Buying a home may seem like one of the most difficult processes that you can go through in life. You spend hours sifting through research to find the best home in the best neighborhood for you and your family. You check out the demographics of the area, what’s available to you, and you compete with other potential buyers for the chance to purchase your perfect dream home. It is quite the accomplishment to become a homeowner and the feat itself provides its own rewards.
However, there is more to the role of being a homeowner than simply being successful in purchasing a home. Additional tasks are necessary to keep and take care of that home you have worked so hard for.
What Is Homeowners Insurance?
Homeowners Insurance, also known as home insurance and hazard insurance, is a type of insurance policy or program designed to help protect the home and the homeowner in times of trouble. As a condition of mortgage loans, many banks and mortgage lenders require that homebuyers purchase or have homeowner’s insurance. It applies mainly to property on a private residence, but can apply to the homeowner and residents of the home in certain occasions. A good homeowners insurance policy will cover any loss a home has as a result of damage or other such events.
There are a lot of unpredictable things that can occur and pose a threat of damage for your home. The majority of homeowners insurance is used in cases of storm damage and accidents, although policies usually will usually cover a wide range of threats. A homeowners insurance policy will provide protection for loss of contents, loss of the home itself, loss of usage, and even certain personal possessions the homeowner has but might not be exactly a part of the home. The coverage will be different for each home, and the policy will usually only pay based on the cost of replacing the home or the item. Depending on the policy and the language used, there might be a few things excluded from coverage, mostly because of the impracticality of certain things happening or the unpredictability or the costs and occurrences. On average, things such as floods, damage from war-like events, and termites tend to be excluded. For things like floods, there are usually additional, separate insurance policies available for purchase.
Homeowners insurance serves as a multiple-line policy, functioning as liability coverage on top of property insurance. Usually, this means that if you are sued for something that occurred in your home or on your residential property, the policy can help pay for the legal fees in the lawsuit. However, this will only work if the event in question occurred on the property or as a result of the property. For example, a tree on your property falls over and lands on a car parked on your neighbor’s property. The policy will usually cover the damage because the tree is a part of your property, although there might be additional circumstances affecting the situation.
Homeowners Insurance in Alabama
Throughout the United States, homeowners insurance policies vary based on numerous things. Often, it is a factor of location, as there are standards placed by each state and each area comes with its own risks. According to the Alabama Department of Insurance, or ALDOI, most states do not have any laws that require you to purchase homeowners insurance. However, ALDOI highly recommends it in the state of Alabama.
Due to Alabama’s location and geography, the weather conditions can be fickle. Flooding is common, with multiple rivers running through the state and the southwestern portion being at about sea level along the Gulf Coast. Unfortunately, most homeowners insurance policies in Alabama do not cover flooding or wind-related damage, and additional plans may be required. With the census bureau estimating a population of 4.8 million as of July 2015, human errors and damage are also carry a noticeable risk.
What Are the Best Deals?
In the state of Alabama, there are a few things that can be done in order to find the best deal for you and your home. Shopping around and looking at what different companies offer is really the best option. The state offers a guide for homeowners insurance, found through its federal website. Included in this guide are a list of potential questions that you should ask when looking at policies, although you can always come up with your own if you need a very specific form of coverage.
It is recommended that you look at all your options and try to seek information that is as unbiased as possible. Some companies might charge more for policies based on where your home is located or may have limits on coverage. Simply finding out what is and what isn’t covered under a policy can be the easiest thing to do, as even the basic coverage plans might vary from company to company. While not every company offers discounts, it is best to find out if there are any available and how they are applied to the policy.
Keep in mind that if you plan on renting your home, your homeowners insurance does not extend to your tenants’ actions and belongings. For landlords, insurance options may be different and can potentially require additional coverage for the provider to insure you. It might also be required that your tenants have renters insurance, which functions in a similar manner to homeowners insurance.
What Affects the Plan?
There are a few things that can affect your homeowners insurance plan in the state of Alabama. Weather conditions, many of which are the prime reasons homeowners insurance is so frequently used, are prone to sudden changes in Alabama. Depending on what part of the state your home is in, you may want to purchase additional insurance policies to make sure that you are well covered in times of emergency. Homes in communities along the coastline may need a more intense policy than a home that is more inland, as they are more prone to damage from storms originating in the Gulf of Mexico.
Your homeowners insurance involves a premium that you pay for the insurance’s usage. No matter the policy you have, your premium can be what is most affected, and you may have to disclose certain information about your home at the time of purchase. This may be things like your home’s age, what other insurance policies you have, and your credit history. You may also need to know how much your home would cost to be rebuilt, which is different than the price you paid for the home and can usually be calculated with the assistance of your real estate agent. Other factors that you may need to know is the history of the home’s previous insurance claims and what protection devices you have installed on the property. There are also little things that can further affect the policy like types of pets, the home’s distance from a fire hydrant and/or station, the furnace type, if you have a home business, and if you have a swimming pool.
2 Point Highlight
According to the Alabama Department of Insurance or ALDOI, most states do not have any laws that require you to purchase homeowners insurance.
Homeowners insurance serves as a multiple-line policy, functioning as liability coverage on top of property insurance.
