When preparing to buy a home, it’s important to also factor in the cost of homeowner’s insurance. It’s also important to have a clear understanding of what is required when it comes to homeowners’ insurance and what you need to have covered in order to be properly financially protected. The following are four things that every homeowner should be aware of when picking out a homeowners’ insurance policy:
- The Amount of Coverage – When deciding how much coverage you’ll need, consider how much it’s going to cost to replace your home. Purchasing too little coverage can lead you into a financial bind if anything were to happen to your home, while buying too much coverage is a waste of money. You’ll also want to consider how much it would cost to rebuild their entire home as well as the value of the contents of their home. Additionally, you’ll need liability coverage in case anyone is injured on your property.
- What’s Typically Not Covered – One of the biggest mistakes a homeowner can make is assuming they know what is and what isn’t covered without double-checking. This can lead to having to pay for damages out of pocket – simply because the homeowner was unaware that additional coverage was needed. Most standard homeowner’s insurance policies do not cover earthquakes or floods, which means separate coverage needs to be purchased to protect against those events. Additionally, most standard policies won’t cover valuables such as artwork and jewelry unless additional coverage is purchased.
- The Deductible – The deductible is the amount of money that the homeowner has to pay out of pocket if something happens to their home before they can collect on insurance. For example, if the deductible is $1,000 and there is $15,000 worth of damage to the home, then the homeowner is required to pay $1,000 of his or her own money before the insurance company provides the other $14,000. It’s important to know what the deductible is and to set that amount aside in case something was to happen to the house. If the homeowner doesn’t have enough money to cover the deductible, then the insurance company isn’t going to pay out. Homeowners that want a lower deductible can choose to pay higher rates.
- The Rates – The rate is the amount of money that is paid to the insurance company on a monthly basis. Insurance companies offer different rates, which is why it’s important for homeowners to shop around and compare prices. Rates will also vary on a number of different factors. These include the amount of additional coverage you purchase, the value of the house, the safety of the neighborhood, the vulnerability of the house to certain elements and more. For example, if the house is in a neighborhood notorious for theft, rates may be more expensive. There are a number of things that the homeowner can do to bring the rates down as well. This includes installing certain safety features, such as a home security alarm system, a fence, stronger locks and more. Homeowners can often save money on their rates if they combine different policies with the same insurance company as well, such as by getting homeowners insurance as well as health insurance or auto insurance through the same company. Homeowners that want lower rates can also choose to have a higher deductible.
Before you start shopping for insurance, you’ll need to shop for your home. Start searching for your next Colorado Springs home or contact Park Avenue Properties of Colorado Springs to discuss what you’re looking for today!