Understanding Homeowners Insurance

By obtaining a homeowners’ insurance policy, you financially protect your property and assets.

If a home and assets become damaged or destroyed, it is unlikely many people can afford to pay for the repairs and replacements upfront if they do not have insurance.

It is therefore vital that you purchase insurance for your home, because you, your family and your possessions will be covered in the case of emergency. In addition, a homeowners’ insurance policy protects you in the event a guest is injured in your home.

If you are getting a mortgage to buy a home, your lender usually requires you to purchase homeowner’s insurance. If you do not buy the insurance yourself, your mortgage lender normally gets the insurance for you.

This involves paying higher monthly premiums than you would if you obtained a policy yourself. It is vital you understand the insurance policy you get, so this is another reason for purchasing the insurance yourself. You must know about coverage limits, how to file a claim if you must do so and more.

Review the following helpful information to ensure you purchase the right homeowners’ insurance for you.

What is Homeowner’s Insurance?

Homeowners’ insurance protects your property. Your individual policy is based on the risk factors associated with your home, the value of your home and the type of coverage you want included in your policy.

A homeowners’ insurance policy does not just protect your property, it protects your possessions. Your policy protects against your home and belongings being damaged or destroyed. In addition, many policies cover your financial legal responsibilities in the case that someone is injured in your home.

Why You May Need Homeowners Insurance

You must get homeowners’ insurance to protect your belongings and assets, meet the requirements of your mortgage lender and protect your household members and guests. If you do not have coverage in the event of your home becoming damaged, you experience financial ruin. Most households cannot afford to replace their homes and assets, which means having homeowners’ insurance is crucial.

Often, a mortgage lender requires you to have homeowners’ insurance for the entire length of your mortgage period. Since the lender is providing you with a loan for your property, the lending company needs to be able to protect their property.

If you lapse in paying for your insurance policy, your mortgage lender often insures the home on your behalf. This leads to limited coverage and higher premiums. It is therefore important to ensure you make every payment so no lapses in coverage occur.

More and more landlords and rental complexes are requiring tenants to obtain insurance as well. If you must buy insurance for a rental property, you are informed in writing prior to signing or renewing a lease. If you do not purchase the required insurance, your application for a rental property is denied.

How to Get Homeowners Insurance Premium Quotes

Not every insurance company offers the same coverage options and level of benefits. Premium charges alter from one company to another. It is therefore important to shop around before deciding on the insurer you want to select.

Review the policies of a number of homeowners’ insurance policies to find the best option for you. Find insurance companies via various methods, such as the internet, phone book directories, television and newspaper adverts and word of mouth.

As well as knowing the coverage options you want, you must know the value of your property before you sign on the dotted line of an insurance policy. You must know the value of your home and possessions to obtain an accurate estimate for your insurance costs.

Get quotes from various insurers for the same level of limits and coverage so you can compare them and determine which insurer is best for your personal circumstances.

Before you make the decision to go with a particular insurer, make sure you ask plenty of questions. Do not sign a policy before you have received satisfactory answers to any questions you may have. Questions to ask insurance companies include:

  • How much will my monthly premium charge alter with a lower or a higher deductible?
  • How does submitting a claim affect the premium amounts?
  • How does the insurer assess the value of my home?
  • How is my credit history affect my premiums?
  • Is the insurer licensed in my state? If so, how long has the company been licensed?

Discuss additional coverage with your insurer. If hurricanes or floods are common in the area in which you live, you want additional coverage for those incidents.

Furthermore, if you have not yet bought your property, it is advisable to find out what claims have been made on the home in the past. This helps you to discover how they affect your insurance policy or monthly premium amount.

Learn About Your Responsibilities Regarding Your Homeowners Insurance Policy

Once you have purchased your homeowners’ insurance policy, you receive a notice to keep as a record. If this is not received within a period of 30 days from the time of purchase, contact your insurer to request it. In addition, you are responsible for various elements of your insurance policy. You are responsible for items such as:

  • Paying all of your premiums on time, as most insurers do not permit grace periods.
  • Creating an inventory of the items in your property.
  • Updating your inventory on an annual basis.
  • Keeping a file of paperwork related to your policy, which needs to include all correspondence documents, receipts for paying your premium and all claims you have submitted to the insurer.
  • Keeping receipts of any repairs or upgrades done to your property.
  • Keeping receipts for any new purchases of possessions.

Learn About Filing a Home Insurance Claim

If you must file a claim, contact your insurer as soon as you can. Ask about which documents you must provide to support your claim and what your responsibilities are for protecting the home from more damage. For instance, you may have to clear debris, board up your home or clean up a backed-up drain.

Once you file your claim, you are assigned a claims adjuster. He or she shall assess your property and asset damage to determine the payout amount you qualify for. Typically, adjusters require meeting you at your home for the inspection.

Keep notes about the dates of conversations you have with your adjuster and insurance company in case you need to refer back to the information later on in the process.