Owning a home is the dream of every American. Whether you’re buying your first or twentieth home, it also means you need to buy homeowners insurance. Therefore, it is best to consider your coverage options as you look for your perfect home.
A number of factors determine the cost of homeowners’ insurance premiums, many of which are out of your control. Making some wise decisions will help you choose the right insurance policy and might save you several hundred bucks each year.
What’s Home Insurance?
A homeowners insurance policy will help ease the risk of loss due to fire, theft, or storm damage. The average home insurance policy doesn’t cover losses suffered due to earthquakes or floods.
Everybody in the same policy will pay comparable insurance premiums per year based on the supposed risk of loss. A specific geographical area may pose higher risks from wildfires or damaging storms, which can lead to higher rates.
Thousands of property owners pay insurance premiums to an insurance company. The company uses these premiums to pay claims in case of losses. Substantial losses will be covered by increased insurance premiums in later policy years. A specific policyholder can incur higher rates due to filing claims on a frequent basis.
Types of Homeowners Insurance Coverage
Main structure: A specific sum of money in this coverage will pay for repairing or replacing the structure. Insurance firms are recommending extra coverage via riders to ensure that adequate replacement value remains when material and labor costs go beyond the base policy.
Additional structures: Decks, outbuildings, and other structures are in this class. New structures need to be included in the policy so they’re covered in case of a loss.
Contents: Personal belongings in the home fall under this category. Standard policies don’t cover pricey belongings like collectibles/art and jewelry. Homeowners should list expensive items under policy riders to get coverage and decrease the premium.
Liability: This covers damage caused to another person’s property up to the stipulated policy limits.
Loss of use: If the damage to your home is extensive, your family will need another residence while repairs are done. You’ll be reimbursed for not being able to use your home.
How to Pick the Right Homeowners Insurance
Bought your first home? Or are you shopping for a homeowners insurance policy? There are many things you should consider. Here is our 10-step guide to help you buy the right insurance policy for your home.
1. Get the Facts
Once you find a home, collect as much information as possible to work out its possible insurance costs. Your premiums can be affected by the materials used to construct the house, as well as the age of the plumbing, electrical and other systems in the home.
For example, less flammable roofing or masonry homes can lower the price of insurance, especially in hot, dry areas that are most vulnerable to fire damage. Then again, masonry homes might be much more costly to insure against damage by an earthquake.
2. Speak to Your Nearest Insurance Agent
When it comes to buying homeowners insurance, it’s recommended that you speak to someone who is very familiar with your area, someone who’s even a resident.
Local insurance agents know your town/city and its outskirts. This means they might know the market values as well as other information that could help determine your coverage needs.
Insurance agents may also help you determine the amount of coverage you require and if it’s wise to bundle your different policies together. Bundling home and car insurance can save you a few hundred bucks every year, so make sure to ask.
It’s also recommended that you work with an independent insurance agent. Independent agents are able to quote various carriers to find the best insurance plan for you at the best price. This can be a good choice if you want several quotes without filling out many online quote forms or making many phone calls.
3. Shop Around
When looking for the right homeowner’s insurance, it pays to compare different policies from different insurance firms.
In particular, look at the various policies, exclusions, limits, and deductibles. For instance, homeowners insurance doesn’t cover damage caused by the following:
o Earthquakes
o Flooding
o Landslides
o Mold
o Normal wear and tear
o Pest infestations
The cheapest policy may not prove to be the best value, particularly if has subpar coverage and high deductibles. In other words, never sacrifice protection at the altar of slightly lower monthly premiums.
4. Pick the Right Amount of Coverage
Many homeowners err in choosing a policy that only covers the cost of their home. This can be costly if a homeowner then must repair or rebuild their house after it has been damaged. Thus, it’s vital to consider getting coverage for the replacement value of the home instead. This way, you’ll rest easy knowing that you’ll be able to repair or rebuild your home if necessary. In case your insurance company is denying your coverage claims without a legitimate reason, it’s advisable to seek help from a professional insurance lawyer. To learn more about how a lawyer can help, visit floridahomeclaim.com.
5. Understand the Policy Fully
One of the worst mistakes people make when dealing with homeowners insurance is going for a policy without completely understanding it first. When looking for coverage that protects the property and your home, be sure to choose a policy that covers more than just the home’s structure.
When buying an insurance policy, ensure you fully understand what’s covered and what’s not covered. This is an essential step to make sure you’re not blindsided in the future should something happen to your home.
Insurance coverage can include damage from:
o Fire
o Wind
o Hail
o Smoke
o Weight of ice/snow
o Lightning
o Theft
o Bursting of pipes
Damage from general wear and tear wouldn’t be covered. And if you plan to keep valuable things in your homes such as collectibles/art, or jewelry, ask your agent about the best options for covering these items.
6. Ask About Discounts
A reputable home insurance will offer loyalty discounts, bundles, and may even reward you for filing claims less frequently, but you also can cut your monthly premium costs by adding several safety and security devices in your homes, such as security alarms, smoke detectors, deadbolts on doors, sprinkler systems, wind protection, and fire extinguishers.
You can also save money by getting discounts offered for risk-reducing behavior. This might be things from driving less a given number of miles annually to quitting smoking. Some categories of people, like the elderly, also qualify for lower premiums.
7. Consider Location
When shopping for a home, remember that location does affect the cost of premiums. For instance, a house close to a fire hydrant may be cheaper to insure. A house in an area with a fire department instead of volunteers costs less as well.
8. Consider Special Circumstances
Most packages protect your home against fire, wind, hail damage, or lightning strikes. Losses from theft and vandalism are also usually covered to varying extents. Other coverages can also be included. You should look at the list of perils your policy covers and be sure to understand them.
Earthquake and flood damage typically isn’t covered but you may buy the coverage separately. Consider if your area is prone to such disasters and weigh the price against the risk. In addition, damage caused by pest infestation, mold, or poor maintenance is not covered.
9. Keep Your Records Up-to-date
If the unthinkable occurs and you need to file a huge insurance claim, having current records of your home’s structural condition and contents can be very useful during the whole claims process. For starters, if you’ve made any major renovations to the house after moving in, make sure to let your insurance company know, since that may affect the home’s replacement cost.
Next, do an inventory of your possessions, including the price of each belonging and its present value. Create a record of all your belongings, with a video camera or pictures, and keep the record away from your house so it’s not destroyed in a disaster. That record may help you figure out your required coverage, and it can also prove your ownership in case of a loss, helping the insurance firm determine your payment.
10. Keep a Good Credit Score and Reduce Your Small Claims
The higher you keep your credit score, the better it is for you. As with a personal loan, mortgage, or credit card, a good credit score will land you a better insurance deal and rate, which can save you cash.
Your credit history is like your claims history. All your past claims are recorded, and making too many claims will not only raise your rates but also affect your chances of finding a standard insurance provider.
Final Verdict
There’s no single homeowners insurance package out there that is best for everyone. As such, it’s important to do your own homework to find the best one for your needs.
Make sure you know your house inside and out and find ways to reduce costs without giving up coverage. Since your house is one of your most treasured assets, you will want to ensure that you find the best coverage available.
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