(Newswire.net — February 18, 2021) — You’re in the process of purchasing a home – congratulations! Now it’s time to look around for a homeowners insurance policy that will cover damages and unexpected situations that may happen to your home.
Most areas do require you to purchase a homeowners insurance policy. In fact, when you go to closing on your house, you are asked to pay for one year of homeowners insurance up front.
Before you choose a policy and commit to it, there are some things you should know.
Shop Around
Just like with any big purchase decision, you should shop around for a homeowners insurance policy. Talk to three or four different insurance companies before choosing to go with one. You may even be in luck as these companies may contact you first thanks to home insurance leads.
Not every insurance company will offer the same coverage, price, or quality of service. Ask your real estate agent, friends, and family for a recommendation when searching for a homeowners insurance policy. Recommendations are better than going with a company you see in a commercial or find on the Internet.
Choosing Your Coverage
This is where buying homeowners insurance can get a little tricky. There are different levels of coverage options available to you, but which one is right for you?
There is a scale of different coverage levels, ranging from HO-1 to HO-5, the first being the most basic and the fifth being the most comprehensive. Make sure you fully understand what will be covered and the stipulations that come with it before agreeing to a policy.
These coverages are based on individual situations and preference – so don’t go with a certain one just because your friend has it. Consider what’s important to you and your current finances before purchasing.
Keep Payments in an Escrow Account
An easy way to make sure your homeowners insurance premium is paid is by bundling it with your mortgage payment and property taxes in an escrow account. Actually, most lenders prefer this option because it’s more reliable and your home’s finances are better organized.
Fully Understand Your Policy
Purchasing any insurance can be intimidating and overwhelming, especially if you aren’t familiar with the jargon that’s used. Familiarize yourself with the key phrases and most important topics.
Some of these common phrases include premium, deductible, rider, actual cash value, replacement cost, and more.
Don’t hesitate to ask questions and sit down with your insurance agent to fully understand what your policy will cover and if there are any exceptions to this coverage. The better you know your policy, the less headache you’ll have down the line when you may have to use it and make a claim.