There are few things in our lives that we can truly call our own. While family and friends certainly belong to that category, a house is also something that you can have an emotional attachment with. After all, it’s not easy to buy real estate to begin with, and even when you do, it takes years to make it a “home”. We’ll take a look at what you must consider before opting for home insurance.
6 Things You Must Consider Before Opting for Home Insurance
If you want to take care of your prized possession as well as your family, then one of the best things that you can do is get a good home insurance coverage. However, there are all kinds of insurance policies in the market which is why you must make your decision wisely. The following are the 6 main things that you need to consider opting for home insurance:
1. Coverage Amount
One of the biggest mistakes that you can make when buying home insurance is under-insuring your property. Think about it, what’s the point of home insurance when the coverage is too small to pay for the damages when the time comes. Thus, it’s really important to analyze how much home insurance you need that looks into various components like dwelling coverage, personal property coverage, etc.
2. Your Options
Shopping around is one of the best ways to save money when buying a home. This is because different lenders offer different interest rates, repayment options, perks, etc.
When opting for home insurance, you will find many differences in insurance plans offered by different companies. Some may charge you a lot more for the same features that others are offering. Thus, it’s highly recommended that you can take your time and find the top insurers in your area, then stack their home insurance plans against each other to get a better understanding of what exactly they are bringing to the table.
Another important thing to look at when opting for home insurance are the deductibles.
The deductible is the amount that you choose to pay from your own pocket toward damages before your insurer pays for your claim. However, you don’t pay this amount every year just like the premium. Instead, the amount is automatically deducted when you raise a claim. For instance, if you file a claim for $7,000 and the deductible is $500, then the insurer will pay you $6,500.
You can increase or decrease your deductible when you apply for home insurance and it remains the same as long as you avail the service. Now, you may wonder why would you want to increase the deductible anyway as that essentially increases the financial burden on your shoulders?
The answer is “lower premium”.
When you increase your deductible amount, then your insurance premium decreases proportionally. In fact, you can lower the premium by as much as 20% this way. However, making the deductible too high can be a bad idea if you think you may need to raise insurance claims in the near future as the real benefit of this idea lies in the long-term. In other words, there should be a good balance in which the premium is small enough but so is the deductible for you to afford.
Lastly, you should avoid assuming that you only have a flat deducible which is one of the costliest home insurance mistakes that the customers make. This is because, under certain conditions, the deductible can become a percentage of the total claim which can be a lot higher than the flat amount. Thus, it’s important that you ask about this when you get insurance.
4. Flood Insurance
If you think you don’t need flood insurance then you are thinking like the half of the people impacted by Hurricane Harvey flooding who likely didn’t have flood insurance. Imagine the kind of financial loss they suffered when they lost their homes as well as money. It is very important to consider this when opting for home insurance, especially when you consider where you live.
Many people assume that when they get home insurance, then flood insurance is a given. However, that’s not true. In fact, the majority of home insurance policies don’t cover damage from flooding. So, if you live in an area that’s vulnerable to floods, then you need to get separate flood insurance.
If you are living in a low-risk zone, then you have all the more reason to get flood cover as you might be able to get a lower premium.
For flood insurance, you can either consult private insurers, or you can also try checking the federal government’s National Flood Insurance Program.
5. Areas Covered
When opting for home insurance, if you own a large property, then your home insurance premium will be a lot higher than standard homes. However, you can still bring it down by choosing to omit select areas. These include a second garage that isn’t used frequently, an old shed, etc. If you think about it, it doesn’t make any sense anyway to pay a premium for parts of your property that you don’t really use or in case they don’t add any value to the property itself.
No two home insurance policies are alike, and not just in terms of costs, but also in terms of inclusions and exclusions. In other words, one insurance policy may cover a larger number of damages and conditions than others. So, it’s important that you inquire about the things that aren’t covered in a certain policy.
Some of them that you want to ask about include:
- mold coverage,
- belongings that will be compensated for if they are stolen,
- conditions for personal liability claims, etc.
Life is unpredictable and no matter how careful you are, you can’t fully protect your home from burglars, natural disasters, and other risks. This is why investing in a comprehensive and affordable insurance policy is a smart move. Just remember that home insurance isn’t exactly cheap and you don’t usually change your policy once you sign on the dotted line. So, take your time and compare all options thoroughly so that your choice of plan is perfect for your requirements.
Opting for home insurance? Consider all the above before doing so!
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.