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What is Homeowner’s Insurance?

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Homeowners insurance is just like it sounds. It is a type of insurance for houses, but it does not just cover the structure itself. It will also cover personal belongings inside the house or on the property in case a catastrophe happens and the owner’s property is damaged, destroyed or stolen.  Damage can be caused by fire, storms, or other unforeseen events.

Who needs homeowner’s insurance?

Anyone who has a home or has a bank loan on a house needs this type of insurance.  Some states require it.  Banks who have the loans out will also require it in a similar way that auto loan banks or companies require full coverage on a vehicle that is not yet paid off completely.

Deductibles

When purchasing insurance, be sure to get good information about the deductible.  If you do make a claim this will become very important. For example, if you roof is damaged in a storm then an insurance adjuster will be sent out to determine if your insurance plan will cover it and how much they will pay.  At that point you will get a new roof or have the current one repaired if the company will cover it.  All that will be expected from you is a payment of the deductible.  So even if your new roof costs $5000 then all you pay is whatever the previously agreed upon deductible is.  These amounts vary based on a number of factors. Of course when you are making a claim you want your deductible to be as small as possible.  It would be nice to only pay $50 for a roof that cost a hundred times that much.  However, one important point to consider is the fact that typically the lower the deductible the higher the insurance cost is. So, you might pay less when it comes time to make a claim, but you will pay more per month or semi-annually to get this benefit.  It is usually best to decide what the right balance is for you.  There are lots of options and combinations.

Additional insurance coverage for certain items

Even though most of the items within a home are covered under homeowners insurance, the plan typically only covers these things up to a certain amount in certain categories.  For example, jewelry and firearms are only covered up to a set amount. This amount will be set up in your plan in advance so that you know. If you have a lot of money’s worth of any particular type of item, be sure to check with your agent about additional coverage.  It would be most unfortunate to find out after all of your jewelry is destroyed in a fire that only a few thousand dollars of it will be repaid.  Additional coverage is typically available to make sure that all of your expensive belongings will be taken care of in case of an emergency.  The extra coverage typically does not add very much to the cost, so it is worth paying for it in most cases.

Homeowners Insurance Quotes

Everyone has their own idea of what makes a dream home, but once they actually get in it, they need to take steps to ensure that it is protected. The easiest way to protect your home and everything inside it is to make sure that you always have homeowners insurance. Not only is this something that is recommended, it may also be something that is required by whoever is lending you the money to purchase the property. Homeowners insurance is actually a good idea for both sides, as it protects you and the lender who is holding your mortgage.

Imagine a scenario where you are away from your home and a fire breaks out that destroys the property and everything you own. Not only would you be placed in a situation where you are left with nothing, the lender is also in a spot where the money they put up for the mortgage is gone. That is why when you go to buy a home, homeowners insurance usually has to be in place before the closing will be allowed to take place.

This is why it’s important for you to have an idea of the level of insurance the lender requires before you start shopping. It may well be that some mortgage companies will only ask you to go with the bare minimum homeowners insurance, whereas others will demand that you go to the max before they sign off on the deal. The amount of insurance you will be require to take out will likely depend on the value of your home, as well as how much you put down in the purchase. Your lender will more than likely go into the details of their required insurance level at some point during the closing process.

Even assuming that you are in the fortunate position of being able to pay for your home outright, you will still want to take out homeowners insurance to protect your investment. Mother Nature can cause all sorts of damage to even the strongest of homes, not to mention some of the things that can go wrong with the pipes and foundation that are part of your home. You dream home can quickly be wiped away by a cruel twist of fate, making the small investment you have to make each month for insurance a wise one, indeed.

Homeowners insurance is no different from any other type of insurance in that different companies will offer very different quotes. It would be well worth your while to do a little bit of price shopping before settling on one insurance company over another. Be sure to read the small print of each to make sure that your home is covered for every eventuality.

About Anthony B.

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