Just like any kind of insurance, not all dwelling fire insurance policies are created equal. The things to consider when choosing a dwelling fire insurance policy vary from state to state. For example, some states require valued policies, whereas others, like Massachusetts, allow for non-valued policies. We’ll focus specifically on what to consider when it comes to purchasing homeowner’s fire insurance in Massachusetts.
Whether you’re buying the policy for a home you live in or one you own but rent it out to others, it’s important to have insurance for a variety of reasons. First of all, as the Massachusetts Guide to Insurance for Your Home says, your home is a valuable asset, and you want to protect your investment. While there is currently no law requiring it, many lenders require some sort of coverage in order for you to secure a mortgage with them.
So what is dwelling fire insurance compared to other homeowner’s insurance plans? Essentially, dwelling fire insurance is considered a “slimmed down” version of regular homeowner’s insurance. These policies actually cover more than just fire-related disasters, but are usually more basic than more complex, and thus more expensive, policies. For example, if you live in a potential flood zone, you’ll want to purchase a flood insurance policy, as well.
Why would you consider this more basic insurance? Homeowners that may prefer this time of insurance include those that have homes under major renovation or under construction, second homes, or homes that don’t have significant cash value such as older homes. Dwelling fire insurance usually only covers the value of the home itself, and not possessions inside of it. You’ll want to keep this in mind when deciding the amount of coverage you’re looking to get.
Keep in mind that policies typically cover property at their “replacement cost.” As the Massachusetts Guide to Understanding the Policy Covering Your Home explains, sometimes the policy can be made to only cover a percentage of the actual replacement cost. A typical percentage that’s required by insurers would be somewhere around 80 percent. This could lead to under-insurance, which would be very bad, so homeowners should be sure to update their coverage every year to keep up with changing costs.
Fortunately, there are also often additional coverages that won’t increase your premiums. This includes “loss of use” coverage, which helps you to cover additional living expenses for a time after your home is lost. If it’s a rental home, then it will cover lost rental income. There’s also personal liability coverage and medical payments to others, both of which are very useful for landlords.
These are just a few things to consider when considering fire insurance policies. Check with your homeowner’s insurance agent to learn the specifics of dwelling fire insurance and if it will be enough coverage for your home.
Banas & Fickert Insurance prides itself on individual attention we give to each client to create a “perfect fit policy.” By getting the right policy for you upfront, you can have peace of mind that you’ll be correctly covered if disaster ever strikes your home. If you’re looking for an insurance policy in Massachusetts, contact us today for more information!