Streetsmart insurance Blog
After you make an offer on a house and find that it has been accepted, one of the first things you want to do is start shopping for homeowners insurance. Buying a home is one of the biggest investments you will ever make in your life—if not the biggest investment. You need to protect that investment and yourself, and home insurance is one of the best safeguards you can have. Add the fact that your mortgage lender will probably require you to have homeowners insurance as a condition of your loan, and there’s no excuse to put off your search for the right coverage policy.
The Average Cost of Homeowners Insurance
You aren’t going to choose home insurance based only on cost. You will also have to consider what kind of coverage you get out of each policy and make sure that it is adequate for your needs. What you pay will also vary depending on the size and value of your home, as well as on the value of the contents of the house (furniture, electronics, clothing, and other personal property). However, if you want a basic sense of what you will pay for home insurance on a monthly or yearly basis, this rundown from ValuePenguin is a great place to start. The page lists average homeowners insurance costs in all 50 states and Washington D.C.
Finding the Ideal Policy
With a basic sense of what you should expect to pay in homeowners insurance each year, it’s time to get started hunting down the policy that is right for you and your family. Following the steps laid out below will help you to find coverage that appeases your mortgage lender and protects your real estate investment.
Step One: Start Reaching Out to Insurance Companies
Recommendations for home insurance companies can come from anywhere, be it your mortgage lender or friends and family you have in the area. When in doubt, just do a Google search for home insurance companies near your location. Make a list of three to five insurance providers, considering factors such as customer reviews, price, and breadth of coverage. You can find a lot of this information online, but it’s also a good idea to reach out to a few insurance companies and get coverage quotes. That way, you can compare the value of different policies head-to-head, making it easier to choose the right coverage.
Step Two: Understand the Terminology
Home insurance policies—and, really, all insurance policies—have a specific set of terminology that you will need to familiarize yourself with in order to shop for coverage in an effective fashion. Be sure to understand the terms below, as well as how they impact the coverage you are buying.
Premium: The premium is the price you will pay for your insurance policy. It may be presented as a monthly fee or an annual one, depending on the insurer.
Deductible: If you need to lower your premium, the best way to do so is to raise your deductible. The deductible is how much money you will have to pay out of pocket before your insurance coverage comes into play. So, if your house was damaged in a fire and you had a $3,000 deductible, you would have to pay the first $3,000 of repairs before you would see any insurance money.
Personal Property Coverage: Generally, home insurance policies provide personal property coverage worth 75% of the total policy value. For a $180,000 home, therefore, you would usually have $135,000 of coverage for your furniture, electronics, or other possessions.
Riders: Personal property coverage won’t usually cover extremely valuable items—including some artwork, antiques, or jewelry. Riders are additions to your insurance policy that can cover these items.
Liability Coverage: If someone is hurt on your property and decides to sue, liability coverage would help to cover legal bills or medical bills.
Replacement Cost and Actual Cash Value: The actual cash value is the dollar amount that your home is appraised at by your mortgage lender. The replacement cost is how much it will cost you to rebuild your home and replace your personal property. You want to insure based on the latter.
Understanding these terms can help you to know whether or not you are getting the coverage you need for your home and belongings.
Step Three: Look for Ways to Save on Insurance Premiums
Buying home insurance through the company that insures your automobile can get you a break on premium prices. Making improvements to your home—from replacing old wiring to installing new smoke alarms and burglar alarms—can also reduce what you are paying. Take these considerations into mind when choosing your home insurance coverage or deciding which improvements to make to your home first.
Buying home insurance should be an easier process than buying the home itself, but it can prove to be just important. By setting aside an afternoon to do some research and make a few phone calls, you should be able to find a coverage policy that protects your home, your family, and your investment.