If you’re looking for the perfect home in Illinois, your research shouldn’t end when you find it. In finding your home, you’ve likely studied the neighborhood, schools, amenities, park districts, and all of the variables which make your chosen community feel like the right fit for your lifestyle. Once you’ve narrowed all of that down, picked out the house, and even put down an offer, the next thing you’ll want to consider is homeowners insurance. Illinois offers a great variety in neighborhoods, home prices, and lifestyles. That all is reflected in the insurance needs of the homeowner.
What Basic Information Do You Need on Homeowners Insurance in Illinois?
Homeowners insurance is no longer a small expenditure. In fact, there was a 6% raise in premiums in 2013 on top of a steep raise the year before that. As the premiums on homeowners insurance continue to rise, consumers are looking for ways to find better deals on insurance needs. Researching companies thoroughly helps to evaluate costs but it’s important to consider more than just the price of the premium. Your homeowners insurance needs to protect your investment.
Those with a mortgage will need homeowners insurance to satisfy the requirements of their loan. Their mortgage company mandates a set price on the amount that needs to be covered, which may be equal to your outstanding loan amount or may cover the full replacement value of the home. Your lender is also listed on the homeowner’s policy and they are notified if you lapse in coverage.
In Illinois, your mortgage lender is allowed to force place you on homeowners insurance if you lapse in coverage. What this means is that your lender can take out a policy to cover your home and charge you for the amount through your monthly mortgage payments. Force placed insurance is often far higher than privately purchased policies and you don’t have any control over the type of coverage, meaning that it may cost far more but not cover your own best interest.
Besides meeting mortgage requirements, your homeowners policy protects your own assets. Your policy should cover your home and personal property, as well as liability (in case another party is injured on your property). You might go with a standard insurance policy which only covers a set amount of money in personal property. It’s important that you understand that amount. In the event of a fire or other major catastrophe, will that amount adequately cover everything you need to replace?
A major catastrophe can absolutely devastate your finances. Your homeowners insurance means the difference between getting back on your feet in the shortest amount of time possible and letting that event cripple you financially for years.
What Are the Legal Regulations on Homeowners Coverage in Illinois?
There are regulations which govern insurance companies in Illinois. The Illinois Legal Aid Department has an extensive outline of the types of rights homeowners have when it comes to business practices of insurance agencies. It’s helpful to be aware of exactly what your rights are in order to stay in good standing with your insurance.
- Canceled Coverage. There is no law in place to stop insurance companies from raising your rates or canceling your coverage. It’s within their rights to do so. Companies may cancel insurance policies because there have been too many claims on the property or because the owner lapsed on payments multiple times.
- Raising Rates. Insurance companies do have the right to raise rates and will often do so when their has been a number of claims on the property.
- Denial of Coverage. There may be a number of reasons for denial of coverage, including problems with the structure, such as an old roof or faulty wiring. These issues can be remedied and often the insurance carrier will then place the policy. Coverage may also be denied for those with poor credit scores, or on a property where there have been multiple large claims in a small period of time.
By Illinois law, if you’ve been denied coverage or coverage is canceled, the insurance carrier has to provide written notice with the exact reason for the denial or cancelation. If you feel you’ve been denied unfairly, you can contact the Illinois Department of Insurance to file a formal complaint.
What Should You Consider When Choosing Homeowners Insurance Illinois?
Different parts of the state have their own considerations when it comes to homeowners insurance. For instance, if you’re buying a home in an area known for flooding, you should be aware that homeowners insurance typically does not cover any damages from seepage, sewer backup, or flood. If your home has a separate basement and you’re certain that there is only a chance of small amounts of water which won’t cause extreme damage, you might forego flood insurance or sewer and backup addendums on your policy and just deal with those instances out of pocket if they occur. However, if your home is in a flood plain, your mortgage lender will require you to purchase a flood insurance policy. Flood insurance is typically far more expensive than regular homeowners polices, so that’s a serious consideration when you purchase your home.
For those buying houses in areas that may see severe weather, those considerations should impact the amount of coverage you want on your policy. There are areas of southern Illinois which are at a risk for a great deal of damage during tornado season. For those who live in urban areas, such as Chicago, considerations might be greater for fire and personal possessions. Your homeowners insurance should also protect you from losses due to burglary provided a police report is filed.
How Do You Price the Best Insurance for Your Needs?
Homeowners insurance is an increasing expenditure for owners, but it is also necessary to protect your investment. While there are plenty of “cheap” insurance options geared to get people to purchase, it’s important to consider insurance carriers you trust. Price all of the rates and then check other measurable statistics about the company. For instance, how do they compete with customer satisfaction? Is it a reputable company that will pay out on your claim expediently? What is their ranking with the Better Business Bureau and other agencies?
Many insurance carriers also offer discounted rates if you choose to use their services for all of your insurance needs. For instance, choosing the same company for all of your auto policies, homeowners insurance, and flood insurance, can mean a discounted rate on your policies which a representative from the company can go over with you. It’s important that you’re comfortable with the exact parameters of the policy. Once you’ve decided on a policy, make sure that a representative from the company answers any questions you might have about coverage.
2 Point Highlight
While you should absolutely comparison shop to find the best premiums, you don’t want to forego quality in your pursuit of price.
A major catastrophe, such as a loss of your home to fire or damage to your home and possessions due to flooding, can absolutely devastate your finances.
