All About Home Insurance
Before you buy your first home, you should consider all the related expenses that come with it and one of the most important expense is homeowner insurance. Remember, if you have a mortgage loan on your home, your bank or financial institution will require that you must have homeowner insurance. Even if you own your home, you should have a homeowner insurance policy to protect your biggest asset, your home. Since you have to have it anyway, it makes perfect sense to do some research and get the best out of your home insurance policy. This article explains basics of a homeowner insurance policy and what you should know before you buy an insurance policy.
Understanding the Policy: First of all, remember that there no such thing as "fit for all" homeowner insurance policy. Everyone has different needs as well as coverage requirements and to address this, most insurance companies sell highly customized insurance products. Before you start shopping for your home insurance policy, make sure you know what you're looking for and how much you can afford to pay every month to keep that policy. You should also take a closer look at your credit rating. If you've recently bought a home then you're probably familiar with your credit scores but sometimes existing homeowners get burnt by their poor credit ratings. So check your credit report if you're an existing home owner and you're shopping for a homeowner insurance policy. Check the claim-filing history on the property you're trying to insure. If you've owned your home for long time, then you probably have these records but new homeowners are encourage to get a copy of loss-history report on their property. It doesn't take a genius to figure out that any property with an active claim history will be hard or very expensive to insure.
Remember, if there are no claims filed in last five years, you'll not have a loss history.
Other factors that you must consider are age of the property, condition of the home, construction design and location. For example, if you're purchasing a property on atlantic coast, consider a brick home because it is more resistant to hurricanes. If you are buying in a seismically active region, look for newer homes built to current codes, or older homes that have been bolted to their foundations. They are better able to withstand earthquakes and thus cheaper to insure.
If it is an older home, you should make sure that house is in good condition with a roof in acceptable condition and all plumbing, heating and electrical systems in good condition. If you have recently installed a new roof, make sure your insurance company knows about it since a new roof in good condition will be attractive to insurers and will save you money as well as aggravation. Same is true for safety devices installed in the home. If your homes equipped with smoke, fire and burglar alarm systems that alert an outside service may get sizeable discounts. Strong doors, dead bolt locks and window locks may also reduce insurance costs. One of the good example is the security system such as ADT. You may get a refund or cash back on a security system from your insurance company. If your home has in ground pool, you should consider getting extra liability coverage for obvious reasons.
A closer look at the Property: Your property location is a important factor in the premium determination as well. Homes near a fire station, those with a hydrant close by and those located in communities with a professional rather than volunteer fire department will cost less to insure. Home located in ice storm belt are expensive to insure due to major damages that can be caused by down tress during ice storm. If you live on west coast like in California, be prepared to pay more because of the risk of earthquakes. If you live in an active flood region, your homeowner policy will cost more and won't cover damages from flood. Sometimes people don't understand that a standard homeowner insurance policy doesn't cover flood damages and by the time they figure this out, it is usually too late. So make sure you purchase flood insurance if you live in an area with a risk of flood.
If you're buying a home or have just bought a home, make sure you pay close attention to home inspection. A good home inspection is a very important part of buying a property and sometimes people tend to put it on the back burner since they are in love with the property they are purchasing. Do no cut corner and get the property inspected. A thorough inspection of the home is very important. The inspector should: check the general condition of the home; show you where potential problems might develop; double-check that past problems have been repaired; and suggest upgrades or replacements that may be needed. If a house has been well-maintained, you should have no trouble getting insurance. However, if the inspector raises questions, your insurance company will as well. In particular, have the inspector check for water damage, termites and other types of infestation. Special attention should be paid to the electrical system, septic tank and water heater. Find out if there is an underground oil storage tank, as many insurers will not provide policies for homes that have one.
Build relationships and use them - Most of the time people spend too much time and energy to find a deal on insurance policy. Remember, you should already have a relationship with an agent even if you're renting.
You should have renters insurance policy and may also have an auto insurance policy. Your existing insurance company should be your first contact for any additional insurance needs. Select someone you know and trust, as he or she will be an advisor for many years. Also, pay close attention to the coverage you're looking for. There are exclusion in homeowner and renters policies that don't cover some of the things like your jewelry. You should declare these items separately at the time of purchasing your policy. |
Considering a Home insurance policy
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Purchasing a Homeowner Policy: Once you have a quote from your existing insurance company, you should shop around for the best coverage and premium. Most people spend months looking for a house, but only spend a few minutes insuring it. Insurance companies sell insurance in different ways – some through their own agents, others through independent agents or brokers and still others directly by phone or over the internet. Select the arrangement that you are most comfortable with. Make sure the insurance company has a good rating in insurance business. The higher the financial rating, the better prepared they will be if a real disaster strikes. Then compare prices – it could cut hundreds of dollars off the cost of your bill.
Make sure you take a closer look at the deductible. Higher the deductible, lower the premium. If you have just purchased a new home, take the highest deductible you can afford. Since you're not likely to file a claim in near term, you will save money over time and preserve your insurance for when it’s really needed.
Maintain your home as you would your car. Every year, there are important things you should do to reduce the chance that you will experience water damage, fire or other insured loss. Insurance does not pay for routine maintenance or damage resulting from neglect. The cost for proper care should be calculated into your overall budget. It’s your responsibility to be the “risk manager” for your home. If you do your part to reduce insurance losses, not only will your home be safer, it will also save you money on your insurance bill. Don't wait for things to go bad and then rely on insurance claim to fix them. Remember, insurance is for unexpected losses or damages and should not be considered as routine maintenance payout. It is also important that you maintain a continuous insurance coverage and proper record of all related claims. Let your insurer know about alterations, additions and improvements to your home. Major purchases and lifestyle changes such as a marriage or divorce should trigger a call to your insurance professional. This way, you can maximize your insurance dollars by not being either under- or over-insured.
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