Homeowners insurance is one type of insurance that you should prioritize as soon as you build or buy your home. It gives great peace of mind, knowing that you have an insurance policy that will take care of your possessions and your home if something terrible happens. Usually, when you buy or build a home, your real estate broker will offer you a referral to a home insurance company. If you take out a mortgage, then banks will give you the forms for this.
Like any insurance plan, you should take your time before signing up. Shop around and do your research to ensure you are getting the right insurance policy at the best possible price. Make sure the policy covers your current and future needs and read through the small print to be aware of any loopholes the insurance company might use to refuse a claim. To help you find the right insurance deal we’ve put together a quick guide covering basic insurance terms, coverage, tips and how to make a claim.
Top Home Insurance Companies
About Home Insurance
Home insurance is a type of insurance policy that provides cover for your home and your personal possessions. It is also a multi-line policy, meaning, your monthly premiums will cover property and liability insurance. The monthly premium, which is the amount you will pay each month, will be calculated based on the cost of replacing your home and the contents of it. So obviously the more expensive your home and your jewellery collection the more you can expect to pay for your insurance policy. Property coverage will cover the physical structure of your home of it gets damaged or destroyed while liability coverage will cover your legal responsibility if someone who is not covered by your policy is injured or killed, or if their property gets damaged while inside your home. Sometimes, your home insurance will also cover for a stay in a hotel or to rent a property while your property is being repaired.
Mortgage companies will also require you to have home insurance. Sometimes, it can be included in your mortgage plan, and your home insurance premium will be added unto your mortgage premium. If you don’t get your policy, they slap a policy on your plan, and you will have to pay a lot more than you normally would, so double check with your mortgage lender on this.
Can you survive without insurance? While home insurance isn’t cheap and it is always painful seeing money go out every month for no return, you should think twice about going without any sort of home insurance. Even paying for a home insurance policy for 30+ years will work out a good deal if your home is destroyed or you are robbed of your most valuable possessions. Also be aware of dropping your home insurance policy for a period of time. When you decide to sign up again you may find your premiums have increased as the insurers will assume you have a history of struggling to pay your premiums (not being able to afford insurance is a common reason for cancelling a policy). This could also affect your credit score, so don’t rush to cancel plans without thinking it through.
What’s in a policy
There are hundreds of different insurance policies out there each with different coverage levels and small print. Not all insurance plans are created equal so you need to do your research online or with the help of an insurance broker. When you find a policy that is suitable make sure you read through the entire policy and have an in-depth discussion with your broker about the policy. Your insurance will only be used when something bad happens to make sure you know what is covered and what isn’t to avoid a major shock when you try to make a claim. The list below are common features of most home insurance policies.
- Fire, smoke, lightning, explosions, wind, hail, civil unrest
- Vandalism and theft
- Falling objects and trees
- Freezing rain, ice and snow weight
- Sudden overflowing or bursting plumbing, air-conditioners, sprinkler systems and heating systems
- Some companies, depending on the area of operations and coverage, will not cover certain incidents. For instance, areas that are below sea level, or see a lot of storms won’t cover you if you get flooded in.
Some insurance companies, depending on where you live and how they operate, will not cover certain incidents. For instance, areas that are below sea level, or see a lot of storms won’t cover you if you get flooded in. A few examples of exclusions to be aware of are:
- Floods or sewers that back up into your property
- Earthquake, landslides, and mudflows that will cause land movement.
- Damage from pets, rodents, or insects
- Damage due to pollution
- Acts of war or civil war
- Deliberate damage
- Normal wear and tear
You need to read through the details of your coverage since flooding due to a burst pipe will be covered, but flooding due to storm floods may not be covered.
Your policy will also pay you depending on the type of plan you have and other conditions, such as:
CONDOMINIUM UNIT OWNERS FORM. This is for owners who live in condominiums. This will insure your property as well as your ceilings, walls, and floor from damage and will cover damage to additions or renovations, to a specified limit.
DWELLING FIRE FORM. This solely covers your dwelling, and for specific perils only. It will not cover medical or legal fees, liability, and your personal property. If you let your policy lapse, this plan is what mortgage companies will offer you.
MODIFIED COVERAGE FORM. This is usually offered to those who have older homes, in which the cost to rebuild is greater than its market value.
Optional Additional Insurance
Certain incidents are not covered by standard home insurance policies. For you to cover other catastrophic events, you may need to add to your insurance plan or to take on a separate policy. This is another aspect for you to think about if you live in areas that are earthquake, or flood risk areas. If you are exposed to certain weather hazards, you may take on separate policies. You can also consider guaranteed replacement cost coverage, inflation guard, scheduled personal property (for high-value objects), and personal umbrella liability insurance.
Even if your property or assets are covered in your plan, there is a limit to the value on which they will rebuild or replace your property. For instance, you may have a dwelling limit on your garage, shed, or separate structures on your property. Your coverage may be based on percentages based on the value of your property.
Your deductible is an amount you will need to pay out-of-pocket before your insurance payout kicks in. The amount is usually at an affordable range so it should not hurt your savings account too much. Usually, the higher the deductible you select, the lower the premiums are.
Shopping Around To Find The Best Deals
When looking for your options for the best home insurance deals, you will need to look at a few things before buying into a plan. Here we have a few tips you can use to determine which plan is better suited for your needs.
1. ALWAYS GO TO PROFESSIONALS FOR CONSULTATIONS. There are exclusive and independent agents who can help you determine which of the available plan types can work best with your situation. Look into their credentials to ensure that they are legitimate and that they have good reviews and little to none complaints.
2. CHECK HOW INSURANCE COMPANIES WILL DETERMINE THE PREMIUMS. The undermining process can have different factors dependent on each company. They tend to look at the cost to rebuild your home, the materials used to build your home, your location, the age and condition of the home and if you have a furnace or wood stove, high-risk outdoor amenities such as pools, playgrounds, trampolines, etc. they also look into your pets, as well as the claims of your neighbors.
3. GET THE BEST QUOTES. It’s fairly easy to get quotes from different companies. You can ask an independent agent to compile options for you, or you can go online, input some basic information needed, and you’ll be given a list of plans from different companies. Your state insurance department can also talk to you and give you a range, so you’ll have an idea of the range of cost of your premiums.
There are a few things you can do proactively to help you save money:
- Get a higher deductible. The deductible will only be paid for if there is a claim, while the premiums are a standard monthly payment. You are better off with a higher deductible with a low monthly payment.
- Consider bundle insurance. Some companies will offer you better rates and premiums if you buy multiple plans, home insurance, car insurance, health insurance, life insurance, etc., from them.
- Stick to one insurance company. Your loyalty is appreciated and valued by these companies. If you have an existing plan, getting additional plans can get you discounts or free add-ons.
- Have good credit score. This is standard in anything that involves finance, loans, and insurance. The better your score, the better your rates.
- Protect your home. By adding antitheft devices such as alarms and lights can assure your insurance provider that you take care of your home and will have fewer chances of getting broken into. You can get up to 5% less in your premiums for this. If you have good quality sprinkler, fire, and smoke detection systems, then you can get up to 15 to 20%.
- Replacement costs should be in your home, not your land. If something happens to your home, chances are, the land itself will remain untouched, so opt for insuring your actual home instead.
- Make a disaster-resistant home. You can do this by installing storm shutters, reinforcing your roofs, adding earthquake brackets to heavy and standing furniture, maintaining your trees, cleaning storm gutters and brush on the sides of your house, and updating your appliances.
- Look for discounts. Senior citizens can get up to 10% discounts.
- Keep up on your policy. Pay your premiums on time and make sure you document everything. Back up a separate file of your possessions and inventory.
- Maintain your home in good condition. Your home insurance policy will and should cover you for damage, but make sure that you take care of the upkeep of your home.
- Update your records. If you are adding a significant amount of new items to your home, renovate, or refurnish your home, you need to make sure you inform your insurance provider, to adjust your policy.