15 Things Everyone Should Know About Purchasing Home Insurance

Home insurance, also referred to as homeowners insurance, is a type of insurance policy purchased by homeowners to protect their home structure and private assets in their homes. It also covers external and detached structures on the same private property as the home.

Like many other things that we don’t know about until we have read about them, getting home insurance is just one of the many things involved in the purchase and move into a new home that most people are unfamiliar with.

In this article, we’ll discuss the 15 things that everyone should know about getting home insurance:

#1 – Coverage Payment

Home insurers are rigid with their terms of payment. You need to be prepared to write a check every month, or every six months, in order to make sure your home is covered. However, if you have an escrow account with your mortgage, as most homeowners do, then that will be taken care of through your lender.

#2 – You Need the Right Coverage

Know your possessions, their value, and make sure you have the right amount of insurance. You need to make sure your house and everything in it is fully covered.

You need to keep these four things in mind: how your house is structured, your personal belongings, your liability to others, and living expenses of you need to temporarily relocate out of the house.

Disasters can happen anytime, and sufficient liability coverage is needed as protection just in case.

#3 – You Need to Understand the Claims Process

Two different policies from two different insurers might claim to offer the same coverage at a similar price, but only one of them will have a better claims process.

You should have an agent explain plainly how claims will be handled, particularly when they have to write a check. You should always inquire about things like whether your payment will be made in one lump sum, or in installments, for example.

#4 – You Need to Take Inventory of Your Possessions

Ensure you keep an inventory of the things you possess. You can make a video of it store it in cloud storage or on an external hard drive, which is a lot easier than listing everything you own.

Initiating a claim in the event of a loss isn’t just a matter of you telling the insurer what you lost–you have to provide proof of what was lost. So make sure you keep a record of your items, especially valuables.

#5 – Consider Buying Floaters

Floaters are items that aren’t covered on a normal policy but can be added to the policy for an extra fee. There are some items like art, furs, and fine collectibles that the home insurance policy might not include.

For example, if you own a $10,000 painting, you might want to insure that painting in a separate “floater” policy.

In this particular case, a special policy, known as a floater (endorsement), should be added to your normal policy.

#6 – You Need to Understand Inflation and Depreciation

This is very important when it comes to what kind of coverage you buy with your home insurance. What it costs to build your house ten years ago is not the same amount it will cost you now or even ten years in the future.

Discuss your home’s value and potential depreciation with your agent, making sure you don’t have too much or too little coverage.

#7 – Protection of Your Property if You Own a Condo or Co-Op

Ownership of a condo brings just as many liabilities as owning a single-family home. Condo-owners typically own property that is attached to other condos. So if, for instance, a water leak occurs while you’re on vacation, it could possibly damage the unit below or next to you.

Check and make sure you aren’t liable for things like the roof, which the HOA may be liable for. However, just like any other homeowner, you need the right amount of coverage.

#8 – Flood and Earthquake Insurance

This is not for everyone, but it is especially needed for those that live in an area prone to earthquakes or in a flood zone. If you are one of those people, then you need to add on earthquake and flood insurance, which does not come standard with most policies. In fact, some lenders will not finance your mortgage unless you agree to have flood insurance.

#9 – You May Need an Umbrella Policy

An umbrella insurance policy can protect you in the event of things that may happen that aren’t exactly in the “normal” scenario of homeownership.

It can protect you in the event that you’re sued for libel or slander, and it can even protect you from things like vandalism.

Ever had your house egged and had to repaint it? That might be covered.

#10 – You Need to Understand Your Escrow Account

Several mortgage lenders use escrow accounts to pay things like taxes, PMI, and the premium on homeowners insurance every year. This particular insurance premium will be paid on your behalf by the lender.

When they receive your mortgage payment, which includes your insurance premium, your insurer will receive the payment from the lender. This helps you by consolidating several of your monthly expenses for your home into one payment instead of two.

#11 – Always Check for Discounts

Insurance companies tend to offer their clients discounts if they bundle home and auto insurance policies at the same time. Others could offer discounts to clients who install a home security system or replace their roofs. Be sure you ask your provider if there is any discount that you qualify for at that moment.

#12 – Make Sure You Review Your Homeowners Policy Annually

Things change. You buy more stuff, more lawn care equipment, and more valuables over time. There’s no doubt that as you live in your home, you’ll be making upgrades and renovations. So make sure that every year, you make sure you have the right amount of coverage as time goes on.

#13 – Keep Your Policies and Inventories Up-to-Date

Life-altering events occur. You make mistakes, you grow, and you even make improvements. Your house is no different. Just like in our last point, you need to make sure the amount needed for the insurance coverage on your policy stays up to date. On top of this, your valuables can increase or decrease, so make sure you keep up-to-date inventories.

#14 – Keep an Eye on Your Deductible

As with car insurance, almost all home insurance policies come with a deductible that you must pay out of pocket in the event of a claim. If you choose to take a higher deductible, this can bring down your premium costs. But you need to make sure you have the cash on hand to pay your deductible in the event of a claim.

#15 – If You Have Specialized Property, Make Sure It’s Covered

Insurers prefer properties that are built with bricks and slated roofs. So, if you possess an uncommon property, whether it be a house made out of a unique material or a roof with an abnormally steep pitch, then make sure it’s covered adequately.

A windmill, for example, is unusual, or something as seemingly normal as solar panels. You may need to get a specialist to cover these specialized objects.

Author Bio: Chuks Nwaodua has an advanced degree in the sciences and loves to play chess, travel, research, and write on various topics of interest, especially on the eFor-Real platform.

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