In your lifetime, you can make many remarkable achievements; owning a home is one of them, in fact, it is one of the most significant investments that you can make. This kind of investment can be exposed to various risks such as theft, damage among others. For this reason, homeowners’ insurance has been set up to protect your investment. Are you a new home buyer who is wondering what this kind of coverage entails? Well, the following are some of the things you need to know about insurance.
1- There are a broad range of coverages and insurance policies.
All new homeowners should be aware of the various existing insurance policies. The policies differ depending on a couple of factors such as, who the insurer is and where you live. However, the most common home insurance policy is HO-3. The HO-3 policy gives you open risks coverage and protects the home from any disaster (the peril could be fire, storm or even theft).
Moreover, you should learn about HO-5 – rather than just covering your home from disasters; it also incorporates your personal property which is not the case for HO-3. When learning about insurance, it is also wise to note that you are required to decide the coverage level of the homeowner insurance. Some of these coverages include replacement cost coverage, cash value coverage, and failsafe replacement cost coverage.
2- Difference between home warranties and home insurance.
Both home insurance and warranties cover your personal belongings both outside and inside your home. However, this does not make having a home insurance useless. It is better also to purchase a home insurance which covers weather, fire, structural and other sorts of damages which is not the case for home warranties (it does not cover weather and fire damage).
3- Location plays a principal role in determination of the cost of insurance.
Just like the construction type, size, and overall house condition, location of your new home matters when it comes to the value of insurance policies that are available. For instance, insurance cost of homes located near coastlines will be higher than other houses since there are several risk factors such as catastrophic weather. It is, therefore, a brilliant move to choose a home in a calm and free-from-risks locality which will be cheaper to insure.
4- The design of your house will affect the cost.
It is a great decision for homeowners to know what insurers look for when determining the cost of insurance. As earlier mentioned, the location of the house is one of the factors. The house design is another paramount factor. Which materials have you used for interior and exterior construction? Are the materials new or old? These are what insurers look for when calculating the cost.
5- Some of your belongings might not be covered.
In most insurance policies, there is a set limit during the coverage of your properties in case of theft or a disaster. Mostly this limit ranges from $ 1,000 to $ 2,000. This means that you will not be fully reimbursed in case you lose property worth $ 6,000.
Nevertheless, most insurance policies can repay you for properties lost outside your home since they are not restricted to the boundaries of your house. This comes as an advantage since you will be reimbursed if you lost your belongings during a vacation. Every new landowner can make a wise choice of purchasing flood insurance separately if living in a locality prone to flooding (many homeowners insurance policies does not cover flood damage).
6- Several insurers are keen on credit scores.
Having good credit scores will put you in a safer position of getting cheaper policy costs. Some insurers will use the scores to determine the policy cost. Do you have a strong score due to your punctuality in paying bills? If this is so, you will more probably pay lower homeowner’s insurance premiums. It is therefore wise to have a good credit score.
It might be a daunting task when new homeowners are trying to learn about insurance. The above are some of the tips that you should learn if you are one of the new homeowners. They will help you to make wise decisions if you are looking forward to purchasing an insurance policy.