The Top 25 Most Frequently Asked Questions about Homeowners Insurance
Owning a home is the American Dream for many people. Single moms are no exception. But owning a home is more than a mortgage. You have to protect your asset as well.
Do you know the worth of all your assets? Could you recover in case disasters like a fire or flood damaged your home? Could you recover from the theft of your property?
Homeowners insurance is one of the best types of coverage you can purchase if you own the home you live in. With this coverage, you can be sure of keeping a roof over your head and a shirt on your back. Homeowners insurance protects your property as well as your family and even your pets.
While many households have invested in homeowners insurance, not many truly understand its importance, or what it covers. Here are 25 commonly asked questions asked by consumers about homeowners insurance.
Do I really need homeowners insurance?
If you don’t want to pay out of pocket for property damage and liabilities – such as medical fees for dog bites – you need homeowners insurance. The cost of recovering from theft or damage as well as defending yourself in a lawsuit can run into the thousands of dollars. Unless you have no attachment or need to replace the items you own (including your home), you should have some level of homeowners insurance.
What does homeowners insurance cover?
This depends on the type of insurance policy you buy. According to a survey by the National Association of Insurance Commissioners (NAIC), 33 percent of Americans mistakenly believe that their homeowners insurance policy will cover them for flood damages.
A standard-form insurance policy doesn’t cover flood damage. Standard insurance policies usually cover damage by:
Smoke
Vehicles
Falling objects
Explosions
Fire
Lightning
Weight of snow, sleet or ice
Frozen plumbing and other household systems
Theft and vandalism
You may have to get extra coverage for other disasters.
Is homeowners insurance expensive?
According to a February 2016 study by the NAIC, the average cost of homeowners insurance increased by 6 percent to $1,096 in 2013. This is an average of $91 per month. This is much less than the thousands of dollars you would have to pay in case of a disaster or liability.
You can reduce the cost of homeowners insurance by comparing home insurance quotes online and searching for the best deal.
Is my backyard shed included in my homeowners insurance policy?
Yes. Real property is included under the policy. Real property includes your home, any shed on your property, the garage and any other structure on the property.
How much is my shed insured for?
The value of coverage for any auxiliary structure on your property such as a shed or garage, is dependent on the value of the main structure (i.e. your house). If the house is valued at $80,000 for example, then the shed will be covered for 10 percent of that value (i.e. $8,000).
Who decided how much my property is worth?
This is determined based on state laws. Insurance companies will base the value on various common methods including actual cash value, replacement coverage and extended replacement cost.
Are my valuables and jewelry included in the cover?
Standard policies have a limit to the coverage provided for jewelry. You may need to add extra coverage to ensure you are fully covered.
Am I covered for flood damage?
No. If you live in a flood-prone area, you may need extra flood insurance.
What about earthquake damage?
No. You will need additional insurance.
Will my policy protect me if my neighbor slips and falls on my porch steps and threatens to sue me?
Yes. Your policy will cover the damages if you are found liable.
Am I covered for damages if a tree on my property falls on my house in a storm?
Yes. You will be covered for damage of the roof and removal for the tree.
Am I covered for the removal of a tree that falls during a storm but doesn’t damage my property?
No. Your trees are covered for risks such as fire and vandalism but not wind damage.
Are my children who are away in college covered by my policy?
If your children are full-time students and still part of your household, they will be covered to a limit of 10 percent. Coverage for children living away from home varies from one insurance provider to another.
Is my mother-in-law who lives with us covered under the policy?
She will be considered as part of the household and will have her property covered under the policy.
Is my vacation home in another state covered under the same policy?
Insurance providers operating in multiple states can issue a policy to cover your vacation home. However, the second policy will only cover the property (i.e. a dwelling policy).
I work from home. Is my business property covered?
Yes. However, the coverage is limited. It is therefore best to have additional coverage.
Am I covered for natural disasters?
Natural disasters, also known as ‘Acts of God,’ are not covered by standard policy. Additional insurance is required.
How much will I be paid in case of damage to my personal property?
This is outlined in your insurance policy under special limits. The amount paid will depend on your cover and the insurance provider.
Are my possessions covered even when I’m on vacation?
Yes.
I rent out a room to a tenant. Are they covered under my policy?
No. Tenants are not covered under homeowners insurance.
Where should I start after losing my property?
Begin by taking inventory and then contacting your insurance provider.
What do I do when my property is stolen?
Contact your insurance provider immediately.
Is insurance for my condo different?
The coverage offered for condo owners insurance covers the same general areas as homeowners insurance. However, there may be some differences based on the specific requirements of the condominium unit owners.
Are there exclusions in homeowners insurance policies?
Yes. These include intentional loss, neglect, damage caused by war or general power failure.
My golf clubs were stolen from my car. Are they covered?
Yes. Homeowners insurance covers your property anywhere in the world.
Now that you have the answers to the most frequently asked questions are you ready to buy a home? If you already have a home do you have the protection you need? Be sure the home insurance agency you choose can answer all of your questions and give you the best value for your money.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
With the economic ups and downs of the last several years, many Americans are more motivated than ever to get their finances on track. With some financial alternatives expiring before the year’s end, there’s no better time than the present to start.
“If you’re waiting until the New Year to resolve to better your finances, you may want to think again. You could be missing out on some year-end strategies that could help bolster your retirement savings and even provide tax benefits,” says Lule Demmissie, managing director of retirement at TD Ameritrade, Inc., a broker dealer subsidiary of TD Ameritrade Holding Corporation. “By being proactive, you can really have a positive effect on your nest egg.”
Demmissie offers 10 smart year-end strategies to help you start the new year with a strong financial focus:
1. Make 401(k) contributions by the end of the year
Not good at regularly saving for retirement? Make up for it by investing part of – or your entire -year-end bonus. For 2013, the maximum 401(k) contribution for people younger than 50 is $17,500. It’s a simple way to help build your retirement savings.
2. Play catch up
If you’ll be 50 by the end of the calendar year, now may be the perfect time to make catch-up contributions. In addition to the $17,500 401(k) maximum, people 50 and older can make a $5,500 catch-up contribution. Visit the IRS website for more information on contribution amounts.
3. Invest in a traditional or a Roth IRA
While the deadline for this year is technically April 15 of the next year; some say don’t wait to make contributions to an IRA for the 2013 tax year. Take advantage of the tax benefits, such federal tax-free growth and tax-free withdrawals during retirement. For traditional IRAs, most wage earners can deduct contributions on income taxes now and pay the taxes upon qualified withdrawals in retirement. Note: Adjusted Gross Income (AGI) limits apply for deductibility for both Roth and traditional IRAs.
4. Invest in a child’s future
Give your child a head start in life by investing toward his or her education. Consider opening a 529, Coverdell or custodial account. For parents of children already in college, don’t forget to take advantage of the American Opportunity College Credit if you are currently paying your child’s college tuition. (Note: AGI limits apply).
5. Pay down high-interest debt
Having high-interest debt can make saving for anything else very challenging. By paying it down now, you can save yourself money in the long run. If you only pay the minimum amount each month, a seemingly small purchase could take months to pay off and over time could cost significantly more due to the high interest rates.
6. Own a home? Invest in it
Numerous energy-efficient home improvements qualify for a federal tax credit if done by the end of 2013. Things like new windows, doors, water heaters and skylights may qualify. Visit energy.gov to learn more. In addition to a tax credit, these improvements can save you money on your utility bills, opening up more of your monthly budget.
7. Donate to charity
Donating to charity isn’t only an act of goodwill; it can be used as a write-off come tax time. Whether a monetary gift or donation of goods, such as clothing and household items you no longer use, keep records and include the deduction when you do your taxes.
8. Adjust your W9
In 2012, the average tax refund was just under $3,000. Rather than loaning Uncle Sam the money at no cost, consider adjusting withholdings and using the funds for saving or investing
9. Save for a rainy day
It can be tempting to spend any monetary holiday gifts or bonuses from work immediately. Instead, if you don’t already have one, use that money to start an emergency fund. Some financial professionals advocate having six to nine months’ worth of expenses set aside for unforeseen emergencies.
10. Review your portfolio
Don’t delay reviewing your contributions and portfolio allocations. TD Ameritrade offers a variety of tax-deferred savings vehicles that can help you pursue your retirement goals. If you have questions, meet with a qualified financial advisor and learn what you can do to start 2014 on the right financial foot.
TD Ameritrade does not provide tax advice. -Please consult with a tax-planning professional with regard to your personal circumstances.
Provided by: TD Ameritrade, Inc. Member FINRA/SIPC /NFA & BPT
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Saving is something that everyone should do regardless of how much money you make and what your status is socially and professionally. As talked about in the previous article “Rainy Day Funds” and other articles, it is always a good idea to save money for times that you cannot foresee from now. It is also a good idea to save for the little things that you have deserved over the year, or have wanted for a long time.
To get started on saving your money, get creative and buy a piggy bank, change jar (one that can track how much you deposit), mattresses, PayPal.com, etc. Being creative can make it fun to save, and easy to store it away from yourself. Sometimes people wait till their change jar, piggybank, or whatever container they use to overflow and deposit it. Another good way to save is to take out a 401K with your job (if they have one). They’ll take it out before your pay is taxed and deposit it into an account for you. Other things that can go into savings, whether an account or a container, is student loan refunds, stimulus checks, birthday money, and even your lottery winnings!
Whichever way you choose to save, make sure you always add to it, and not subtract from it. Saving money will always come in handy, and it will make you feel a lot richer than you might have been feeling before.
Everyone, at some point in their life, will have a “rainy day”. For those who are unfamiliar with the phrase, it means a day or time period where one comes across times of unexpected financial troubles. It is always a good idea to save money for times that you cannot foresee from now.
The first step to preparing your rainy day fund is to have a savings plan for emergencies. It’s hard to predict when and where a financial emergency will emerge, and it’s better to be prepared for such occasion. Second, open up a separate account for your rainy day fund. Any spare funds that you receive, whether it’s a tax refunds, raises, a side job, or any extra income, is a good deposit for your newly created account. Third, it’s recommended that you have at least $1,000 to $3,000 in savings, but even if you save $500 it still helps wonders.
Having a rainy day account is very empowering to the soul. It gives you and your family a way out of financial troubles like unemployment for a period of time, or things that need fixing to maintain your life. Saving money also relinquishes stress levels, depression, and anxiety.
Everyone is talking about the ecomomy and how bad things are. Politicians and big business men are playing ping-pong with our emotions and wallets.
Everywhere I turn I hear about the 1% versus the 99%. Occupy Wall Street and various other offshoot “Occupy” groups are springing up all over the country.
With all this noise I wonder if it’s a good time to play the stock market. So many people are distracted because of the news coverag and naysayers. Is this a good time to be playing the stock market?
The reality is, business goes on and as usual. The stock market is still moving forward. People are still buying goods and services and companies are still making money.
Even in a recession we still need food, clothing, gas, shelter, and numerous other things. As idealistic as it is to want to boycott, sit down, and/or be an activist life still goes on. We can complain about what happening or we can do something about it.
I think there are opportunities in the stock market, but it requires education and innovative thought. For me I have to get input from an experienced person that I can trust. There are many online brokerage services and products like Scottrade that offer quick and inexpensive options to jump into the market.
For me, I need a bit more hand holding and guidance. A while ago I spoke to an investment adviser that seemed on the up and up. He seemed genuinely interested in helping me set up accounts, transfer my retirement fund, and start making money to fund my dreams.
Thankfully I have a little nest egg to turn over which will make getting started much simpler and less stressful. I won’t have to figure out how to get the money to put into the market and beginning playing with the big boys.
Someday soon, I’ll be sitting pretty with a diverse portfolio of my favorite companies. In the meantime, I’m back to the grindstone to make a dollar out of 15 cents like everyone else. 🙂
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Hi! Welcome to RichSingleMomma.com. I started this website almost a decade ago because I couldn't find any blogs back then that helped single moms with money. I was having some success in that area so I decided to share what I knew about side hustles, making extra money, and managing money. Read more...
