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June 7th, 2017

Everything You Need to Know About Homeowner’s Insurance – So You Don’t Get Caught in the Cold

Whether you’re buying your first home or you’ve bought and sold enough houses to be an old pro, you’re probably aware that you need to have homeowner’s insurance.

Other than that fact, you may be a little hazy on the specifics.

Here is everything you need to know about homeowner’s insurance.

Get caught without it  –  or without enough of it  –  and you’ll pay dearly.

You have to have it

Home insurance is a necessity, plain and simple.

You have to protect your home and your personal property, as well as yourself, against liability in case there is an accident that damages someone or their property.

You decide on the coverage

In the event of a disaster, you’ll have to pay less money out of your own pocket if you have more coverage. There are certain circumstances in which the lender sets the amount of coverage you must have, sometimes as much as half the amount of your mortgage loan.

The important thing to remember is this: The amount you will pay for your policy is directly proportional to the amount of coverage you have.

You have to decide between replacement cost and cash value

Replacement cost refers to the amount it would cost to rebuild or repair your home with materials that are comparable to the originals. This figure doesn’t take depreciation into account.

Cash value is the amount to rebuild or repair your home with similar materials after depreciation.

Most homeowners will opt for replacement cost; however, depending on the age and type of home, it may only qualify for actual cash value coverage.

Be sure to talk to a professional so you know which policy type is best for you.

These 5 Insurance Tips for Arizona residents will help you purchase the best policy type to protect your family.

Compare deductibles

You have some choice in this area, too.

In general, a greater deductible will lower your cost, while a lower deductible will raise your overall cost.

For example, if your home needs a repair that is covered by your policy and costs $500, the amount of that that you will have to pay is dependent on your deductible. If your deductible is $250, you’ll pay that and then insurance will cover the remaining $250.

Figure out what you can afford and choose your deductible accordingly.

You can choose your agent

Your lender cannot tell you from whom you have to buy your insurance.

Do your due diligence to find an agent that you can trust and who will do their best to meet your needs.

Don’t be afraid to keep looking until you find one who is a good fit.

You should read the fine print

Though many don’t think of it in those terms, your home insurance policy is a legal contract. It is written in such a way as to clearly state your rights and responsibilities, as well as those of the insurance company.

Make sure that you understand the document. That great agent that you chose will be able to explain any parts that give you difficulty.

You should know the consequences of not having it

Because it is required that you have coverage, if you don’t find it for yourself, the lender will find some of their choosing.

You may end up paying quadruple the price for a policy that only covers the structure of your home. You don’t want to go this route!

You should know the cost

Home insurance isn’t one-size-fits-all. Many variables influence the total cost.

For example, your credit history, the location of your home and prior claims can all have an effect. The state you live in and what you add on to your policy will also make a difference in what you have to pay.

Talk to your home insurance professional to find out how the variables will influence the cost of your policy.

You should know how to save money

The best way that you can save money on your home insurance policy is to combine it with other insurance policies. It also helps to keep your home well-maintained. Keeping up with things like the roof, the plumbing and the electrical system will help to keep your costs down.

Get help with home insurance

Though you are required to have homeowner’s insurance, you have options. A reputable insurance agent will be able to go over those options with you and help you make the best choice to meet your needs.

What has been your experience with obtaining homeowner’s insurance?