If you are in the process of purchasing a home, make sure that you take some time to secure homeowner's insurance. Homeowner's insurance is a necessary expense when you own a home, and it is an important expense to make sure you fully understand.
Important Thing #1: Homeowner's Insurance Is Required With a Mortgage
If you are taking out a mortgage on the property, you will be required to retain homeowner's insurance. Just like when you have a loan out on a car, and the lender requires you to carry car insurance, home lenders require you to carry homeowner's insurance as a way to protect the asset that they are providing you money to purchase.
Important Thing #2: Decide Between Replacement Cost or Actual Value
With a homeowner's insurance policy, you are going to need to decide between two types of coverage. You will need to decide if you want to ensure your home, as well as your belongings, for the replacement cost or the actual value.
The replacement cost is the amount that it would take to rebuild your home or replace your belongings with something similar without taking away anything for depreciation. Actual value, or actual cash value, is the cost that it would take to replace your home or belongings after depreciation is accounted for.
Important Thing #3: Think Carefully About Coverage Limit
When getting insurance for your home, you don't want to be cheap. Think about what type of limit you want to put on your home and on your personal belongings. Make sure that in a disaster, you have paid for all the coverage you need.
Carefully consider the deductible that you choose as well. A higher deductible can lower your premium, but you should never go higher than you could afford to pay right now with your deductible.
Important Thing #4: Always Shop Around
One insurance provider is going to provide you with a different premium, and often different coverage limits, than another insurance provider. Always work to get quotes from multiple companies so you can find the right coverage for your budget.
When you purchase a home, you need to get homeowner's insurance to protect your assets. You need to carefully consider if replacement cost or actual cash value is the best deal for you. Make sure you get enough coverage and choose a deductible you can afford to cover. Always take the time to shop around.
For more information on homeowner's insurance, reach out to a local insurance provider.
Share12 August 2020
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