If you own a home, you need to make sure that your home is properly insured. Otherwise, you could be on the hook for anything that happens to your home or anyone on your property. Therefore, you need to know as much about home insurance as possible before you buy your next house.
Contact A Home Insurance Broker Today
The first thing that you should do is contact a home insurance broker in your area. You and a broker can talk about the different home insurance products available to help protect yourself and your home.
Make sure that you work with someone who is reputable and will take the time to answer all of your questions. It is important that you have a policy that covers you no matter what happens.
Insurance May Be Mandatory To Get A Mortgage
Those who are applying for a mortgage may need to get insurance to ensure that the mortgage is approved. This is because the lender needs to know that the loan will be repaid. If a homeowner moves into a house that becomes unlivable, there is less incentive for the homeowner to continue to pay the mortgage.
Additionally, the home may be worthless if something happens to it. If the value of the house drops below the loan amount, the homeowner may again have little incentive to continue to make payments each month.
Flood Insurance Generally Is Not Included In A Standard Policy
Anyone who lives in an area prone to flooding may need to get a flood insurance policy that is separate from their homeowner’s insurance policy. This is important to inquire about because you don’t want to be on the hook for the cost of damages related to a flood.
The bad news is that even a few inches of water can cause thousands of dollars worth of damages. This means that you need to protect yourself now to ensure that you don’t get stuck with a flood of bills in the future.
Always Read The Fine Print Of Any Policy
Before purchasing a homeowners policy, make sure that you read the fine print. In some cases, you may not get a claim approved if your home is damaged in a named storm such as a hurricane. In other cases, you may only be limited to a fixed amount of coverage during the time that you own your home.
This is why you need to sit down with an insurance professional who can walk you through the process of buying a policy that will fit your needs while remaining affordable.
When you decide to purchase a home, make sure that you don’t forget to purchase insurance for the home. Although it is mandatory to do so in many cases, you should buy coverage even if it isn’t required.
You don’t want to have to pay for fire or flood damage on your own because it could take years to save up the money to make necessary repairs to your property.
Homeowners Insurance – Get The Cover You Need
A house is the single most expensive thing most people will ever buy or own. Protecting your house with adequate homeowners insurance makes sound financial sense. Should the worst happen, you will seriously regret it if you fail to insure your home. There are ways to cut the cost of homeowners insurance, but accepting limited cover is generally not the best way to do this.
Choosing basic homeowners insurance will give your home very limited cover. Your actual needs will vary depending on where you live. For example, some areas are more at risk of damage from flooding and tornadoes. If your home is located in an area where the temperature drops below freezing, cover against freezing pipes and damage caused by the weight of snow is worth having.
The amount you need to insure your house for under a homeowner insurance policy is the cost of rebuilding the property. Many people assume they should insure for the market value of the property, but this is not the case.
The cost of rebuilding a property can be higher than the purchase price, and under-insuring your home can have serious consequences. The safest way to ensure that you insure for the correct value is to seek expert advice.
As well as your home, you may need to insure additional structures such as detached garages. Most insurance companies allow ten percent of the value of your home to cover other structures. It’s important to check the wording of your policy and consider if the level of cover is sufficient.
Replacing the contents and valuables of your home could be very expensive, so these should also be insured under your homeowner’s policy. Consider how much it would cost to purchase everything new if your home was destroyed by fire.
Many people underestimate the potential cost and fail to insure adequately. As well as your furniture and electrical appliances, consider the cost to replace clothes, shoes and personal belongings.
High-value items such as jewelry and works of art generally need to be specified on the schedule of a homeowner’s policy. Having a bill of sale or valuation can be useful when insuring these items.
Some policies offer specialist services to locate replacement items for rare valuables, and the additional premiums are worth considering if you have lots of these. Items that you use away from the home, such as cameras and photographic equipment, need additional insurance in some situations.
Choosing an increased deductible is an easy way to cut the cost of insuring your home and valuables. However, always consider whether you would be able to afford to repair or replace items if a large deductible is selected.
If the cost of insuring your home with full protection is high, consider ways to reduce your premiums. For example, some insurance companies will offer a discount if your home has an alarm system.
Buying home and auto insurance from the same company can generate a discount in some cases. Spreading premiums on installments can be more expensive than paying annually, so consider if you can pay in one lump sum.
Read also: How To Choose The Best Insurance Company
Homeowners Insurance by the Numbers
Protecting your home and personal property with homeowners insurance is an important element in your overall plan for financial well-being. Understanding each of the multiple types of homeowners insurance coverage is a critical step in assuring that you have the optimal protection for your specific circumstance. There are 7 levels of homeowners insurance.
Generally, when you ask your insurance agent for a free insurance quote, you are going to be provided information on one of the following coverage levels:
HO1 – Homeowners Insurance
This type of homeowners insurance offers a very limited level of protection against a very narrow set of potential perils. Because of its limitations, many states no longer allow the sale of HO1 policies.
HO2 – Named Peril Insurance
This level of coverage is the least expensive and covers only, as its name suggests, those perils specifically named in the policy. The covered perils maybe fire and lightning. If your home or property is damaged by a non-named peril (i.e. wind) the is no coverage for your loss.
HO3 – Open Peril Insurance
This level insurance covers your home and property for all perils except for those specifically excluded in the policy. Please note that all homeowners insurance has some exclusions. Common on the list of exclusions are flood, earthquake, war and intentional destruction. HO3 level insurance is generally recommended as the minimum level to own.
HO4 – Renters Insurance
This is a special type of homeowners insurance designed to protect the personal property of those renting, rather than owning their dwelling. Renters insurance also offers liability protection for injuries caused to others when on the property of the renters covered by the policy. Renters insurance is most often similar to Open Peril insurance in that it covers damage caused by all perils except those specifically excluded in the policy.
HO5 – “Open Peril Plus”
A newer form of homeowners insurance that offers the policyholder the same benefits as a typical HO3 policy and also includes a rider that expands that coverage to personal items and offers other benefits.
HO6 – Condominium Owners Insurance
This plan offers the policyholder the same kind of protection as an HO4 policy, however, because a condominium owner also owns some of the physical structure of his or her dwelling, an HO6 policy includes expanded coverage to protect against damage to the dwelling’s physical structure (the coverage is sometimes limited to improvements to the condo that have been paid for by the condo owner.)
HO7 – Mobile Home Insurance
This type of policy is designed to protect mobile homeowners, and it may not be available from all insurance companies.
HO8 – Older Home Insurance
This is a special homeowners insurance that is designed specifically to protect older homes. Most often it will be a named peril policy and protect the building up to the repair cost or its market value (in the case of a total loss) rather than for the replacement cost of the structure, as is the case with other homeowners insurance policies.
Homeowners insurance is designed to protect you against the financial loss that results from damage to your home and/or your personal possessions. Homeowners insurance may also offer you protection for your financial responsibility to others who are harmed while on your property.
Most insurance agents offer free homeowners insurance quotes and knowing which level of protection is correct for you will help you make the most financially sound choice from among your options.
Homeowner Insurance Property Protection
When it comes to protecting your home, you must buy an affordable Homeowner insurance plan that offers adequate coverage. However, before you make any buying decision, make sure you understand what you are actually getting from your chosen plan. This is the most important part of your decision; you must not ignore this.
Basics of homeowner insurance
A homeowner insurance policy, also known as a home insurance policy, is specially created to safeguard the homeowners from different potential risks. Whether you buy your policy through the Internet or an insurance agent, conventional homeowner insurance can be split into 2 different parts:
- Homeowner insurance property protection
- Homeowner insurance liability protection
Homeowner insurance property protection Facts
The Homeowner insurance property protection part of your home insurance policy can be divided into 4 subdivisions.
- Dwelling structure
- Other structures
- Losses of use
- Personal belongings
- Dwelling structure This part usually provides coverage for the actual structure of your house along with attached structures and fixtures like plumbing, integrated electronic appliances, heating machine, wiring and permanently fitted AC system.
- Other structures This part mainly provides coverage for detached structures of the house. The structures may include storage sheds, garage and the fittings attached to the land comprising driveway, sidewalk, patio, fences and retaining walls. However, the detached structures utilized for commercial purposes are not entitled to get coverage under your personal homeowner insurance plan.
- Losses of use This part provides coverage for living expenditures besides usual living expenditures if you’re not at home, while your house is under renovation or being repaired. You can also get such coverage if you are refused access according to government instruction.
- Personal belongings This part mainly provides coverage for the personal property comprising your personal belongings owned by either you or any of your family members residing with you. This coverage is generally provided on the basis of the cash value of the item/items or its replacement costs. This part also has a provision of limited coverage for a small boat, but not for any motorized automobiles unless they’re without a license and used only at the home. Items like artworks, firearm, electronic data, jewelry, and money may have limited coverage through this part. For additional coverage, you need to add endorsements to the existing home insurance policy.
Additional property coverage
Your home insurance policy may provide additional coverage for removing debris as well as damaged plants, property removal, burglary, paying for fire-service charges, unlawful use of credit cards, and the collapse of structure and glass damage if occurred by any covered risks.
You can add endorsements to the homeowner insurance property protection part by paying additional costs. The endorsements may include,
- Coverage for assured replacement costs It pays for rebuilding the home, provided if you meet the eligibility criteria.
- Coverage for extended replacement costs Provides coverage to your home for up to a specific limit. It also extends the coverage by 20% to 25% if the cost of reconstruction runs over.
- Coverage to scheduled personal belongings Provides coverage for most expensive belongings if their value surpasses the normal coverage limit.
- Coverage for inflation Provides extra coverage to the home if inflation occurs.
- Coverage for secondary residence Provides coverage to a secondary home like a summer residence.
- Coverage for theft and burglary Provides extended coverage that includes coverage to belongings kept in trailer, watercraft or car.
- Coverage for lost credit cards Provides coverage against loss of credit cards and also unauthenticated use of credit cards.
These are some very important facts regarding a home insurance policy. When you plan to buy a policy to protect your home from every potential risk, make sure you ask your insurance agent about all these matters.
Benefits of Having a Home Owner’s Insurance Policy
Whether you have just recently purchased a new home or if you are thinking of investing in your very first home, you should also consider the option of purchasing a homeowner’s insurance policy known as home insurance to help with protecting you and your family along with the assets you have in your home.
When you are interested in obtaining a home insurance policy, it is important to research why it is useful to do so and the benefits you will receive with each policy before you choose one.
What Does Home Insurance Protect?
Home insurance policies vary depending on the company you choose to work with and what you are seeking to have protected based on the insurance policy prices and what is available near you and for your type of home. Most home insurance policies protect the home from theft and also from various forms of damage.
Included in home damage protection and insurance policies are fire, lightning, snow, ice, windstorm, and hail damage caused by nature. Additionally, smoke damage, freezing damage, vandalism, and even falling objects are often covered in home insurance policies.
House damage done by vehicles, overflow from plumbing, electrical damage (to appliances), and other incidents caused by nature is also often covered in insurance policies so you are able to be compensated.
Additionally, with some home insurance policies, there is also personal liability insurance available to help protect you from being sued if anyone else is hurt while they are visiting on your property.
This allows you to feel safe regardless of who has entered your home or where they are in the house at any given time. It can also help to protect you from having to cover medical expenses for others or for claims to defend yourself when you are required to pay for others’ medical bills due to your own home.
How to Find Home Insurance Policies
When you are ready to begin your search to find the home insurance policies that will work for you and your household, you have multiple methods of doing so depending on how familiar you are with the type of insurance plan you need to protect all of what is yours.
You have the ability to visit a local home insurance agency to speak with an agent themselves. Home insurance agencies are often available locally and you can speak with a specialist and agent by visiting any type of insurance company near you that has home insurance and homeowner’s policies available that are also within your price range.
You also have the option to look into getting the homeowner’s insurance policy you need by browsing online. Searching online for home insurance is a way for you to easily compare quotes and get estimates on pricing for the home protection you are seeking based on the value of your home and the estimated net worth of all of the goods and items you have in your home at the time of purchasing the policy as well.
Insurance Buying Tips for Home Owners
You may think that you can’t afford home insurance, but without a policy that gives you coverage equivalent to the cost of the residence, most lenders will not give you a mortgage. Your insurance covers the building and maintenance costs but not the contents of your home.
Home insurance is not cheap so you do need to shop around for the best policy deal that you can get. If the residential property you are buying is in an area that insurers regard as high risk, you could find yourself paying hundreds if not thousands of dollars in premiums each year.
Protecting Your Property
Even in non-problem areas home insurance can still be expensive. If you can show the insurance company that your property is well protected with an alarm system and strong oak doors.
You may get cheaper premiums. Like car insurance, those companies that provide home insurance are more likely to offer the best rates to those clients that take care of their property. You should consider installing smoke alarms in your property as a lot of property damage is caused by domestic fires.
Up Your Excess or Deductible
Even when you shop around for the best possible deal you may still find that home insurance is a lot more expensive than you thought. It’s worth looking at raising the amount of deductible on your policy.
You may find that if you need your guttering repaired or you have a broken window that you have to find several hundred dollars to get it fixed, but it may reduce your premiums to a more acceptable level.
Group Your Policies Together
If you choose to take out home insurance with the same company that holds your life insurance and car insurance policies, then it’s more likely that you will get a discount. Not all companies give discounts to multiple policyholders, but it is worth looking into.
Regularly Review and Compare Policies
It is worth keeping your eye on the cost of home insurance and other policies in general. You may find that some companies offer a better deal than the one that you are getting. Talk to your insurer first and ask whether there is any chance that they will lower your premiums in line with what other companies are offering.
If the company agrees then you will pay lower premiums and if they don’t you can take your business to a company that is offering a better deal.
Replacement Value Insurance
You should look for home insurance where the company will rebuild your home if it is destroyed. A guaranteed replacement value policy is what you need. Most property prices increase over time and unless you have a guaranteed replacement value policy – i.e. a policy that will absorb the increased property costs – your home may not be rebuilt without significant extra cost to you if it is destroyed.
When you first take out home insurance it is for the value of the property at that time, ordinary policies will not cover the extra cost of rebuilding if your property has gone up in value.
Natural Disasters Make Losses For Insurance Companies
In the past few years, a record number of hurricanes, tornadoes, and floods have ripped through parts of the United States, costing countless numbers of people their homes and livelihoods, and some even their lives. The resulting property damage has caused unprecedented losses for insurance companies, and it’s changed the way they analyze risk in many regions of the country.
In 2005, Hurricane Katrina cost insurance providers $45 billion dollars. In 2008, Hurricane Ike totaled $28.4 billion in losses. In 2010, the U.S. had more natural disasters in one year than a country has had in over six decades. And the damage from Hurricane Sandy in 2012 has cost over $35 billion so far. All of this adds up to a change in how companies insure both businesses and homeowners.
The Real Effects on Insurance Companies
In the United States, insurance companies are prohibited by law from raising their rates based on any single event. But as evidenced by the damage that has accumulated as a result of natural disasters since Katrina, this is more than one event and presents a growing problem.
The increase in wildfires in California, storms in the Midwest, and flooding along the Southern coast, largely blamed on climate change, have bankrupted the cash reserves of some providers.
This means that the risk-assessment professionals they employ are looking at how drastically they have to raise the price of premiums for individual policies and overall.
When it comes to insurance for homeowners, some companies are simply refusing to cover certain geographic areas. Insurance companies like to spread their risk out among a variety of locations, but parts of Florida, Louisiana, and Mississippi consistently generate the greatest losses of all. Some consumers in those areas could be paying enormous prices for insurance if they can find any.
Business insurance is a bit more flexible because so many different kinds are offered. While business owners will still invest in liability insurance, other types of insurance, such as business interruption, could become too costly. If the amount of the policy barely exceeds the cost of the premium, it won’t be worthwhile to purchase it, which can spell catastrophe for both customers and insurers.
In the long run, the effects of climate change on Mother Nature may have a devastating effect on the economy. The challenge for the insurance companies is to become more diligent in assessing claims so they can minimize potential losses.
It is legal for them to raise their rates considerably, using past events as a predictor of future ones. If the cost of premiums is too high, both the consumers and the insurers suffer.
But if the costs aren’t raised enough, the next natural disaster to sweep through the country could result in losses too big for insurance companies to absorb.
The bottom line is that the changing weather in the United States means a change in the economic climate too. It will take some precarious crunching of numbers to continue to keep everyone’s head above water.