So you’ve found the perfect partner and the perfect home; now it’s time to find the perfect homeowners insurance policy. Scary as it may seem, getting the right insurance is one of those things in life that you should research thoroughly. Though many first-time homeowners simply consider the financial burden of making monthly insurance payments, those who are more experienced know that making a good choice is a more complex process. What follows are three tips on what to consider when making an insurance rate comparison and buying your first homeowners insurance policy.
Tip #1 Does the insurance policy offer enough coverage? In the event of severe damages or even total destruction of your home, you’ll need to know that your insurance policy offers sufficient coverage. It’s important to know that repair and replacement costs run higher than in some areas than others, so do some research to find out how much coverage you realistically need for your home.
Tip #2 Does the policy take devaluation of your property into account? You should decide whether you want a policy that gives you the current replacement value of your property. This may be more expensive, but it can be worth it to keep your own costs low in the event of a claim.
Tip #3 Does the policy include homeowners liability insurance? You need to be legally protected in the event that somebody is harmed or injured while in your home, and you also need to be able to meet any medical costs that might arise as a result of injury.
For first-time homeowners, it may be intimidating to find information on homeowners insurance and comparing coverage rates. This is to help assist you to overcome that anxiety.
To assist in making a personal decision about insurance coverage for your home, you need to understand the basics. The following two terms are essential elements to come to terms with and grasp in order to make an educated decision.
- Homeowners insurance: A policy taken out on your residence. Usually, the policy covers all or a portion of the repair or replacement costs if your home is damaged or destroyed. But, just like car insurance, you can have “riders” added to your policy. These include such things as medical coverage (this is optional on some homeowners insurance policies), coverage for unattached buildings or structures (tool sheds, barns, or similar buildings), and other things.
- Premium: The amount you pay for your homeowners insurance policy. How much that figure is depends on the amount of coverage you purchase. How much coverage you need depends on a number of things. For example, if you still have a mortgage on your home, your mortgage company may require you to carry a certain amount of coverage. If your home is paid off, and is an older home, you may be able to get by with less coverage.
So you’ve finally found the home of your dreams, and you’re getting ready to sign the paperwork. Whether your insurance broker has informed you about homeowner policies or not, it’s also time to compare home insurance policies. Don’t let the excitement of the moment keep you from taking the time to compare home insurance policies. It’s vital that you’re realistic about assessing your new home’s location, as well as your financial position, when requesting quotes.
State Requirements for Home Insurance Policies
Carefully review the state requirements for home insurance policies and how they affect your new purchase. For example, if you live in a state that’s frequently hit by hurricanes, you’ll probably need to insure your home against hurricane damage. The same goes for regions that suffer from floods and earthquakes. Even if home insurance policies are not required to cover these perils, it’s still the smartest course of action if homes in your area are periodically at risk from these types of natural disasters. When determining the amount for which you insure your home and possessions, request quotes for their total replacement value, not just the cash value.
HO-2 Home Insurance Policies
Most home insurance policies are HO-2 types, which are very broad homeowner policies that cover homes and the contents they contain against sixteen perils, including weather damages, vandalism, and burglaries. Depending on the type of home you buy and its location, you may or may not need additional insurance for natural disasters. Once you’ve received a number of quotes for home insurance policies, review them carefully and choose the one that offers you the best coverage for your situation.