Home Insurance

Purchasing homeowner’s insurance is a good way of insuring your home against loss or damage. Hazard insurance is a similar way to minimize risk. But what kind of insurance coverage does the average homebuyer need? Researching specific insurance questions can save worry, money and potential heartache if something were to happen. Find out exactly what kind of homeowner’s insurance policy you need and why.

Hazard insurance is usually required from lenders when securing a mortgage to buy a home. This policy, sometimes referred to as a HO-1, typically insures the property against more common types of losses and damages such as fires, lightening, smoke, explosions, volcanoes, theft, riots, vandalism and damages by vehicles and aircraft. Check with your agent for specific insurance coverage details. If it’s not listed, it’s not covered. Homeowner’s insurance may be considered the same thing as hazard insurance in some instances. However, a homeowner’s policy usually covers a more comprehensive scope of damages than what a mortgage company requires.

There are different types of homeowner’s insurance policies. A common kind of insurance is known as an HO-3. This insurance usually protects the property itself as well as the contents. This type of insurance coverage can include many items except specific exclusions like mudslides, mold and war. Speak to insurance agents to find out what different policies like this would cover for your particular property. When gathering information, ask about the HO-2. This type is less expensive and covers fewer disasters. The HO-4 only covers renters’ belongings when they are renting a home. Condo insurance is commonly called HO-6 and is similar to homeowner’s insurance.

When insuring your home, prepare to do some detective work on your home. If a policy only covers against the current value of your home, that may not be enough to rebuild. Getting a builder’s estimate of how much it would cost to replace your home would be helpful in determining how much coverage you want. Owners who’ve done extensive remodeling should alert agents so policies can be adjusted. Improvements will then reflect in the new replacement value.

A good, comprehensive homeowner’s insurance policy covers various problems. Check to see that certain events are covered when you begin the process of insuring your home. Incidents like losing a wallet while traveling and being mugged may be covered. See if and how inflation is dealt with through your insurance company. Does your policy pay for living expenses up to two months after a disaster? While these scenarios may seem odd, it is better to be covered should any of them happen to you. To be on the super safe side, consider purchasing any of the following extra policies for additional peace of mind.

  • Flood- No standard homeowner’s insurance covers flood damage. Those living in flood zones may be required to purchase food insurance before a mortgage can be issued. Homeowners living near flood zones may want to think about getting additional coverage as well.
  • Earthquake- No standard homeowner’s insurance safeguards against earthquakes but those living near fault lines may want to give this extra policy some serious consideration.
  • Replacement Cost- A regular homeowner’s policy depreciates the value of personal belongings and gives the cash value left over. Replacement cost covers the full amount it will take to replace the items, up to your policy limit.
  • Rider- Additional insurance coverage for certain household items of high value including electronic equipment, collectibles, antiques, jewelry, firearms and coins.

Insuring your home means protecting your family and your investments. Going for el cheapo insurance can translate to getting el cheapo benefits if something happens. Just because you want superior coverage doesn’t mean you have to pay through the nose, either. Search around. Talk with friends, family and associates to see if they can recommend insurance agents who might work with you. Ask for discounts. Insurance companies may discount homeowner’s insurance for firefighters, law enforcement officers, service members, teachers, clergy, seniors and may give reduced rates for having alarm systems, smoke detectors, storm shutters, deadbolts and flame-retardant roofing. Living across from a fire station or police office may result in another reduction. Consider keeping a higher deductible to keep your premiums lower.

Homeowner’s and hazard insurance are important variables to research when purchasing a home. Start by finding out what it would take to replace everything on your property. Knowing how much insurance coverage you need is the first step to buying the right homeowner’s insurance policy.

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