HOMEOWNERS INSURANCE

Buying a home is no small investment, and it may cost a significant amount of money over time. Therefore, having homeowner’s insurance is important. Though not required by law, getting homeowner’s insurance is often beneficial. Generally, you must protect yourself and your property in the event that something happens. For example, if your home is damaged during a storm, having insurance helps with the costs required to repair the damage.

If you have taken out a mortgage, you are most likely required to have homeowner’s insurance as a condition of your loan. However, be mindful that not all homeowner’s insurance plans are created equal. Depending on where you live, certain types of coverage may be unnecessary. Moreover, despite the fact that you may have been assigned a policy when you purchased your home, you are able to change to a different company and policy at any given time. When looking for homeowner insurance policies, it is important to ensure that you are only paying for the services you need. Check out these helpful topics about home insurance and how to find the best plan.

What exactly is home insurance?

At a glance, homeowner’s insurance serves as protection against losses from unforeseeable events. These insurance policies typically offer coverage for reparations to your home, yard and any structures built on the property. Coverage may help replace or repair certain personal belongings, such as furniture, depending on the policy you select. Finally, home insurance policies cover personal liability issues in case anyone is injured while on your property. Depending on the plan you have, you have coverage for specific events. For example, some plans include flood damage but not lightning damage.

If you have valuable possessions in your home, it is best to purchase homeowner’s insurance and ensure that these items are replaced if an unforeseeable event occurs. Homeowner’s insurance is required by most mortgage lenders, but you are free to select the company from which you wish to purchase the policy. The only requirement is that the policy you select meets the criteria and coverage requirements of your lender.

What will homeowner insurance cover?

Many different types of homeowner insurance policies exist. The most common types of policies are HO-2 and HO-3. Most times, homeowner insurance policies are intended for primary residences. Additionally, a policy only covers specific types of damages, which are outlined in the contract. Each insurance plan offers different amounts of coverage and associated levels. On average, homeowner insurance policies cover damages such as:

  • Fire.
  • Snow.
  • Lightning.
  • Vandalism.
  • Theft.
  • Vehicular Damage.
  • Smoke.
  • Water damage.
  • Storm Damage.

Certain policies may provide additional coverage. For example, if you live in an area where riots and explosions happen often, certain homeowner’s insurance plans may cover it. Moreover, homeowners who reside near volcanoes may obtain insurance that covers damages from volcanic eruptions. Overall, it is important to identify which plans are offered and cover your situation best.

What does homeowner’s insurance not cover?

Despite the broad range of protection for personal and home property, insurance policies across the board only cover certain issues. For example, the following types of damage are not covered in a general homeowner’s insurance plan:

  • Mold.
  • Landslides.
  • Flooding.
  • Wear and Tear.
  • Government actions.
  • Earthquakes.
  • Infestation.
  • Nuclear hazards.

It is possible to buy additional insurance policies to cover the types of damage that are not included in a general policy. Furthermore, you may reach out to your insurer and talk about specific concerns based on your location. You may be able to add coverage to your existing policy. Endorsements are additional coverage that cost an extra fee.

Coverage Plan Premiums

When you purchase an insurance plan, you pay a monthly premium for continued protection. Depending on the type of coverage and insurer you choose, your monthly premium will differ. Each insurer uses different characteristics to calculate your monthly premium rate. The following factors are typical aspects affecting your calculated premium:

  • Age of the home.
  • Rebuilding costs on the home.
  • Fire protection rating for your area.
  • Your claims history.
  • The neighborhood claim history.
  • Your current coverage plan and deductibles.
  • Recreational items posing risk factors.

If homeowner’s insurance policies are at the top of your budget, consider some ways to save money on it. One way to do this is to ask your provider about potential discounts, as various insurers offer discounts to lower your monthly premium. Additionally, if you are claims-free for a certain amount of time, you may be eligible for a reduction on your premium. Other options to save money include bundling your insurance. If you bundle your home and auto insurance together, it has the potential to be cheaper than paying for each of those coverages individually.

Coverage Deductibles

Coverage deductibles refer to the amount of money you pay out of pocket before the insurance plan steps in to offer financial assistance. If you have a policy with a $1,000 deductible and you submit a claim for $10,000 worth of damages due to a storm, you must pay for the $1,000 while the rest of the claim is covered by insurance.

You have the option of either bundling your risks under an all-peril deductible or selecting different deductibles for specific claims. Overall, you have the option to pay higher or lower deductibles, but be mindful that there are specific benefits and drawbacks for each of those choices. When you choose a higher deductible, you often decrease the monthly premium amount. However, if a problem arises, you pay more out of pocket before insurance kicks in, which may be detrimental. Therefore, it is important to determine which is the best option for you based on the risks in your area.

Talk to a Professional

When it comes to protecting your home, it is important to obtain coverage for a variety of potential issues. At the same time, there is no point in paying for protection you do not need. For example, having flood insurance in an area with a significantly low risk of flooding may be a waste of money. If you have never had to purchase homeowner’s insurance before, you may benefit from speaking to a professional.

Insurance professional can decipher different coverage options and recommend which policies best suit your home. Thus, it is important to determine the value of your home and to choose the best policy for your situation based on the risk factors. As such, make sure to do your research to find credible professionals and run multiple estimates with different agencies.