A home is one of the largest purchases you’ll probably ever make. It only makes sense to protect your investment by purchasing home insurance. It’s important that you understand what home insurance is, what it covers, who should have it and what happens when you don’t.
What Is Home Insurance?
Home insurance protects the structure of your home and the items that are inside. Your policy will generally cover damages and losses to your home under a variety of circumstances, including property loss due to theft or vandalism. It also includes destruction due to a fire or windstorm.
What Does It Cover?
According to the Insurance Information Institute, protection can be divided into four specific areas.
Structure of the Home
Your policy should provide coverage to rebuild your home or make repairs where necessary in the event of a fire or any other natural disasters listed in your policy. You may want to add coverage for “other structures” to your policy to protect things such as fencing or sheds.
This includes items such as clothes, jewelry and furniture. It’s important to take a home inventory to make sure your policy provides enough coverage. Floaters can be added to protect expensive items.
Liability will cover you if someone is injured while in your home. It usually also covers damage caused by pets.
Extra Living Expenses
This would include costs such as hotel bills if you can’t live in your home after a disaster that is covered under the policy.
Who Should Have It?
Anyone who owns a home should have homeowner’s insurance. In most cases, when a bank or any other financial institution lends you money for a mortgage, you’re required to show proof of insurance before the institution will issue the mortgage.
You might be tempted to drop the insurance after you pay off your mortgage to save on expenses. If at all possible, you should never drop your homeowner’s insurance. The Simple Dollar states that if you drop it and then try to get insurance at a later date, it will likely be more difficult. Companies might assume that you were having trouble meeting your premiums and would be a poor risk in the future.
What Items Must Be Covered Under Your Plan?
Most insurance companies will offer basic packages, but there can be variations depending on your personal needs or location. US Insurance Agents states that personal property coverage often isn’t enough protection in many plans to reimburse the total value of your items. A floater or policy rider can be added to protect items or for natural disasters not listed in your basic policy.
How Can You Save Money on Your Plan?
There are several ways to save a considerable amount of money on your insurance plan. First, shop around and compare rates. You’ll save money by having your home and auto insurance with the same company. You may also want to consider raising your deductible if you can afford it. Most deductibles start at $500. Maintaining good credit can also lower your rates.
What Happens If You Don’t Have Home Insurance?
If you don’t have home insurance, or just a limited amount of it, you won’t get enough to rebuild your home. It’s important to note that most standard policies don’t include earthquake or flood damage. If you live in areas prone to these disasters you’ll want to add that coverage in your policy.
Whether you’re still paying off a mortgage or your home is completely paid for, it’s essential to have homeowner’s insurance. It’s crucial to protect an investment as large as your home. With a little effort, you can find a cheap but quality policy on our website that fits your individual needs.