We’ve said it before, and we’ll say it again: your home is most likely the largest asset you own. With that in mind, doesn’t it make sense to protect it? If you’re not convinced, or you want to learn more about why homeowners insurance is important for every homeowner, keep reading.
Homeowners insurance, often referred to as hazard insurance, provides financial protection and peace of mind to homeowners in the event of damage to the home. This protection covers the physical building in addition to all the contents and other structures on the property.
In general, a homeowners insurance policy typically covers these 10 basic threats to your home*:
Depending on your location, you may be concerned about a few home threats that are not listed above. Below are a few examples of perils that require a rider or a separate policy. A rider is a supplement to a standard insurance policy to cover specific item(s) and requires an additional premium to be purchased.
Please note that the scope of coverage in terms of homeowners insurance can vary between states or companies. It’s important to review your policy thoroughly with your insurance agent.
No matter your location, there are three levels of coverage insurance companies have to offer. Let’s dive into those, shall we?
Depending on the age of the home, full replacement cost policies may not be available, as actual replacement or rebuilding of older homes is generally not possible. It’s also important to note that mobile homes, condos, and historic homes have policies designated specifically for those types of homes.
It’s common for mortgage lenders to require borrowers to carry homeowners insurance. Be prepared to begin shopping for coverage immediately after you submit your mortgage application. Check with your Mortgage Banker as he/she may be able to make an introduction for you.
Your next step should be gathering a list of what you own so you can make sure you get the necessary coverage. Start your list with this Home Inventory Worksheet. Fill out as much as possible, and make a mental note to add new purchases to the list as you acquire them. Be sure to include any possessions you have in a storage unit as well, as those items may also be covered in your policy.
When you make a decision on who you’d like to partner with for your homeowners insurance, your chosen insurance company will need to submit information about your policy to your lender. And, because your home is your lender’s collateral in case you default on your loan, you’ll need to provide proof of your homeowners insurance at closing.
It’s in your best interest to review your homeowners insurance policy regularly to ensure it still meets your needs. We recommend doing so annually, with these things in mind:
If you answer “yes” to any of these questions, it’s time to give your homeowners insurance agent a ring. Take a look at your Home Inventory Worksheet during your review as well to ensure that it is up to date with your current assets.
You have health insurance to protect yourself, and auto insurance for your car… It’s important to have the same kind of financial protection for your home. Want a list of trusted agents? Contact us for a recommendation!
*Insurance rules and regulations differ across states. Exceptions may apply. Consult your insurance agent and/or your state’s Department of Insurance for specific information on requirements.