by Catherine Rein
(last updated April 27, 2012)
I felt a little overwhelmed with the purchase of my first home. Looking into home insurance was one of the tasks required as we made our way through the home ownership process. Insuring your home is required by most mortgages. The bank and the insurance company are not usually concerned with the market value of the home. The insurance premiums are based on replacement value, what you would have to pay to rebuild your home if it were destroyed. There are three main components to home insurance:
After researching home insurance policies, another important step is to create a household inventory, which is a detailed record of all your possessions. This inventory will help determine how much insurance you need. It is also critical for making claims if your possessions are damaged or destroyed. If you keep it up to date, the inventory provides a quick and accurate record of your possessions.
Some items, such as valuable art objects, photographs, or collections cannot be insured for replacement value. In these cases the insurance company might be allowed to pay you the actual cash value rather than the replacement value.
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