Choosing Home Insurance Wisely

October 22, 2020

One of the biggest purchases you will ever make is buying your home. It is an investment, and, hopefully, it will gain in value, making you money in the long run. Protecting it is essential, as things happen, so you want to be sure you do everything possible to insure it against damage. Insurance is vital when you have such a significant investment and, if you are financing your home, you will have to purchase insurance. Where do you start?

Don’t Buy From the First Company You Go To

You will be amazed at the pricing variables in home insurance from provider to provider. That is why it is essential to compare and contrast the costs and policies from several providers to ensure you are getting the best deal possible. Don’t just go for the lowest price, however, as you may be sacrificing protection of your home. Be an informed consumer and look at coverages, limits, and deductibles to make sure you are not only getting a price you can afford but protecting your investment wisely.

Compare Deductibles

A deductible is the amount you will have to pay before the insurance kicks in. Deductibles can range from just a few hundred dollars to thousands of dollars. The rule of thumb here is to consider how much you can truly afford to spend if something happens. Don’t just go with the lowest deductible – customize it to your family’s financial situation to make sure you can afford it if damage occurs.

Consider More Than Standard Coverage

Homeowner insurance policies carry some basic/standard coverage pieces that are dictated by the government. These include:

• Dwelling protection will cover any damage to your house or any attached structures, like a garage.
• Other structures protection will cover those stand-alone structures, like your shed, fence, or a carport not attached to your home.
• Loss of use coverage pays for basic living expenses and temporary relocation costs if you have to leave your home.
• Personal property coverage will cover the cost of repairing or replacing any damaged or stolen belongings. This includes dishes, curtains, furniture, and other personal belongings.
• Liability coverage will cover your financial responsibility if someone is injured on your property.
• Medical payments coverage will pay for treatment for guests who are hurt on your property or if a member of your family accidentally injures someone away from home.

Some of the most common optional coverage options you want to consider are:

• Identity theft coverage will reimburse you for any expenses that you may be responsible for due to recovery from identity theft.
• Water backup coverage will cover any damage caused by issues with your plumbing. Flood insurance is not included in this.
• Personal property endorsement coverage is for those high-end items you may own, such as art or jewelry.
• Enhanced dwelling protection increases the coverage limits of your home’s structure, such as if the coverage limits are too low to replace or repair your home.

Considering Coverage Limits

Coverage limits can be confusing, but you want to cover the rebuilding cost of your home. This is not the same as the purchase price or the market value, as it will be a different cost to rebuild your home. Insurance with a limit of just real estate market value can leave you with not having enough money for repairs, or you may be spending more on insurance than you need to. It is also important to take a home inventory to be sure you have enough personal property coverage to replace your belongings.

The right home insurance policy will ensure that you can repair/replace the dwelling, any outlying structures, and personal property that may be damaged or lost. A little fore planning and thought can ensure your investment is covered for the future.