“It’s better to have it and not need it than need it and not have it.”
That excellent movie line from True Romance could be better adapted when referencing the need to buy adequate homeowners insurance coverage.
While many aspiring and current homeowners understand the financial responsibility of securing a down payment or paying a mortgage for decades, most don’t fully appreciate the need to buy a homeowner’s insurance policy.
What’s worse is that even when homeowners do buy homeowners insurance, they are unsure what exactly is in their own policy coverage.
Being a homeowner is an awesome financial responsibility, but don’t ever allow yourself to be confused about homeowners insurance coverage. Contact the Loan Brothers at Mares Mortgage today to get the information you need.
Here is what you must know about homeowners insurance coverage and its basic coverage points.
According to a 2016 study conducted by the Insurance Information Institute, about 95% of American homeowners have homeowners insurance.
The problem with that promising statistic is that many American homeowners are woefully underinsured or don’t even know what their own basic policy protections offer them.
Many homeowners don’t even know what kinds of coverage their home needs, even though they own homeowners’ insurance.
About 50% of Americans may be significantly underinsured relative to the kinds of coverage their own home readily needs. A lot of homeowners may even be vastly overpaying for policy coverage plans they don’t know they don’t need.
The average annual cost for a homeowner’s insurance policy is just $1,200.
However, the exact amount that you might pay for a homeowners policy varies from person to person.
What’s important to keep in mind is that the amount you pay for homeowners insurance depends on where you live and your relative local underwriting risks. For example, you could pay as much as $4,445 for homeowner’s insurance in Oklahoma.
Unfortunately, about 30% of Americans believe that homeowners insurance is a lot more expensive than it really is.
About 41.5% of homeowners had no clue that their annual premiums would be significantly lower if they bought and bundled their homeowners and auto insurance policies from the same provider.
Related – Should You Consider Mortgage Protection Insurance?
Homeowners insurance is a form of coverage policy that is designed to cover your house against potential damage risks, personal theft, and accidents.
What is covered in your standard homeowners insurance coverage policy is relative to where you live, your home’s age and its market worth, and the potential damage risks your home could face in the future.
No two basic policies are the same. What is considered basic coverage in your policy could be radically different in another’s homeowner’s policy.
Here are some points that a standard homeowner’s policy might cover:
Most basic coverage policies will pay to rebuild or repair your home in the event of damage or destruction caused by specific events explicitly detailed in your policy contract.
You may be eligible for a policy payout if your home was damaged or destroyed by fire, lightning, hail, hurricane, or other very specific threats.
However, most basic homeowners’ insurance policies don’t cover flooding or earthquake damage.
Most policies will also cover detached structures like tool sheds, gazebos, or garages.
Loss of use means that your insurance company will reimburse your cost of placing your family in temporary housing if your home becomes uninhabitable. This is valid only if the damage stems from a covered event.
Any personal belongings that are stolen or destroyed in a fire or other covered disasters are included in standard policies.
Coverage may only equal 10% to 70% of the policy’s value. If you own expensive items like jewelry or fine art, you may need additional coverage.
Make sure to take a detailed inventory of valuable items in your home.
If you, your family, or pets cause injury or damage to others, liability coverage protects you from lawsuits and legal costs.
For example, if a tree from your yard falls on your neighbor’s car, you’ll likely be covered.
Liability limits often start at $100,000, though this is not universal. It won’t cover damage you do to yourself or your own home.
Related – Normal Disaster Help vs. The New PPP Program
Basic homeowners insurance is notorious for excluding:
Sometimes, you may be paid for wind damage but not interior flooding caused by the same storm. Know what’s excluded.
What you don’t know can cost you a lot.
Contact the Loan Brothers at Mares Mortgage today to better understand your homeowners policy and protect your investment.
Related – A Guide for Avoiding First-Time Home Buyer Mistakes
