Things You Should Know Before Buying Home Insurance

Posted by Lauren Schneider on Monday, June 10th, 2019 at 9:50am.

what you need to know before buying home insurance

Home insurance is single-most important thing you can have to protect your largest investment, and if you're financing a home with a mortgage, there's a very good chance you'll be required to have it. However, not every insurance policy is created equal and it pays to do your homework. If disaster strikes, you don't want to be left wondering: am I really covered for that?

Here are some things to watch for if you're in the market for home insurance:

Know What You Need

The foundation of every insurance policy is its level of coverage. A twenty year-old home is going to require a different policy than a new construction one, as will mobile homes and condominiums.

For many homeowners, insurance is one of those things they buy once and forget about. You can factor the payment into your mortgage, so you'll never have to really think about it again, at least until something happens. If that time comes, you'll want a company that has outstanding customer service and a policy that protects you.

Types of Homeowner's Insurance Policies

There are several types of homeowner's insurance policies. 

  • Coverage for Dwelling. This is the basic insurance homeowners need to purchase. It covers the structure of the property and protects you against various damages up to the entire dwelling value.
  • Coverage for Content. This type of insurance policy replaces the contents of your home such as furniture, appliances, and electronics when specific scenarios that are outlined in your policy occur.
  • Personal liability. If a person were to get injured on your property or in your home, this is the coverage that would pay out for medical bills and other costs.
  • Coverage for other structures. Sheds, workrooms, storage buildings, and unattached garages need to be insured separately from the main house.
  • Umbrella policy. This is a type of homeowner's insurance that provides coverage in addition to your personal liability coverage on bodily injury or property damage. Homeowners may choose to add this policy to protect their assets in case of a lawsuit.

Choose The Best Insurer

Home insurance isn't as competitive as the auto insurance market, but you can still save quite a bit by shopping around. In some cases, if you bundle your insurance policies with one provider, you could save even more.

Get in touch with at least three different providers and compare their quotes. Focus on the value you're getting for your dollar over the cheapest price. If one provider has great customer satisfaction reviews and a slightly higher price, it could be very worthwhile to choose them over the budget-friendly brand. In times of distress, whether it be a small claim or a large one, you'll appreciate having the better support on your side. And don't be afraid to ask big questions, like what's their policies for fire, flood, earthquakes, and wind, and even smaller items like frozen pipes.

Familiarize Yourself With The Lingo

Understanding what the key terms mean will help you read the policy and know exactly what your covered for.

  • Deductible: The amount you'll have to pay out of pocket before your insurance company pays for a claim.
  • Premium: The annual or monthly payment you'll make for your insurance.
  • Liability Coverage: This covers legal or medical bills that accumulate if someone is injured on your property.
  • Personal Property: The belongings in your home, such as electronics, clothing, jewelry, and furniture.
  • Replacement Cost: This coverage will pay the cost of replacing your home or belongings up to a certain amount.
  • Cash Value: Unlike replacement cost, this coverage will only give you current cash value for your personal belongings and home.
  • Sub-Limits: A sub-limit is a limitation to the amount of available coverage for a certain type of loss. Almost every insurance policy will include limits and sub-limits.

What Kind Of Home Insurance Do I Need For A VA Loan?

Homeowners insurance will typically cover your personal property depending on the replacement cost or cash value amount in your policy. However, some won't cover your personal belongings if you take them with you on your deployment into a warzone. Your VA loan won't require a particular type of coverage, but you will need it to be escrowed with your mortgage payment.

Daunted by the idea of shopping around for home insurance? Your agent would be happy to refer you to some of their preferred insurance brokers in Colorado Springs!

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