When you are purchasing a home, you will need to take out a homeowners insurance policy.
This is different from the mortgage insurance that you might also need to pay for. While mortgage insurance protects your lender, homeowners insurance protects your home.
In this post, we will introduce you to homeowners insurance basics. We will explain exactly why you need this type of insurance and what it does and does not cover.
Why is Homeowners Insurance Important?
Homeowners insurance is essential for two reasons:
- To buy a home with a mortgage, a lender will require that you are paying for homeowners insurance.
- Since your home is a large investment, protecting it is important for your financial wellbeing as well as the longevity of the property.
What Does Homeowners Insurance Cover?
There are differences between homeowners insurance policies. Your exact coverage depends on your individual policy. Most homeowners insurance policies cover:
- Lightning damage
- Wind damage
- Hail damage
- Vandalism and theft
This includes damage to your home, other structures (i.e. a shed), and possessions on the premises.
Sometimes, there might be so much damage to your home that you temporarily need to stay in a hotel. Your policy may help to cover expenses associated with that stay.
A homeowner’s insurance policy also includes basic liability coverage in case someone else is injured on your property (or even on theirs, if, for example, your pet was involved).
What Doesn’t Homeowners Insurance Cover?
First of all, the coverage that is available through your policy will be up to certain limits. Past those limits, further damages are not covered. So, make sure you purchase enough insurance for your needs.
Despite homeowners insurance policies covering a significant range of possible types of weather damage, most policies do not include earthquake or flood damage coverage.
You can purchase separate policies or riders to add coverage for both or either of these.
Damage caused by pest infestations, backed-up sewer systems, or wear and tear are not covered either.
Maintaining your home is your responsibility. The insurer’s thinking with pests, sewers, and wear and tear is that if you experience problems with these things, it is likely because you were not doing your part to keep these issues in check.
So, if lightning leads to damage which causes a leak, it should be covered. But if pests compromise your roof or wall and cause a leak, you will be paying out of pocket.
How Do You Find Competitive Rates?
There are some factors affecting your insurance rates that you will not be able to do anything about, such as the neighbourhood where your home is located and its condition when you purchase it.
But you can shop around and check quotes from different companies. Bundling your homeowners insurance with your auto insurance might also get you a discount.
Upgrading your home and improving its overall condition could help you reduce your rates in the future. So can going a long period of time with no claims. You should also consider installing a security system to see if that can get you a discount.
Ask Us Your Questions About Homeowners Insurance
That covers the basics of homeowners insurance. If this is your first time shopping for a home, it is also your first time choosing a homeowners insurance policy. You probably have quite a few questions.
PLC’s friendly team can answer your questions about homeowners insurance along with any other questions you have during the home purchase process. To schedule your consultation now, please give us a call at 954-840-8811. We work with customers in Cooper City and throughout Florida.