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How to pick homeowners insurance

Trampolines are fun for kids to bounce on in the backyard. But they can be a problem when you buy homeowners insurance. Some carriers will consider them too risky for liability reasons, according to Suzanne Pagonis, vice president of HRH Brokerage, a Cranford insurance broker.

Homeowners should advise their agent so they can be placed with an insurance carrier that will not cancel their policy for having a trampoline, she said.

Liability is just one issue to consider when buying homeowners insurance, which is required if you take out a loan to purchase a new house. Existing homeowners also should update their policies whenever they acquire something valuable that will be stored inside their house, Pagonis said.

Every year, you should do an annual review of your policy, because you may have bought expensive jewelry for your wife or put an addition on your home, she said. You don’t want to be underinsured.

Following are some tips on buying insurance based on interviews with Pagonis and Harry Crossen, owner of the Crossen Agency in Chester.

Broker or direct insurer?

Companies that sell direct are fine for first-time buyers, but their product selection can be limited. Brokers can provide more choices, especially for expensive homes, because they work with various carriers.

Hurricane coverage

Many companies put a 2 percent hurricane deductible on policies because of wind damage claims from previous years. On a policy with $500,000 of coverage, that would mean a $10,000 deductible. Most companies no longer write insurance on properties near tidal waters.

Replacement cost

This type of policy pays the cost of rebuilding or repairing the home or replacing possessions without a deduction for depreciation. Figure on spending between $175 to $300 a square foot to rebuild your house, depending on its age and the type of construction. Ask for an insurance company appraiser to determine the

replacement value of the home, rather than use standard replacement-cost formulas tied to square footage.

Extended/guaranteed replacement cost

Companies such as Chubb, Firemen’s Fund and AIG offer policies with guaranteed replacement cost. which means they will pay whatever it costs to rebuild your home. Others provide extended replacement cost, which pays between 20 percent and 50 percent more than the limit of the policy to cover spikes in construction costs.

Finding the right insurer

Check the financial stability of companies with A.M. Best at You want companies rated A or better. The Insurance Information Institute Web site. at, also is a good resource.

Set a deductible of at least $1,000 to $2,500 to reduce the premium and deter you from filing small claims.

Take all risks coverage on the contents of your home. It costs more than named perils coverage, but allows for more flexibility in making claims. Under named perils coverage, you have to prove forced entry if your home is burglarized; under all risks, you only have to claim items disappeared. For about $20 more, you can add identity theft coverage .

Get coverage for water backup of sewers and drains as well as sump pump failure. You have to buy a separate policy for flood insurance.

If you have jewelry, antiques or a comic book collection, schedule them with a separate rider on the policy. Take photos and videos of major items in your house and keep them in a separate location, such as your office.

Umbrella policy

Consider an umbrella to cover you for liability above both your home and auto policies. This can protect your assets against major legal judgments. If a family member has a bad driving record, umbrella coverage may not be available. If you have a full-time nanny, make sure to add her to your policy.

Category: Insurance

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