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1. Look for
exclusions to coverage. For example, most insurance policies do
not cover flood or earthquake damage as a standard item. These
coverage's must be bought separately.
2. Look for
dollar limitations on claims. Even if you are covered for a
risk, there may a limit on how much the insurer will pay. For
example, many policies limit the amount paid for stolen jewelry
unless items are insured separately.
3. Understand
replacement cost. If your home is destroyed you'll receive money
to replace it only to the maximum of your coverage, so be sure
your insurance is sufficient. This means that if your home is
insured for $150,000 and it costs $180,000 to replace it, you'll
only receive $150,000.
4. Understand
actual cash value. If you chose not to replace your home when
it's destroyed, you'll receive replacement cost, less
depreciation. This is called actual cash value.
5. Understand
liability. Generally your homeowners insurance covers you for
accidents that happen to other people on your property,
including medical care, court costs, and awards by the court.
However, there is usually an upper limit to the amount of
coverage provided. Be sure that it's sufficient if you have
significant assets.
Reprinted
with permission from Real Estate Checklists and Systems,
www.realestatechecklists.com.
Reprinted from
Realtor(R)Magazine Online permission of the NATIONAL
ASSOCIATION OF REALTORS(R) Copyright 2005. All rights
reserved.
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