So why buy house insurance? Well homes are expensive. It does not matter if you have a single story one-bedroom home or one of the most unique-looking homes in the U.S., houses are a big investment and they should be protected. A home insurance policy will save you money in the event that something happens to the structure itself, or to your belongings. If an incident like a burglary were to happen in your home, insurance will protect your property. The premiums that you pay on your house insurance are nothing compared to the high out-of-pocket costs that may result from your home being destroyed by a natural disaster or even a lawsuit resulting from someone getting injured on your property.
There are several different options to consider when purchasing a house insurance policy. A basic form homeowner policy provides coverage on a home against things like fire, lightning, windstorm, hail, vandalism, theft, damage from vehicles, volcanic eruption and personal liability.
The most common and most comprehensive form of house insurance is a special form homeowner policy, which provides all risk coverage on the home, excluding flood and earthquake damage. The contents of the home are covered with this type of policy and personal liability is also included.
Essentially, there are three types of house insurance:
1. Guaranteed replacement coverage: This is the best option, but is also the most expensive. It will cover 100 percent of the costs to replace your home, should it be fully destroyed. This may be required by your mortgage lending company, but not often as their interest is to cover the amount of their loan which should be less than full replacement cost.
2. Replacement cost coverage: The option isn’t as comprehensive as guaranteed replacement coverage or as expensive. In some regions of the country, this may be your best choice. It will have a maximum stated amount that it will pay, should your home be destroyed.
3. Cash-value coverage: This option offers the least amount of coverage. It will help to pay the costs to repair or rebuild your home. However, the amount you will be paid is based on the original cost of your home, minus the wear and tear. In certain circumstances, a cash-value policy may be an ideal choice. For example, if you have little or no mortgage, the home price is based on location much more than size, or it is an older home with irreplaceable architectural details.
One of the first things to look at when purchasing a house insurance policy is to know what the liability limit is. This amount determines how much coverage you have, should your home be damaged or destroyed. Policies typically start at $100,000, but most experts recommend that you have at least $300,000. A common misconception is to insure a home based on the purchase price, but this is not necessarily the replacement cost of your home. It is advised that a home be covered based on the amount it would cost to completely rebuild.
The cost of house insurance varies based on your region, risks for catastrophic weather (like hurricanes and tornadoes), your credit rating, extent of your coverage, and many other factors. Residents who live in places that have a high risk of natural disasters destroying their home, like New Orleans or Tornado Alley, likely need extra coverage. The victims of major disasters are not the only ones who benefit from house insurance. Home insurance can protect a home from water damage, vandalism, or someone accidentally injuring himself or herself while in the home.
Home insurance is a complicated and vital purchase. Buying a home is a life-changing event for many people, and to protect this purchase one needs to have adequate house insurance coverage. Your independent home insurance agent will be able to help you find a policy that fits your home’s needs, allowing you to enjoy its comforts for many years to come.
Some other Enhanced Insurance articles related to Home Insurance:
Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.