A home is often the most valuable asset you’ll own, and it will need adequate protection in the form of insurance. Even though you can own a home without insurance, having coverage protects your home from unforeseen circumstances like floods and fires.
Before signing on the dotted line, however, there are several aspects you need to consider first.
Perhaps the most important part of getting home insurance is choosing a policy that provides adequate coverage. Otherwise, you risk major financial loss after a severe storm or event. There are many types of coverage you can choose from, including HO-1, HO-2, HO-3, HO-5, HO-6, and HO-7. HO-1 is one of the more basic policies that safeguards your property from perils like vandalism, theft, fire, hail, lightning, and explosions.
Another type of policy homeowners usually opt for is HO-2, which typically covers your home’s structure and belongings inside. This policy is a ‘named policy’, meaning any damage that occurs to possessions not listed will be excluded. If you opt for this policy, you’ll need to list items inside your home that you want covered. Generally, this is preferred for expensive possessions or family keepsakes with a lot of sentimental value.
Understand Your Deductible
It’s not enough to secure the right coverage, though. You need to understand everything about your deductible, or the amount you pay out of pocket before your insurance kicks in. There are usually two types of deductibles: a percentage based and dollar-amount. Different insurance companies use either type (or both), but percentage-based insurance is often higher than flat-rate deductibles.
Whatever type the company uses, you need to consider paying a higher deductible if you can afford it. That’s because the higher the deductible, the lower your annual premium, or the monthly price for insurance, will be. If your deductible is $500, for example, switching it to $1,000 could cause your premium to fall by 25%.
Choose the Right Location
Just like the condition, size, and construction type of your home, the location of your property can also affect your home insurance price. Some insurance companies offer cheaper premiums on locations that are in good areas and have access to safety resources.
The insurance premiums for homes located near fully-staffed firehouses, for example, won’t be as expensive as other homes because they won’t be considered high-risk. Selecting homes near the coast can have the opposite effect on your premiums, as the potential risk of a severe weather event damaging your property goes up.
There are a lot of factors to weigh when finding home insurance. Just make sure you take your time and get coverage that you really need.
6 Things You Need to Know When Buying Home Insurance, realtor.com
Here’s the Average Cost of Homeowner Insurance. Are You Paying Too Much?, fool.com