Getting Alaska homeowners insurance requires you to understand just how much coverage you need. You don’t want to be underinsured and you surely don’t want to pay for insurance coverage that you don’t need. Here are a few things to consider when determining just how much Alaska homeowners insurance you should buy.
Out of Pocket Expenses
One of the most important things you have to consider when choosing an Alaska homeowners insurance policy is how much can you afford to pay from your own bank account.
The one aspect of your Alaska homeowners insurance policy that affects your out-of-pocket expense the most is your deductible. This is the dollar amount needed per claim to force your Alaska homeowners insurance policy to kick in. If you have a claim and the damage is $1,000 and your deductible is $500, then you will pay $500 and your home insurance policy will pay $500.
Another out-of-pocket expense would come if you don’t have complete coverage on your home. If it would cost $150,000 to replace your home and you only have $125,000 worth of coverage, then the extra $25,000 to replace your home would have to come from you.
General Coverage Options
When it comes to choosing the level of coverage provided by your policy, there are 3 basic levels to consider.
- Actual Cash Value: Will be the cheapest because it replaces your home and covered possessions minus the depreciation of items involved. Could leave you having to pay out a substantial amount of money to replace everything that is lost if the depreciation is considerable.
- Replacement Cost: Pays the predetermined amount from your Alaska homeowners insurance policy to rebuild your home and replace covered possessions. The premiums are a little higher because there is no deduction for the depreciation of the covered items.
- Guaranteed Replacement Cost: The premiums will be the highest for this level of Alaska homeowners insurance. It pays to rebuild your home and replace all covered possessions no matter what it costs.
Determining which level of coverage you should purchase is a balancing act between how much you want to pay for our Alaska homeowners insurance premiums and how much risk you are willing to take against something happening to your home and the insurance not covering the entirety of the damage.
Homeowners Insurance and Earthquakes
If you are just relocating to Alaska, you should know that Alaska is prone to earthquakes. This has more to do with you than just the possibility that you may experience one; it also has implications for your Alaska homeowners insurance policy. If you live in an area of Alaska where earthquakes are common, you will probably be required by your lender to also purchase Alaska homeowners insurance for earthquakes.
A standard Alaska homeowners insurance policy will generally not cover you in the instance of damage done to your home due to an earthquake. If you still owe on your home, contact your lender to see if an earthquake policy is required. If you do not owe on your home you should still contact your Alaska homeowners insurance agent to see if you should get this coverage. It may save you from having to rebuild your home after an earthquake out of your own pocket.
Get Quotes on Your Home and Possessions
For many first time home buyers, it doesn’t quite sink in that you may not need an Alaska homeowners insurance policy that covers how much you paid for your home. It is easy to forget that when you pay for a home, you are also purchasing the land, but Alaska homeowners insurance doesn’t cover the land.
The limits of your Alaska homeowners insurance policy should be based upon the amount if would cost to replace your possessions and to rebuild your home. The land does not need insurance protection. Therefore, find out how much your home is worth, appraise your personal items in the home and that is the monetary level of Alaska homeowners insurance you need.