A Beginner’s Guide to Home Insurance

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A Beginner's Guide to Home Insurance

If you’re looking to buy your first home, one important aspect of homeowning is having the right homeowners coverage.

While most mortgage lenders require that you have one, home insurance policies protect your home against damage and disaster – and also provide financial protection.

Before you sign on the dotted line to own your first home, we’re here to answer your common homeowner’s insurance questions:

What is Home Insurance?

Home insurance is a policy that can help protect your home, its contents, and your family in case of theft and loss/damage to the interior or exterior of your home.

Some policies will also cover third-party injuries on your property (i.e., if a guest slips and falls on your steps and sustains an injury).

Depending on the homeowners policy you choose, you may be covered for:

  • Damage or loss to your home
  • Damage, theft, or loss of your personal possessions
  • Theft of personal items from your vehicle
  • Injury or damage to others who visit your home or property
  • Additional living expenses if you need to vacate your home

The coverage you receive depends entirely upon the type of homeowners insurance you choose.

What Are the Different Types of Homeowners Insurance Policies?

Not all insurance is created equally and the cheapest home insurance policies will give you the least amount of coverage. This is why it’s important to choose a policy that suits your unique needs.

There are five basic types of homeowners insurance:

  1. Comprehensive

Comprehensive insurance coverage is the most inclusive home insurance policy that covers both your home and its contents – except for specific exclusions such as uninsurable perils (predictable events) and optional coverage (i.e., sewer backup insurance, damage from earthquakes, water damage, etc.).

The insured perils covered by comprehensive dwelling coverage include fire, theft, window breakage, and damage from lightning.

Comprehensive home insurance is the best package to give you complete peace of mind.

  1. Basic Coverage

There is an option to save money on your homeowners insurance by choosing a basic or named perils policy. This type of home insurance covers only perils that are specifically stated, leaving you to be financially responsible for everything else.

  1. Broad

If comprehensive home insurance is beyond the scope of your budget but you want more coverage than a basic policy, you can choose a broad insurance policy.

This mid-priced package provides comprehensive coverage on your home and other big-ticket items as well as named perils coverage on some of your valuable items.

  1. No Frills

Some insurance companies will offer what is known as no frills coverage for properties that don’t require normal home in surance.

For instance, if there are physical issues with your home that prevents it from meeting the standards required by insurers, you can get no frills coverage until the problems are fixed.

  1. Personal Liability

When you own a home, you can be held liable for bodily injury or property damage caused to others – such as a visitor hurting themselves or damage occurring to their vehicle.

The personal liability coverage portion of home in surance provides coverage if such an event occurs so you can avoid financial responsibility for injuries and damage.

Keep in mind, however, that personal liability coverage does not apply to you or members of your household.

What Isn’t Covered By Home Insurance?

When you are considering the type of home insurance policy you want for your new home, it’s important to consider what insurance policies routinely do not cover:

  • Earthquakes: Standard home in surance policies do not cover events such as earthquakes and landslides. However, you can add earthquake coverage to your policy – which all depends on where you live.
  • Frozen Pipes: While your policy will likely cover pipes that freeze and burst, this coverage does not extend to vacant properties. So if you are away from your home in the wintertime and your home is unattended for more than four days, you will not be covered for water damage.
  • Flooding: A standard homeowner’s insurance policy will cover flooding caused by burst pipes but not for sewage backup and natural flooding. These are additional insurances you will have to add to your policy.
  • Vacant Properties: If your property has been vacant for more than 30 days (i.e., there is no occupants or furniture in your home), home insurance policies can’t help in the case of damage, theft, or other occurrences. 
  • Poor Upkeep: Home insurance is there to help in emergencies but not to cover damages caused by negligence. As a homeowner, you are responsible for the reasonable upkeep of your property. Otherwise, your policy cannot help you out.
  • Certain Valuables: Most insurance policies have a maximum amount you can claim for certain valuables (cash, art, jewelry, etc.) so it’s important to know this amount when it comes to your policy.

How Can I Save Money On My Home Insurance?

Buying a house is a huge financial ordeal, so it’s understandable for new homeowners to look for ways to save on their insurance.

Here are some tips to saving money on your home insurance:

  • Install a security system with central monitoring
  • Install smoke alarms
  • Raise your deductible (the amount you pay towards fixing damages)
  • Look for multiple policy discounts (i.e. combining home insurance with your auto insurance)
  • Use fire-resistant materials when renovating your home.
  • Review your policy regularly and do some price shopping once a year.

Insurance rates are based on risk – so the more you can reduce the risk of damage to your home, the more you can reduce the cost of your policy.

How Can I Get a Homeowners Insurance Quote?

In order to get a quote, it’s best to speak directly with a broker about homeowners insurance. There are plenty of options both national and local, like https://bkifgbarrie.com. Contacting agents and brokerages directly are the best way to source rates because you can discuss which policies are the best fit for your unique situation. They can also explore the possibility of insurance discounts to find you the most affordable home insurance coverage.

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