Cheap home insurance can mean limited coverage for yourself, your family, your house and your other possessions, so before accepting a cheap insurance policy, examine first what it covers and know why your premiums are low.

The adage too-good-to-be-true also applies in home insurance. An insurer cannot sell you a very low-cost policy and at the same time offer you complete coverage. There has to be some provisions in the standard house insurance coverage that were removed or revised so that they can reduce their liability and also reduce your premium.

One of these ways is through your insurance deductible. Your premium may have been reduced by 20 or 25 percent, but your deductible has been raised from $500 to $1,200. The deductible is your share of the cost when something bad happens to your house or a liability arises.

Increasing the deductible is one of the ways to reduce insurance premiums, but if you are not informed beforehand about the deductible increase, then it is a mishandled strategy and reeks of deception.

Another is the cash value or replacement cost coverage option. Your home insurance policy may be cheap because you were given a cash value coverage without you knowing or realizing it.

A cash value coverage means that when you submit a claim, the insurance appraiser will estimate the value of your house at the time of the claim, reduces it by applying the depreciation rate and your deductible. Typically, this option results in much lower claim proceeds because of the depreciation factor.

On the other hand, if you purchased a replacement cost policy, the amount of your claim proceeds will be equal to the exact amount you will spend or you have already spent to replace your property or possessions. This requires submission of receipts and other types of expense documentation. Because this type of coverage provides full compensation, its premium is much higher. So cheap insurance policies are commonly cash value policies.

However, there could be legitimate and valid reasons why you are being offered a cheap house insurance policy. Probably, you were given cheap rates because your house is well-secured and resistant to disasters, your CLUE record is good, you have been patronizing the company for years and your location is not prone to natural disasters.

What is important is you know the list of perils and liabilities covered by your home insurance policy, your deductible amount and the basis to be used when your claims are processed.

Due to the current instability of the U.S. housing market, more Americans are choosing to rent the roofs over their heads. Nearly one-third of the nation’s population rent their homes. According to a survey conducted by insurance provider Allstate, of the 87 million renters (2008) only about 40 percent of them have a renter’s insurance policy.

Like homeowners, renters are at risk of having their property destroyed, damaged or stolen. Renters insurance can not only mitigate financial loss but also provide overall peace of mind. Standard rental insurance is relatively inexpensive, costing about $12 a month. Since the average renter has$30,000 in material possessions, paying a small premium of $12 can be a smart move.

Typically a standard home insurance policy provides protection from:

• Theft
• Windstorm or hail
• Fire or lightening
• Vandalism
• Explosion
• Volcanic eruption
• Riot
• Smoke
• Damage caused by a vehicle or aircraft
• Snow, ice or sleet
• Falling objects
• Electrical surge damage
• Unlivable quarters (covers you living somewhere else typically for 12 months if your dwelling becomes unlivable after one of the above occurs)

If you live in a geographical area that is plagued by natural disasters, opting into additionalflood insurance and earthquake insurance riders may be a wise choice. The costs for these types coverages are set by the government and are generally non-negotiable. Both program maximums can cover content loss up to $100,000 based on what level of protection you choose to purchase.

Renters should conduct a search to determine the risk of both flood and earthquakes in their area. Floodsmart.gov is a great resource tohelp consumers determine their flood insurance needs and find reputable policy options.

Even though the chance is slim of all your property being lost in an earthquake,90 percent of the nation’s population lives in seismically active areas. Residents in California can find out more information from the California Earthquake Authority.

It is up to independent renters to secure their own policy. Yourlandlord probably has insurance protecting his/her financial interests if a crisis occurs. By securing your own renters insurance policy, you will get the coverage you need to provide yourself with your very own financial safety net.

When it comes to vacant home insurance, a good low cost solution does not exist in the United States. Vacant home insurance is 3 times to 5 times as expensive as regular homeowners insurance in most instances, and there is no way around this if you want a good policy.

Even “fire only” policies may be more expensive for vacant homeowners insurance than regular homeowners insurance and what are you getting, fire only!

There are certain factors that can get you the best rates possible for your vacant or empty home during the vacant home underwriting process. These are listed below

1. Will the vacant home be visited at least 4 times per month? Homes that don’t get 4 visits are loaded or not rated at all. Visits mean inside inspections not grass cutting.
2. How long as the home been uninsured or is the home currently insured.
3. Is the vacant house within 1000 feet of a fire hydrant and within 5 miles of a fire station
4. What is the type of construction on the empty home? Brick and mortar is better than wood frame and cedar shake.
5. Is the home in a coastal community or a beach community.

Landlords that are keen on avoiding have to claim on their landlords insurance policy because of leaks caused by a burst pipes should read the advice given by landlord insurance broker Hamilton Fraser.

Steve Barnes, Property and Claims Manager, said:

“Escaping water from burst pipes can cause considerable damage and inconvenience. By taking some simple precautions property owners can reduce the risk of a claim, and whilst much of it is common sense or indeed standard practice to the experienced landlord the following actions could make a difference!”

Hamilton Fraser has issued the following advice:

• Make sure you and your tenants know where your main stop tap is and check that it turns easily.
• Make sure pipes and tanks in your roof space are lagged. Where the loft has been insulated, less heat gets into the roof space and pipes can freeze more easily.
• In very cold weather, you could instruct your tenants to open the loft hatch to allow heat into the loft space. This will help prevent pipes from freezing.
• Advise tenants to keep doors between heated and unheated rooms open, and where possible, cupboard doors open below sinks to allow warm air to circulate.
• Seal any holes or gaps that may be letting cold air into your property.
• Check roofs, chimneys and gutters for unsafe tiles, cracks, leaks and blockages. Check that down pipes and supporting brackets are also secure. Clear drain gratings of leaves and debris to allow water to drain quickly as temperatures rise and the thaw begins.
• Make sure water supply to any external taps is turned off, drain down any water in the pipe and disconnect any hoses.
• If you or your tenant discovers a frozen pipe don’t wait for it to burst. Turn off the water supply and slowly thaw the affected pipe by introducing gentle heat to the area e.g. hair dryer, space heater, hot water bottle. DO NOT attempt to thaw the pipe with a blow torch or other open flame such as a cigarette lighter or matches.

If your property is unoccupied
• Keep the heating on a low constant heat or make sure the system and all of its components have been fully drained by a plumbing professional – or it will freeze.
• Check on your property as regularly as you possibly can. If you do have a burst pipe early identification of escaped water can help reduce the cost of the damage.
• Ensure you have complied with any un-occupancy conditions listed in your policy. Remember that, for example, regular inspections might be a condition of your insurance policy and failure to do so could affect settlement of your claim. If you have any questions regarding an un-occupied property call us on 0845 310 6300.
Emergency Action if disaster strikes
• Turn off the stop tap to prevent further flooding
• Block any escaping water with a towel
• Open all taps to reduce flooding and pressure on the system
• Turn off the source for hot water and central heating
• Can your tenant contact you in an emergency? If not you might consider providing your tenant with the number of a reputable contractor who could respond quickly and undertake emergency repairs to prevent further damage

Southern California residents were recently hit with new expectations to purchase flood insurance due to FEMA’s new floodplain map, and it appears that now some Michigan residents will be on the hook as well. While some of the resident in California were able to fight FEMA’s requirements and excuse themselves from this new expectation, it looks like residents in Michigan’s Fenton Township area are just beginning their fight.

Advice from Townships and City Halls

Many residents who have received notice of their requirement to purchase flood insurance have turned to their townships and city halls for advice on what to do. According to published reports, the townships and city halls are, in turn, providing copies of the new floodplain map from the Federal Emergency Management Agency (FEMA) and telling the homeowners to consult with a surveyor or floodplain expert.

If the surveyor or floodplain expert determines that the home surveyed is not a threat, it could be removed from the floodplain map. However, if the home isn’t surveyed, FEMA will expect the homeowners to purchase their flood insurance policy within 45 days of receiving the notice.

Some May Still Have to Pay

Unfortunately, reports show that despite the fact that some homeowners are able to produceproof that they are no longer in the floodplain and don’t require insurance, they may stillhave to pay. This is if the lender they work with determines that as a condition of their loan they are stillcovered by this type of policy.

However, some residents have already been lifted out of the floodplain zone, relieving themselves of nearly $4,000 a year in coverage.Residents andsurveyors strongly recommend that anyone affected by this new requirement get a surveyor to the home as soon as possible to avoid an unnecessary expense.

As we move into 2010 continuing to insure vacant apartments, vacant houses, and vacant townhouses as our specialty, we unfortunately can still say that 9 out of 10 customers had NO IDEA their existing homeowners insurance company does not provide vacant homeowners insurance. In other words they came to us out of last minute desperation. The fact that clients are continually blindsided and blown away proves the homeowners insurance companies are not doing enough to communicate to their clients that they do not insure vacant homes and vacant town houses.
We propose the industry inform clients of their exact policy regarding vacant home insurance at the time of the initial sale. In many instances, the policy document may not even address the terms and conditions regarding vacant home insurance but long term customers will be promptly cancelled if a house becomes empty or a town home becomes unoccupied for just 60 days.
Because of this “don’t ask don’t tell” policy as we see it in the industry, we estimate there may be over 10,000 homes across the United States that are either not covered at all, or not covered in full because of a vacancy situation and the customer does not know they are at risk.