Home insurance is one of the most vital kinds of insurance you can buy. But these policies are often large and expensive, making them intimidating for people searching for the first time. Here’s what you need to know:
Why You Need It
If homeowners insurance is shaping up to be quite expensive in your case, then you might be wondering if you need it at all. The answer, simply, is yes. A home is likely to be the biggest asset you’ll ever own, and not protecting it financially is an extremely unwise decision. Moreover, if you’re using a mortgage to finance your home purchase, it’s very likely your lender will require that you carry insurance on the home. You should get quotes from multiple home insurance providers to make sure you’re getting the best possible rate, but having insurance is simply non-negotiable; the cost of homeowners insurance is very low compared to the risk of losing your home and everything in it.
One thing to be mindful of when assessing potential policies is that they may not offer adequate protection on their own. Depending on what region you live in, certain high-risk natural disasters may require a separate policy. You might need to look into earthquake insurance if you live in California, for example, or hurricane insurance if you live in Florida. Flood damage is often excluded from a basic policy as well. You should also make sure that the policy covers not just the value of the house, but the rebuilding cost; you should make sure you’d be able to truly recover the asset should a disaster occur.
How Rates are Set
Homeowner insurance rates are based on a number of factors, many of which are outside of your control. This category includes the location of the house — both its regional location and the safety of the specific neighborhood. The age of the house is also taken into account, as older homes tend to have more problems. If you are hoping to reduce your homeowner insurance rates, there are a few things you can do, however. Contact your carrier to see if updating resistance to natural phenomena would lower your premiums (adding storm shutters, drainage systems, a new roof, etc.), or find out what security measures would result in a rate decrease (an alarm system, integrated smoke detectors, etc.).
Do you have any tips on getting better homeowner insurance rates? Share your thoughts in the comments.