Buying homeowners insurance can be daunting to anyone who doesn’t understand the nuances of insurance. Most mortgage companies require homeowners to maintain an adequate homeowners insurance policy, so how can new home buyers navigate the more confusing aspects of this insurance product? First of all, take a deep breath, and keep the following tips in mind.
Know What the Policy Covers
Most homeowners insurance policies cover the dwelling itself and any on-site structures like a garage or shed. Generally, some liability is included in the policy which would protect you against someone becoming injured on the premises.
Understand What Affects Your Premiums
Home insurance policy rates are generally better for homeowners with good credit, but the value of the property itself is also taken into consideration. This include the location of the property, which could be affected by local crime rate and proximity to emergency services. Homes in high-risk weather areas will also have higher insurance premiums to help cover damages caused by natural disasters like tornadoes, earthquakes and hurricanes.
‘Normal’ Insurance Rules of Thumb Can be Misleading
According to www.moneytips.com, general rules of thumb aren’t good indicators for how much home insurance you should have. This is because few homes or homeowners fit into a standard situation that could be considered the ‘norm,’ and merely taking the most general advice could mean not having enough home insurance coverage when you need it most, per Allstate.
Know What a Typical Policy Doesn’t Cover
Most people are aware by now that the standard homeowners policy doesn’t cover floods and water damage, but did you know the same can be said for power failures, nuclear hazards, faulty zoning, shoddy workmanship and sinkholes? Be aware of these voids in coverage and seek out supplemental policies that boost your protection, advises Fox Business
As with any insurance product, be sure to shop around before settling on your first and only quote. Rates can drastically differ between providers even in the same area, so you could unknowingly be paying three times as much for the same product as your insurance company’s competitor. With online comparison tools readily available, there’s no reason not to at least compare your options.
Lower Your Insurance Rate with Preventative Measures
Simple updates to your home can lower your premium and come with discounts. Typical upgrades insurers like to see are energy-saving additions, new roofs and plumbing, up-to-code electrical systems, smoke detectors and alarm systems. Ask your insurance company what sort of discounts they offer for house upgrades and take steps to accommodate them. Also, keep up with your home maintenance to ensure affordable premiums stay current.
Bundle Policies to Save Money
This is a great tip for anyone buying insurance, but don’t rush out and buy policies you don’t need simply to save 5 percent on your homeowners insurance. Most people find they can bundle their home and auto insurance with the same company and enjoy a decent discount they wouldn’t otherwise find if they purchased each policy separately. Keep in mind, however, that this doesn’t always translate to adequate savings, especially when the agent pressures you into buying policies you don’t want.