Your home is your sanctuary. At the end of the day, you recharge and replenish your energies at home. You update each other on how their day has been at school and work. You put your kids to sleep at night and wake them up each morning right in the comfort of their own beds. You eat meals together and watch television together here.
Can you imagine what would happen if a fire or hurricane would suddenly decimate this place of comfort and love? It is certainly a blessing if no one in your family got hurt. However, you can’t deny the fact that having your home destroyed is going to be traumatic for the entire family. It’s also going to take time and funds to reconstruct your home. If you don’t have the money for it, rebuilding your home is going to be next to impossible. Without a home, it’s going to be very difficult for any family to start rebuilding their lives.
This is why homeowner’s insurance is very important. Homeowner’s insurance is a policy that gives financial coverage against disasters that may strike your home. In a standard policy, your home and belongings are covered. In addition, it also provides protection in the event that you, your family members and even your pets cause injuries or damage to other people. Let’s look at these provisions in more detail in the sections that follow.
A homeowner’s policy generally provides coverage for damages incurred in the outside and inside of your house in case of fire, lightning, hurricanes, vandalism and other calamities. The insurer will cover the damage for repair or complete rebuilding of the structure. You have to remember that floods and earthquakes are not included in a standard homeowner’s policy. You will need to purchase these separately if you want coverage. However, other structures such as your garage or sheds that are within your property are also covered.
Another element of a homeowner’s policy is that in the event of an insured disaster, you get compensated in case your clothes, furniture, appliances, gadgets and other items in your home get lost or destroyed. There is typically a cap on how much the insurer will reimburse you for your possessions. Standard homeowner’s policies generally provide anywhere from 50 percent to 70 percent coverage of the insurance you have on the structure of your home for belongings. Let’s say that your homeowner’s insurance provides coverage of $500,000 then you have at least $250,000 coverage for your possessions. You will only know if this is enough for you if you conduct a home inventory of all your possessions and record their corresponding value.
A homeowner’s policy insurance also provides coverage for any liabilities you will incur in the event that a neighbor slips inside your home and has to be hospitalized. The insurer will shoulder the medical expenses and if your neighbor decides to sue, your insurer will cover the legal costs and damages. If you have a pet cat that happened to scratch your neighbor’s face, that is also covered by your insurance.
A crucial coverage that homeowner’s insurance offers especially when your home has been decimated by a natural disaster is your stay in a hotel or rental in another house while work is going on to rebuild or repair your home. This kicks in if your home is totally uninhabitable that you have to find another place to live in for the meantime. You will get reimbursed for the money you spend on rent or your hotel stay, food and other associated costs up to a certain daily limit.
Now that you understand the importance of homeowner’s insurance, the next logical question would be, “How much would it cost?” On the average, yearly premiums of homeowner’s insurance in the United States is around $815. States like Louisiana, Florida, Mississippi, Texas and Oklahoma where natural disasters commonly take place have the highest homeowner’s insurance rates that range from over $1,300 to close to $2,000 annually. On the other hand, the states that have the lowest rates of homeowner’s insurance are Washington, Wisconsin, Utah, Oregon and Idaho. Their annual rates range from a little over $500 to just a little over $600.
The premiums you pay for your homeowner’s insurance depends on where you live, the cost to build your home and the insurance requirements of your state. If your home is situated in a high-risk location—such as in the states mentioned in the preceding paragraph—you will have to pay higher premiums compared to those living in areas not frequented by natural disasters. Also, you can expect to pay higher premiums if you live in a neighborhood where the crime rate is high.
Another factor that would increase your homeowner’s insurance premiums is the amount it would cost to rebuild your home. If your home is going to be expensive to rebuild, expect to pay more for your insurance coverage. The insurer will also determine the condition of your plumbing, heating and electrical systems and if these are considered high risk, you can expect to pay higher premiums as well.
The rate of your homeowner’s insurance is also affected by what your state requires. States typically issue minimum requirements on the coverage so how much you would pay would depend on state regulations as well.
Other factors that will affect how much you pay for homeowner’s insurance include the number of claims that have been filed on the home you want to insure and your credit record as evidenced by your credit score. If there have been many claims filed on the home by its previous owners or if your credit score is low, you can expect to pay more for your premiums.
There are a number of insurers offering homeowner’s insurance so the choices can be overwhelming. However, you can simplify the process if you keep these tips in mind:
1. Compare quotes from at least five insurers.
Premiums vary greatly among insurers for the same type of coverage. Thus, you have to make sure that you are getting the best deal by shopping around. Put at least five companies on your short list. You can ask for recommendations from friends and colleagues or read reviews online. In addition to the price of the premiums, check if they have a history of denying claims and how their customer service personnel addresses complaints.
2. Check the credit rating of the insurer.
You want to be sure that the insurer will be there when you want to file your claim. The only way for you to be certain the company’s financials are stable is to check the websites of credit agencies like Standard & Poor’s and Moody’s. There, you will find which insurance firms are on solid financial footing. You must also make sure that the company is licensed to do business in your state. You can verify this by calling your state’s insurance department.
Together with checking the financial standing of the insurance firm, you might also want to check its customer service record. See if there are previous complaints and how these were handled. Look at online forums as these will provide you with a good idea of how insurers treat policyholders’ claims. Keep in mind that homeowner’s insurance is something that you don’t remember until you most need it. You won’t want a company that will just deny your claim when you are most in need of your coverage.
3. See to it that you have enough coverage.
You will have to do some number crunching based on the quotes you are getting from the different insurers. Make sure that you are satisfied with the total coverage the insurer is going to be providing before you purchase a policy. When purchasing a policy, smaller premiums should not be your only consideration. It won’t hurt to fork out a higher amount for as long as you know that when there is going to be a calamity, you are pretty much covered.
4. Find ways to lower your costs.
If you feel that homeowner’s insurance is too expensive, keep in mind that there are ways to reduce the premiums. You can raise the deductibles or bundle your other insurance policies with the same insurer. You can also get discounts if you install security devices in your home. Before applying, make sure that your credit score is on the high end so you qualify for higher rate cuts. Don’t forget to ask your insurance broker for additional discounts that you might still obtain. There might be others that will apply to your situation but you will not know about these if you don’t ask.
5. Read the fine print.
Before signing up for any policy, make sure that you read the fine print carefully. You want to know everything about the coverage and other conditions so that there are no surprises should you make a claim. Carefully review everything and if you have any questions, don’t hesitate to ask the insurer.
No related posts.
No related posts.