When you are buying a new home, purchasing homeowners insurance is a necessity. This type of insurance protects your home and possessions against damage or theft and is required by most mortgage companies. Obtaining homeowners insurance should be at the top of your to-do list during your homebuying journey.
All homeowners insurance policies are customizable and there are many different packages you can choose from. Each package protects against a specific event that may cause damage to a property. Examples of events that could cause damage include fires, hurricanes, lightning, windstorms, vandalism, and theft. Insurance packages usually contain four additional types of coverage, including property damage, additional living expenses, personal liability, and medical payments. If damage is done to your property, your insurer will compensate to help repair your home or even completely rebuild it depending on the situation and policy you have.
There are some situations that are not covered under a general insurance plan. Floods and earthquakes may require separate policies if you need that type of protection. Poor home maintenance is also not covered under a general plan, as well as acts of war. Insurance companies will provide coverage for approximately 50% to 70% of the value of your possessions. If your home is insured for $200,000, you will receive about $140,000 worth of coverage for your damaged possessions. If you have expensive items in your home, it is smart to get a higher coverage amount or take out a separate policy on those items.
There are a few different types of insurance policies you can choose for your new home. The lower the price of the policy, the least amount of coverage you will receive, and vice versa. Here are three of the most popular levels of coverage:
The driving force behind insurance rates is the insurer’s perceived risk. To determine risk, insurance agents will look at the homeowner's past insurance claims, as well as their credit. Claim frequency and severity play a big role in the rate you will receive for your insurance. The neighborhood your new house is in and the crime rate will also play a role in determining rates.
Homeowners insurance can be expensive, but it is a necessity when buying a home. It is always best to go with a more expensive policy than a cheaper one to ensure that your home and possessions are covered. However, there are also ways to reduce your insurance premiums:
All insurance carriers are slightly different and offer specific premiums. Here is what to look for when searching for home insurance:
Finding the right company to buy homeowners insurance from can be challenging. HomeHunt can match you with the right agent to help you find the best insurance policy for your new home. Contact HomeHunt today!