When you purchase your dream home, there is one thing you need to finalize first before signing on the dotted line: homeowners insurance. While finding the right homeowners insurance can be tricky, it can be done. Start your search for the right home insurance policy by asking the right questions.
1. What will a standard homeowners insurance policy cover?
The standard homeowners insurance policy comes with four main types of coverage:
● Personal property coverage
● Liability coverage
● Dwelling coverage
● Additional expenses coverage
Several companies might offer additional coverage homeowners can add to their core policies, depending on their needs. For instance, let’s say you have underground utility lines that you want to be covered in your insurance policy. In that case, utility line coverage can be added on top of the standard policy.
2. Will I need flood insurance?
Where you live can impact the kind of coverage you should purchase. For instance, if you live in a place that gets lots of extreme wet weather, it would be a smart idea to get a flood insurance policy, so you are protected against weather damage. In some instances, your mortgage lender might even require you to get one.
3. What should the deductible be set at?
A deductible refers to the amount of money paid to handle a claim before an insurance company steps in and covers the repair cost. For example, if your deductible is at $1,000, that will be the amount you need to pay to handle the claims before the provider gets involved.
4. What are policy limits?
A policy or coverage limit refers to the maximum amount the provider pays for a claim. For example, if your home is worth $500,000, your dwelling coverage limit is also the house’s replacement cost, which is $500,000. The rest of the policy limits are usually related to the value of the dwelling.
5. Will I need an umbrella policy?
Think of umbrella insurance as an extra layer of protection if you need a massive insurance claim. Suppose you are sued for a person’s bodily injury while on your property, and the legal fees exceed the policy’s liability limits, in that case, umbrella insurance can come in handy.
6. How are homeowners insurance rates calculated?
Several factors can go into calculating the home insurance rate. One of the most significant factors is the personal claims history. Those who have filed several home insurance claims in the past are seen as a higher risk and might need to pay higher rates to offset the risk.
7. How can I save on my home insurance?
There are several ways to save on home insurance. One effective strategy involves minimizing risk. For example, if you live in a dangerous area, your home insurance company would appreciate it if you will install a home security system.
This can lower the homeowner’s chance of filing a claim for theft, such as installing sprinkler systems or smoke detectors, reducing one’s chances of filing a claim for fire damage.
8. What’s the difference between homeowners insurance from renters insurance?
Homeowners insurance is for people who own homes. On the other hand, renters insurance is for those that are merely renting their living space. That’s the reason renters insurance
only covers personal belongings at home. After all, the landlord is the person responsible for the home’s physical structure and not the renter.
9. Is a home inspection required before getting home insurance?
In most cases, a home inspection is needed before purchasing insurance for the home. The inspection is one way for the insurance companies to assess your home risks to calculate your rates correctly.
10. How will I pay for my home insurance premium?
Your home insurance premium will likely be included in your mortgage. This is ideal, so all the bills are in one place, and you don’t have to worry about handling different insurance costs. The payments can also be included in the escrow account that’s set up by the mortgage lender.
When shopping for a home insurance policy, make sure you get the right coverage at a reasonable price. The best way to go about this is by comparing quotes and asking all the right questions.
About the Author
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.