Learn About Homeowners Insurance

It only makes sense that you would insure what amounts to one of the largest single assets that you will ever likely own. When you purchase a home, you will need to take out a homeowners insurance policy. This is especially the case when you have a mortgage on your home, as it will be required by your mortgage lender.

A homeowners policy is not the same thing as mortgage insurance, otherwise known as private mortgage insurance (PMI). PMI is designed to protect the lender, while homeowner’s insurance ultimately protects you by protecting your home. It is a valuable tool in your belt which will pay out money in the event of an event that damages or destroys your home.

Why Do I Really Even Need Homeowners Insurance?

There are really just two reasons why homeowners need a homeowners insurance policy. The first reason is that a mortgage lender will require you to obtain a homeowners policy on your home. The lender is simply protecting their investment. The second reason is that an asset as large as a home requires protection to ensure your financial wellbeing. Imagine purchasing a home only to lose it in some event. The cost to replace the home would be enormous and would likely cost much more than you have saved up.

What Does Homeowners Insurance Cover?

Each homeowner’s policy will carry different provisions and protections. The exact coverage depends upon the individual policy that you have selected, and additional riders may be purchased to enhance coverage, including items like earthquake insurance, where available. Most homeowners insurance covers events like lightning damage, hail damage, wind damage, vandalism of your home and even theft.

The coverage will include your home, as the primary structure, as well as any other structures on the property such as a detached garage, shed, or even poolhouse. It also includes the contents of the structures on the property.

Additional expenses covered include lodging expenses if the damage is so severe that you need to vacate the premises for a time. Basic liability coverage is included, meaning that injuries on the property are at least partially covered.

What Else is Important to Know About Homeowners Coverage?

The coverage that is available through your policy will be limited to a certain amount. This is why it is important to purchase enough insurance for your needs. Additionally, it is important to keep up with your insurance amounts as the value of your home appreciates. An event like a natural disaster becomes much worse if you belatedly discover the insurance on the property will not be enough to replace the home.

Most policies do not cover natural disasters like earthquakes and flood damage. You will need to purchase a flood insurance policy separately. A rider for earthquake insurance may be obtained through some insurance providers. Otherwise, most policies coverage a wide range of natural weather-related events. Make sure to carefully review your insurance quote to determine what is covered. 

Furthermore, damage caused by daily usage, backed-up sewage or pest infestations are not covered. This means that it falls on you as the homeowner to maintain your home. Spraying for pests, treating any issues, or otherwise keeping your home maintained are considered the domain of the homeowner. 

Finding the Best Price on Homeowners Insurance

Just like real estate, there are a number of factors that determine the cost of your homeowners insurance plan. Factors that affect the cost include the location of the home, condition of the home, and the prevalence of events in the area. 

As with anything else, it is a good idea to shop around for the best rate from different insurance companies. Oftentimes, opting to bundle your homeowners insurance with your auto insurance, or other policies, can result in a discount. Also inquire about payment schedules, since paying for insurance for six or twelve months at a time may also generate another discount.

Keeping your home updated and maintained can also help. When a home is maintained and the proper safety equipment is present onsite, this can help reduce rates. Consider installing a security system and inquire with the prospective insurance provider to see if this will generate yet another discount. 

Last but not, reduce your claims to only what are financially necessary. Going for a long period of time without a claim can generate another discount. Opt not to file a claim for costs that are very close to the deductible, even if they are a little over assuming that you can afford to do so.

Range Lending Helps Homeowners

Range Lending is available to answer questions about the mortgage process and can help you understand the world of homeowners insurance more clearly. We work with experienced buyers and first time future homeowners as well. To get started with Range Lending, simply contact us. We work with customers all across the state of Michigan to help them get into their future home more quickly!

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