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Home Insurance Basics

This section is designed to help you understand home insurance policies—what they typically cover and don’t cover, what affects their rates, and how and under what circumstance they can be cancelled or not renewed.

Common gaps in homeowners insurance

Homeowners policies vary company and homeowners can mistakenly assume common items and features are covered. When purchasing insurance coverage, talk with you insurance agent about your needs and be sure to mention the following items:

  • Sump pumps

  • Sheds and unattached enclosures

  • Trampolines and pools

  • Jewelry artwork, antiques (Depending on the value, you might want to consider adding an additional personal articles policy.)

  • Home office or business (You will need an additional policy to protect your assets if a client is injured on your property or if merchandise is damaged or stolen.)

It pays to be proactive

When reviewing your policy options, considering the following factors can help guide you to the appropriate amount of coverage for your needs.

Determining adequate coverage

Creating a home inventory can help determine if you have enough coverage. If you have any special items like art, jewelry, consider if you need additional coverage. You also need to factor in coverage for a shed or pool. Those items might not be covered under your policy or might raise your liability.

Actual Cash Value vs. Replacement Costs

If your policy provides “Actual Cash Value” the insurance company will pay you an amount equivalent to the current value of the property. Keep in mind, that you might be reimbursed for less than what you originally paid for the item.

With “Replacement Cost” the insurance company will pay you the “Actual cash value” upfront, then provide further reimbursement if the cost of replacement is more than the actual cash value.

In cases where there is a disagreement between you and the insurance company over the amount of the loss, Minnesota statute provides for resolving the dispute through an appraisal process. Ask your claim representative how to start the appraisal process.

Raising your deductible to lower premium costs

Ask your insurance agent whether there are discounts you qualify for and review if you could raise your deductible to decrease your premium costs.

Assessing your risks

Floods and earthquakes are often not covered by a standard homeowners or renters policy. Determine your risk for these types of disasters and ask about available options. Visit for details on flood insurance.

Determining your liability coverage

Coverage for $250,000 might sound like it would go a long way to protect your property, but once you factor in retirement accounts, savings, and your home's value you might need coverage beyond that amount. An umbrella policy can extend your liability coverage above the amount that you might find in a basic homeowner's policy. 

Review your coverage annually

Insurance companies may change policy terms at renewal, but they must notify you first. Read all notices and information sent from your insurance company.

Prepare a home inventory

A home inventory can help in case you need to file an insurance claim after your belonging are damaged or stolen. Not only will an accurate and detailed inventory make the claims process easier, it can help ensure that you are adequately compensated. These tips can help you put together a comprehensive home inventory:

  • Document each item as completely as possible, including brand, serial number, and model number. Taking pictures can help.

  • Keep receipts to prove what you paid for each item.

  • Review your insurance policy to know what is covered and whether your possessions are insured for actual cash value or replacement cost.

  • For rare or valuable items such as jewelry, antiques, or art, you may want to consider adding additional insurance -- a rider -- to your policy.

  • Update the list annually and keep it in a safe, fire-proof box, or store in online.

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