Buying Homeowners Insurance for Beginners
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Buying a new home is exciting but nerve-wracking at the same time. You want to make sure your new home is covered in the event of a disaster, make sure you know what to look for when shopping for homeowners insurance.
A home is one of the most important purchases you can make, and it’s vital to protect this important asset with homeowners insurance. Homeowners insurance covers your home and its contents in the case of a disaster, but it’s important to know what exactly you’re getting and how to shop for homeowners insurance effectively.
What does homeowners insurance cover? What doesn’t it cover? How can you make up the difference? How much is homeowners insurance? What is the difference between homeowners insurance and a home warranty? These are all questions you should answer before closing day, so you can move into your new home with confidence that it and its contents are protected.
What’s Covered and What’s Not
If something happened to your house – if it burned down, or flooded, for example – could you afford to rebuild out of pocket? There’s a good chance the answer is no, and that’s why mortgage companies require homeowners insurance, and why most homeowners choose to buy a policy even if they don’t owe on a mortgage.
Most homeowners insurance covers damage and loss related to specific perils, including:
- Fire or smoke
- Hail, trees, or other falling objects
- Vandalism or theft
- Civil unrest
- The weight of snow, ice, freezing rain, or sleet
- Burst pipes, or ruptures affecting your HVAC or sprinkler system
However, most homeowners insurance policies don’t cover flooding from storms or sewers – you’ll have to get a separate flood insurance policy for that. Damage due to earthquakes, mudslides, landslides, or other forms of land movement may also require a separate policy, as may damage due to severe weather events like hurricanes or tornados. Although your policy will provide some coverage for the contents of your home, you’ll probably also need some additional coverage for especially valuable possessions, such as luxury jewelry, collectibles, furs, stamps, guns, coins, art or antiques. Other types of damage that may not be covered include:
- Pet, insect, rodent or bird damage
- Damage done deliberately
- Failure due to normal wear and tear
- Pollution damage
- Perils related to acts of war or collapse or overthrow of the government
Neither will homeowners insurance cover repair or replacement of home appliances and systems. What your homeowners insurance doesn’t cover, however, your home warranty might.
How to Shop for Homeowners Insurance
If you’re buying homeowners insurance for the first time, you should start by contacting the company that provides your auto insurance. You’ll usually get a better deal on homeowners insurance if you can bundle it with another type of policy.
If you want to get quotes from multiple companies, contact an independent agent to get quotes from a range of insurers at once. If you have military connections, you may want to contact USAA for a homeowners insurance quote. It’s also a good idea to contact some of the larger insurers, such as State Farm, which don’t sell through independent agents.
Save Money on Homeowners Insurance
Once you’ve chosen an insurer, it’s time to buy a policy. Make sure you get one that will cover the cost to rebuild your home, which may be more than its market value, depending on how your home was built and the cost of supplies in your area. While you might be in for some sticker shock when you get your first premium statement, you have several options for lowering the cost of your homeowners insurance.
The first, and most popular, is to raise your deductible. Raising your deductible to $1,000 can lower your premiums without placing an undue financial burden on your family. Just make sure you have enough money to pay the deductible if necessary.
In addition to bundling your homeowners insurance with another policy, such as an auto or life insurance policy, you can also lower your costs by sticking with the same insurer over the years, and by minimizing the number of claims you file. Adding security features, such as cameras, burglar alarms, deadbolts and smoke detectors can lower your premiums. You can also keep premiums low by:
- Keeping your credit score high
- Installing storm shutters on your windows
- Adding earthquake brackets to heavy furniture
- Reinforcing your roof against strong, hurricane-force winds
- Replacing and updating appliances and systems as necessary
- Maintaining storm gutters
- Removing brush or dead trees that could present a hazard
Of course, not all of these measures will apply to every homeowner – if you live in Michigan, for example, you probably don’t need to bother with storm shutters and a reinforced roof. But adding these safety measures in Florida could save you a bundle on homeowners insurance premiums.
Homeowners insurance protects the most important asset you own, but if you’ve never bought it before, some confusion is understandable. Know what your policy covers and what it doesn’t, and what you can do to lower your costs and extend your coverage. You’ll be glad you educated yourself when the time comes to file a claim.