Purchasing a home owner’s insurance policy is an essential part of securing a home loan. It can be confusing to understand how much coverage you need, and which company will best suit your needs. In this article, we will discuss some of the aspects of home owner’s insurance. We will also help to clarify some of the confusion, by providing a few user-friendly tips.
Understand the risks you face if you live in flood- or earthquake-prone areas, including what kinds of additional insurance you will need. Home owner’s policies typically do not cover destruction caused by these two forces, and you will likely need additional coverage to fully protect your home in the event of a disaster.
Install a solid alarm system in your home, preferably one that is monitored by a reputable security company, or is linked directly to the local police station. Insurance companies reduce your yearly premium by up to 5% if you can prove by an invoice or contract that you have a centrally monitored security system installed.
Paying off your mortgage can have a significant effect on your yearly home owner’s premium. It is not easy to do in most cases, but if you can afford it you can save a lot of money because insurance companies think you will take much better care of your home when you fully own it.
As part of your home owner’s insurance, consider increasing your liability coverage to protect you from bodily injury or property damage claims. This coverage protects you in the event of damage or injury occurring to others either on your property or from actions of someone in your home. For example, if your child damages a neighbor’s home by accident, the liability coverage on your own policy often covers the claim.
Protect yourself with liability coverage on your policy. Replacing or repairing your property is part of your policy, but you need to make sure that you have enough liability coverage to keep you protected. For example, if a guest at your home falls down and is injured your guest’s insurance company may hold you responsible for the medical bills. It is recommended to have at least $300,000 of liability coverage.
Understand how your home owner’s coverage works. A home owner’s policy is a combination of two types of coverage to provide more complete coverage to the insured. Your home owner’s insurance is made up of property insurance and liability insurance. The property insurance covers loss and damage, while the liability portion gives you coverage for any injuries that someone sustains while on your property.
You should always ask how much it would cost to increase your coverage. Home owner’s insurance factors in the chance of many small tings going wrong in addition to catastrophic events, but those large events are unlikely. Given that fact, it may only cost you $20 or $25 to increase your coverage from $350,000 to $500,000 to insure your possessions as well as your house.