right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs.


10 Questions to Ask When Choosing a Financial Planner
1 Q. What experience do you have?
A. Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.

2 Q. What are your qualifications?
A. The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP® practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with CFP Board or other relevant professional organizations.

3 Q. What services do you offer?
A. The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.

4 Q. What is your approach to financial planning?
A. Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed.

Make sure the planner’s viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5 Q. Will you be the only person working with me?
A. The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.

6 Q. How will I pay for your services?
A. As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided. Planners can be paid in several ways:

A salary paid by the company for which the planner works. The planner’s employer receives payment from you or others, either in fees or commissions, in order to pay the planner’s salary.
Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.
Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.
A combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.

7 Q. How much do you typically charge?
A. While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner’s hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8 Q. Could anyone besides me benefit from your recommendations?
A. Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

9 Q. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
A. Several government and professional regulatory organizations, such as FINRA (formerly NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

10 Q. Can I have it in writing?
A. Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.

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Insurance Tips For Homeowners

The good news is that although you can't (and shouldn't) avoid purchasing homeowners' insurance, there are ways to minimize the cost. (To find out more about homeownership, see A Tax Primer For Homeowners, Fix It And Flip It: The Value of Remodeling and Mortgages: How Much Can You Afford?)

Here are six ways to make sure you get the right coverage and consequent compensation for your home:

1) Maintain a Security System and Smoke Alarms: A burglar alarm that is monitored by a central station, or that is tied directly to a local police station, will help lower the homeowner's annual premiums, perhaps by 5% or more. In order to obtain the discount, the homeowner must typically provide proof of central monitoring in the form of a bill or a contract to the insurance company.

Smoke alarms are another biggie. While standard in most modern houses, installing them in older homes can save the homeowner 10% or more in annual premiums. Of course, even more importantly, in case of fire, they could save your life!

2) Raise Your Deductible: Like health insurance or car insurance, the higher the deductible the homeowner chooses, the lower the annual premiums. However, the problem with selecting a high deductible is that smaller claims/problems such as broken windows or damaged sheetrock from a leaky pipe, which typically will cost only a few hundred dollars to fix, will most likely be absorbed by the homeowner. (To read more about deductibles, see Shopping For Car Insurance, Fighting The High Costs Of Healthcare and Tax Deductions For Rental Property Owners.)

3) Look for Multiple Policy Discounts: Many insurance companies give a discount of 10% or more to their customers that maintain other insurance contracts under the same roof (such as auto or health insurance). Consider obtaining a quote for other types of insurance from the same company that provides your homeowners' insurance. You may end up saving on two annual policy premiums.

4) Plan Ahead for Construction: If the homeowner plans to build an addition to the home or another structure adjacent to the home, he or she should consider the materials that will be used. Typically, wood-framed structures (because they are highly flammable) will cost more to insure. Conversely, cement- or steel-framed structures will cost less because it is less likely to succumb to fire or adverse weather conditions.

Another thing that most homeowners should, but often don't, consider is the insurance costs associated with building a swimming pool. In fact, items such as pools and/or other potentially injurious devices (like trampolines) can drive annual homeowners' insurance costs up by 10% or more. This may seem like a small price to pay given the joy these items bring, but it is still something that should be considered by the homeowner prior to purchase or construction.

5) Pay Off Your Mortgage: Obviously this is easier said than done, but homeowners that pay off their mortgage debts will most likely see their premiums drop. Why? The simple reason is that the insurance company figures that if you own the home outright, you'll take better care of it.

6) Make Regular Policy Reviews and Comparisons: Investors should, at least once per year, compare the costs of other insurance policies to their own. In addition, they should review their existing policy and make note of any changes that might have occurred that could lower their premiums.

For example, perhaps the homeowner has disassembled the trampoline, paid off the mortgage, installed a burglar alarm or installed a sophisticated sprinkler system inside his or her home. If this is the case, simply notifying the insurance company of the change(s) and providing proofs in the form of pictures and/or receipts could significantly lower insurance premiums.

Look for changes in the neighborhood that could reduce rates as well. For example, the installation of a fire hydrant within 100 feet of the home, or the erection of a fire substation within close proximity to the property may lower the homeowner's annual premiums.

Additional Items
The following are characteristics that all homeowners' insurance policies should carry:

Guaranteed Replacement Value Insurance: All homeowners should buy "guaranteed replacement value" homeowners insurance. This means that their home will be rebuilt in the event of a disaster - no matter what the cost. Of course, many of you may be thinking that this is what would happen anyway, right? Wrong. Because home values have increased substantially in recent years, it probably costs more to build a house than when you originally purchased your home and your insurance policy. The good news is that guaranteed replacement value policies will absorb the increased costs and provide the homeowner with a cushion if construction prices increase.
Endorsements: Legally speaking, an endorsement is an amendment to the basic homeowner's policy. Practically speaking, it is a way for homeowners to ensure that their high-priced possessions will be insured in the event of a disaster.For example, a woman wanting to insure her diamond engagement ring would obtain an endorsement to her homeowners' policy in order to prove not only that she owned the ring, but also its value. She would do this by obtaining a formal appraisal of the ring from a jeweler, and then sending the appraisal to the insurance carrier for special notation on the insurance contract. Formal endorsements such as these will help in the claims process and ensure that the homeowner gets the full dollar value of the item if it is lost, stolen or damaged in a disaster. Typical items that are endorsed in addition to jewelry include furs, antiques and collectibles.


Wrapping It All Up
To avoid any discrepancies and any delays in receiving your insurance money for your home, make sure you document everything. Photograph and videotape the entire contents of your home and the home itself. Then store these photos and videotapes in a fireproof box. In addition, consider storing a copy of the photos at a relative's house, and/or in a safety deposit box. Doing this will help homeowners compile an inventory of their possessions (which is what the insurance company will demand) after a disaster. It will also, by extension, dramatically shorten the length of the claims process if a disaster does occur.Homeowners' insurance is a necessity. There are ways to save money, but there are also some features that homeowners shouldn't skimp on. Make sure you know the difference.

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