The Ins and Outs of Homeowners Insurance.



Most people are pretty familiar with car insurance policies, deductibles, premiums, and coverage. Homeowners insurance is relatively similar, except there are no laws governing the requirement of a homeowner’s insurance policy. Your joy in knowing that will be short-lived, however, as it is almost always a mandate for homeowners seeking a mortgage. Most banks and mortgage lenders do require you to have a homeowner’s insurance policy, and it is going to cost you. But remember, “cheap insurance can be expensive” so be sure to do your research before you agree to the least costly policy. It may catch up to you should you need to make a claim.

There are two kinds of common coverage for your homeowner’s insurance: Structure coverage and Personal Belongings coverage. I don’t need to go into detail about the definitions of those, do I? No. I won’t. I will tell you that the typical Structure coverage protects your home from fire, windstorm, hail, and water damage, but not flooding or earthquakes. Flood insurance is a separate policy you’ll have to purchase on top of regular liability coverage. Some properties require you to have flood insurance, some don’t. It should be easily accessible in the listing information. Typical Structural coverage also protects you from having to pay out of pocket for the cost of living elsewhere should your home need repairs or rebuilt. You are also covered if you, a family member or even a pet should injure someone or destroy their property, not only at your home but if you’re away from home, too.

A few things affect your insurance costs and policy renewals. Your credit history comes into play here, obviously better credit history results in lower costs for better coverage. Local building costs and crime rates, square footage of all structures, as well as type of construction, materials and features determine your rates, too. Your home’s distance to a fire hydrant and fire station also affect your pricing, and the condition of the plumbing, heating and electrical systems in the house. Sometimes, the likelihood of natural disaster (hurricane, tornado, flood) will make your policy more expensive.  Catastrophe insurance is mandatory in certain areas. Flood insurance is available through the Federal Government here.

There are a few things that could lower your insurance rates. Some companies offer bundle savings if you carry other insurance policies with them, such as car and life insurance. A good credit history, as mentioned above will help you get the best rates along with your claim history. Less claims equals less risk equals lower rates.

Taking your time to shop around and verify that you’re getting a legitimate and reputable homeowner’s insurance policy will absolutely be one of the most important things you can do. Remember: Your Home is your largest asset. Protect it!