At least 85% of Americans who own a home have homeowners insurance, according to the Insurance Information Institute. The others likely own their homes outright as while it isn’t required by the government, it is necessary as one of the conditions of obtaining a mortgage. This applies to all types of home purchases, from condos for sale in Jacksonville, FL to townhouses in Seattle, WA.
This kind of insurance provides financial protection in the event of an accident or disaster that involves your home. It insures the actual structure as well as your belongings that can occur during a destructive event like a hurricane, flood, tornado or fire. Primarily, homeowners insurance policies are “package policies” that not only include damage to your belongings and property, but also your liability. That includes property damage and/or injuries that occur to others that are caused by you or a member of your family, including any pets.
When shopping for homeowners insurance, there are a few things you know before you purchase a policy.
Determine How Much Coverage You Need
Your first step when researching homeowners insurance options is to determine how much coverage you’ll need. In many cases, the lender will determine how much coverage is necessary and is likely to require you to purchase at policy that covers at least the amount of the mortgage. The amount of coverage will affect the price you pay – the more that’s covered, and the lower the deductible, the higher the cost will be. The deductible is the amount you’ll have to pay on every claim should an adverse event occur, it applies to personal property and your house.
Compare Coverage and Cost Options
Once you know how much coverage you need, obtain quotes from at least a few different companies to compare cost and coverage options. While lenders may recommend a particular insurance company, you don’t have to choose buy from them. Just as you would for car insurance and many other things you buy, it’s important to look at customer reviews as well. Should you have to file a claim, good customer service and quick action can make difficult circumstances easier to get through. That means shopping for value, and not necessarily bottom of the barrel prices.
Ask Your Insurance Agent About Discounts
Most people have car insurance and perhaps other insurance with an agent already. Be sure to check with that agent to find out if you can get a better deal if you insure your home with the same company. No matter which agent you choose, ask about discounts for things like installing an alarm system, reinforcing the roof or adding storm shutters. Modernizing plumbing, electrical and heating systems can lower the risk of water and fire damage, providing even more discounts on insurance premiums.
Escrowing Your Insurance Payment with Your Mortgage Payment
Most homeowners include the insurance payment with the mortgage payment. The lender is then responsible for paying the insurance premium from your escrow account. They generally prefer this option as they’ll know that your insurance payments are always made so that their investment will be well-protected. In most cases, you’ll have to pay for one year of insurance at the closing time.