Articles Tagged "insurance policies"

Purchasing home insurance for the first time can be overwhelming. Review some of the common insurance questions before shopping for coverage to build knowledge of policies and find the best one to suit the family's needs.

Why Buy a Policy

Most states require drivers to possess auto insurance prior to driving a car off the lot. Home insurance is different in that a person can legally own a home without insurance. If a loan is needed to purchase a home, the lender will likely require the family to purchase home insurance as a way to protect the investment.

Coverages Included

Home insurance policies typically include coverage for the home's structure, contents, liability, other structures (toolshed, etc) and additional living expenses. Learn more about items typically covered in home insurance policies:

Structure:

If the home is damaged or destroyed by a covered peril and needs to be repaired or rebuilt, insurance can help cover expenses. Structural coverage is not the same as the amount paid for the home. A person needs to set structure coverage for the amount it would take to rebuild the home from the ground up.

Contents:

Coverage typically begins for belongings which are damaged or destroyed. Usually set between 50 and 70 percent of the home's structural coverage, high-value items (jewelry, art, valuables) may have a cap on the repair/replacement value..

Liability:

If a person becomes injured on the property, the liability portion of insurance can help pay for medical, rehabilitation and/or funeral expenses. This will also include legal fees in the event the injured party decides to sue. Liability is usually set around $100,000 worth of protection. Insurers recommend more at $300,000-$500,000.

Covered Perils

Standard home insurance policies can cover damage by fire, windstorms, hail, lightning, theft, vandalism, explosions and riots. Typically, water damage from freezing and bursting pipes is also covered. Damage from floods or earthquakes is typically not covered as natural disasters require separate policies for people living in a high-risk area where this is a more common occurrence.

Policy Cost

Insurers take the following into account to determine cost of coverage:

• Credit score

• Claims history (personal and claims history for the area)

• Location of home

• Age of home

• Cost associated with rebuilding home

• Proximity to fire department

• Pet owner status (owning a dog means more liability coverage)

• Coverages selected

Saving Money

When looking for ways to save money, scope out discounts. Most providers offer discounts to policyholders. Build multiple policies (home, auto) with same provider for simple ways to save more each month. Raising the deductible (amount agreed to pay personally toward a claim prior to insurance) will result in lower premiums. Set it reasonably low enough to be affordable but also provides coverage necessary in the event disaster strikes.

Looking for guidance through the home buying process?

The award-winning real estate agents of Choice Properties are on hand to answer your questions.