Home Insurance

All mortgage lenders ask homeowners to get homeowners insurance when applying for mortgage. Homeowners insurance offers protection to the belongings and the house in case of a natural disaster or other damages.

It is important to note that ‘homeowners insurance’ policies are different from one another. Hence, homeowners need to shop around for policies and compare the rates in order to avail the best affordable coverage.

Listed below are some ways homeowners can save money when choosing homeowners insurance:

  • Policy with high deductible is preferable: Deductible is the amount that needs to be paid for every claim. Opt for a policy with a higher deductible so that the monthly payments or premium is low. It is however vital to ensure that the deductible amount selected can be afforded by you, if any damage occurs to the home.
  • The credit score should be good: Insurance companies usually tend to check the credit score to gauge the associated risk of a customer filing a claim. Also, a low credit score will mean that the cost of the policy will be higher. Hence, work to improve the credit score to get the best quote.
  • Bundle different insurance policies: You may bundle the homeowners insurance with auto insurance and other policies to get discounts from the insurance provider. In some cases, the discount can be as high as 15 percent. When shopping around, ask the companies for a bundled rate as well as a standalone rate.
  • Compare local and national insurers: Prices and policies differ from one state to another. Comparison between local and national insurance companies can help you find the best homeowners insurance coverage.
  • Decrease vulnerability of house and take insurance for rebuilding house: Install security gadgets to prevent theft and other such damage. Take steps to increase resistance of your house to fire and natural disasters. Take insurance for cost of home reconstruction, which is different from market value of the house as market value includes cost of the land as well.
  • Avail of all possible discounts: Call up the customer care center of the insurance company and find out all the available discount offers. Then avail of all the discounts that you are eligible for to lower the overall cost of homeowners insurance policy.
  • Carry out an annual review of the policy: Situations tend to change every year and there may be certain things that you may not need insurance for in the future. Hence, remove protections that you may not require any longer and stop paying for them. On the other hand, you may want to add protections to new features that may have been added to the house.

The 5 main constituents of homeowners insurance coverage are as follows:

  • Cost of rebuilding or repairing the main structure, i.e., the property itself.
  • Cost of replacement or repair of stolen, damaged, or lost personal belongings.
  • Cost of rebuilding or repairing facilities or separate secondary structures like pool houses, detached garages, fencing, and decking, etc.
  • Some insurers will pay for loss of use of the house. This means that the companies will pay for rentals or hotels when you are unable to reside in the house because of some risk that is covered by the policy.
  • Liability homeowners insurance coverage offers protection for claims related to injury or death caused to neighbors, visitors, or passersby, or to damage of their belongings.

It is important for homeowners to select a policy that offers proper coverage for things listed above. Avoid too high or too low of limits as it may respectively lead to excessive premium or a high deductible when filing a claim.