Finding your house is an exciting time. You spend countless hours researching different properties to find the perfect one that was made for you. Signing the mortgage and getting the keys, you are officially a homeowner.
The process doesn’t end there though. Now you have to worry about things like home insurance. It may seem as simple as signing the package policy and sending money to the insurer each month. It could be if you don’t pay attention to what type of insurance policy you are getting. But the smart way to do it is to research and fully understand the different kinds of insurance policies before picking one.
When you understand what home insurance is, how it relates to you and what you should keep in mind before picking your coverage, you’ll less likely be caught off guard if an accident occurs. You want to get the most coverage possible with your money. So here are a few tips to keep in mind.
Know the Types of Insurance and What They Cover
When you buy home insurance, there are three primary functions behind it:
- Helps cover the cost of repairs to the property (house, yard, any structures included);
- Replace or repair any personal belongings listed;
- Help cover costs due to personal liability issues.
There are two types of coverage plans that are the most popular. The first is an HO-2 policy, also known as the “named-peril” policy. This policy covers a list of 16 perils including:
- Falling objects
The other popular coverage is a more extensive version of the HO-2. The HO-3 plan is called an “open-peril.” This means the coverage is more open except for any exclusions from your insurer.
No matter what type of insurance you go for, there are still damages that are not covered by any. The following disasters and damages are not included under standard home insurance policies:
- Wear and tear
- Nuclear hazard
- Government action
However, you can purchase separate insurance packages for flood and earthquakes. If you live in an area that is prone to high winds and severe weather storms, it is best to look for additional insurance on top of what you are already getting.
Not all Prices are the Same
When looking at insurance packages, you are best off to shop around. Choosing the first policy you find doesn’t mean you are getting it for the best price. You can compare home insurance quotes from different companies across different plans to find the best price for you.
Many factors contribute to the price of your package. Insurers will look at these factors:
- The age of your home;
- Cost to rebuild your home;
- How far your house is from the closest water source;
- Your history of claims and claims in your neighborhood;
- Your coverage and the deductible;
- Fire protection in your city; and
- Any items that are for recreation but can cause serious injuries.
So if you are buying a home for the first time, seriously take a look at home insurance, and what types of packages are available. Shop around between insurance companies and policies before deciding on which one is best for your home.