When it comes to protecting your home properly, there are a lot of things you can do. One of this is to make sure you have a good homeowners insurance policy. That won’t stop something bad from happening to your house, but it will stop you from being financially devastated because of it. So, what is homeowners insurance, really, and what all does it cover? Those are important questions, especially for first-time homebuyers that might not be completely clear on how everything works when they buy a home. Be sure to ask questions about any homeowners policy you plan to get, so you know you’re covered as well as possible. That can help you have more peace of mind when you close on your home and get moved in.
What does this insurance cover?
The standard homeowners insurance policy is designed to protect your house from things like fire, natural disasters, and people breaking in and stealing things. If those kinds of events happen to you, you won’t be liable for the whole cost of fixing the house or replacing the items that were taken. Instead you will only pay a deductible, and your insurance policy will cover the rest. That deductible is in addition to the premiums you must pay every year to keep your insurance in place. However, not having insurance could mean much larger financial losses, and if you have a mortgage your lender will require that you have homeowners insurance to help protect their interests, as well.
How much does homeowners insurance cost?
While you’re choosing the right house, be sure to talk to an insurance agent about the cost of homeowners insurance for that house. Generally, you need to have replacement cost insurance, which means that you pay for a policy that would completely rebuild your home, minus your deductible, if it was destroyed. The insurance amount is often more than you paid for the home, because the cost of rebuilding that home is higher than the amount that it is worth now. All new materials would have to be used, and that can become very expensive. If you don’t have a mortgage you can choose a lower insurance amount, such as covering it for what you paid, but that won’t be an option for people with mortgages. The cost can really vary, though, depending on the size of the house, the location, and other factors.
Are there other coverage options you need?
In some parts of the country, you’ll need coverage beyond standard homeowners insurance. You don’t have to get those coverage options if you don’t have a mortgage, but if you’re paying a lender for your home you’ll need the coverage that they request. If your house is in a FEMA-designated flood plain, for example, you’ll be required to buy flood insurance. If you live along the Gulf Coast, you’ll be required to purchase windstorm mitigation insurance. That’s often also called hurricane buydown insurance, and it covers your home from hurricane damage. The deductible is generally much higher than a standard homeowners insurance deductible, but much better than not having any coverage at all. There are also options for earthquake coverage, but not all lenders require that coverage, even in areas that can have earthquakes, such as Washington State.
How can you make a claim?
If you have something happen to your home, or if someone breaks into it and takes things, you’ll want to make a claim against your insurance to get your items back or your home fixed. You can do that by contacting your insurance agent, and they can walk you through the steps you’ll need to complete. They’ll also get needed information from you, and will likely send a claims adjuster to your home. That way, you’ll be able to show the adjuster exactly what the damage is, and the adjuster can also take pictures to make sure they don’t miss anything and that they completely understand your claim. How long it takes to pay your claim and whether it’s fully paid will depend on your particular case and your insurance company.
Should you shop around for your insurance?
Before closing on your new home, you’ll need to have your insurance in place. However, that doesn’t mean you shouldn’t shop around. There are a number of homeowners insurance companies that can help you, and their rates may not be the same. You don’t have to choose a particular company, as your lender won’t require you to do that. You’re free to select the insurer you want, and you should do that based on price and other factors. By shopping around and making sure you’re comfortable with your insurance company, you can have peace of mind. You’ll know your finances are protected, and you’ll also feel safe in knowing that your claim will be handled properly if you even do have to make one.
What happens if you don’t have homeowners insurance?
If you don’t have homeowners insurance and you have a mortgage, your lender will buy insurance on your home on your behalf, and charge you for it. Often, the cost of this insurance is much higher than what you would pay on your own. Without a mortgage, you’re free to leave your home uninsured if you want to. However, if you do that you won’t have any kind of protection from theft, fire, or other problems. Even if your home is completely destroyed, you won’t have any coverage, and that could mean financial devastation. Fortunately, with the right homeowners insurance that can be avoided.
2 Point Highlight
Be sure to ask questions about any homeowners policy you plan to get, so you know you’re covered as well as possible.
There are a number of homeowners insurance companies that can help you, and their rates may not be the same.
