Homeowner’s Insurance

Homeowners Insurance

When you secure financing to purchase a property, obtaining homeowners insurance is mandatory. This insurance policy covers not only the structure of your house but also most of your possessions such as electronics, furniture, and clothing. It provides personal liability coverage, protecting you in case someone gets injured on or off your property, and it may also cover your additional living expenses if your home becomes uninhabitable due to an unexpected event.

How much coverage do I need?

Typically, coverage amounts for homeowners insurance are determined based on the replacement cost. This means the cost required to rebuild the property with similar materials and quality, without considering depreciation. The policy usually outlines this as the “cost to replace damaged property.” It is crucial to obtain a precise replacement cost estimate when determining the coverage amount.

Do I need to carry personal liability?

Your homeowners insurance policy includes personal liability coverage to protect you from legal claims if someone is injured on your property or if you or a household member causes damage to someone else’s property. The policy also covers the cost of defending against a claim. If you have additional risk factors, such as a trampoline, swing set, pool, or if children frequently visit your home, it may be wise to increase your personal liability limits or consider adding an Umbrella Policy for extra protection. An Umbrella Policy can provide additional coverage beyond what is included in your homeowners policy.

What should my deductible be?

In order to receive payment for a claim, your insurance company will deduct a certain amount called the deductible. Choosing a higher deductible will typically result in a lower annual premium, while lower deductibles will increase premiums. It’s important to determine what amount you feel comfortable paying in the event of a claim and ensure that your insurer offers a compatible deductible. This can be a flat dollar amount, such as $500 or $1,000, or a percentage of the coverage amount, often 1%. You may also see separate deductibles for specific perils, like wind and hail, or for earthquake coverage. It’s crucial to understand how your deductible works before selecting a policy.

How does this get paid?

When you close on your property, you will be required to pay for the first year of your insurance premium. This payment will cover you for the initial 12 months. The premium will be included in your closing costs and prepaid expenses, and you will need to bring this amount along with your down payment to the closing. The title company, acting as your settlement agent, will make the payment to your insurance agent, so it is important that you do not pay them directly.

Isn’t all insurance the same?

Are all insurance policies identical?

While some policies might appear alike, they are not all the same. Homeowners can choose to include or exclude specific coverage. Often, having a reliable agent can make a big difference. When shopping for insurance, it’s essential not to undervalue the importance of having an agent who can assist you in determining the appropriate coverage for your needs and support you if you experience a loss. Your home is typically among your most valuable assets, and it should be protected by someone you trust rather than just the lowest bidder. Please contact us, and we will introduce you to the insurance agent we depend on to safeguard your family.