How much to buy: Keeping in mind that the purpose of insurance is to transfer risk, you need to adequately protect your assets in the event of a catastrophic loss. You should insure your home for its proper value for maximum protection. Your house is a major investment, don't scrimp on protecting it. Additionally, your mortgage company may have a set of insurance requirements you must adhere to.
Coverages: Know the difference between All Risk and Named Peril coverage. All risk is broader and will cover all risks subject to policy exclusions. On the other hand, Named Perils will cover only the perils named (i.e., fire, lightening, windstorm). All risk may cost a little more, but it's worth it to protect your home.
Valuation: To protect our investment, replacement cost coverage pays the amount it will take to replace your home with the same kind and/or quality. Actual Cash value depreciates the purchase price of your home. ACV premiums may be cheaper, but replacement cost will return your home to it's pre-loss value.
Rates: Rates are affect by factors such as:
· Type of construction: frame houses usually cost more than brick houses to insure.
· Age of house: Newer homes may qualify for discounts that older homes may not be privy to.
· Fire Protection: How far is your house from a fire hydrant or a fire department? The availability of water in the event of a fire is also taken into consideration when determining rate.
· Deductible: The higher the deductible you can withstand, the more of a premium discount you'll enjoy
If you would like more information, or if you have a complaint you may contact the Arizona Department of Insurance
