Homeowners insurance is a fact of life when you own your own home. You want to have something in place to protect your investment should the unthinkable happen, and most mortgage companies require a minimal amount of insurance on your financed property as well. While most insurance companies will try and get you to have all of the available coverage, there are only a few that you really need unless you live in an area that is at high risk for earthquakes or floods. Before you go through the process of purchasing homeowners insurance, you need to be sure to go through the requirements of your bank as well as what you might be at risk for so you don’t end up paying way too much for your insurance policy. For most policies, you can get by with the minimum requirements that will protect your home from any damage that occurs due to most accidents and any failure in the construction of the home.
Fire Insurance One of the main requirements for any homeowner’s insurance policy is fire coverage. This coverage will cover any costs associated with a fire inside the home whether it is a partial loss or a total loss. The cost of your fire insurance will depend on the district in which you live as well as your proximity to the closest fire hydrant and the nearest fire department. If you live in an area where the fire department is on a volunteer basis, or if you have a fireman as a neighbor, this sometimes reduces the cost as well.
Wind damage happens often all over the country. Wind damage is a feature that is often covered in all types of homeowners insurance. High winds can cause damage from objects hitting the home or blowing parts of the structure off that will cost money to be replaced.
Structural accidents or worn out features throughout the home are also generally covered under the minimum homeowners insurance. This includes things like broken pipes that can cause serious damage to the home and require replacement of drywall and floors. Other things that are considered structural are if the foundation shifts creating splits in walls and an uneven foundation that makes the whole home crooked. Through your homeowners insurance, you will be able to call in a contractor of your choice to fix any damage that may happen and the insurance company will either pay them directly or reimburse you for the cost.
The deductible that you have with your homeowner insurance policy will depend on the requirements of your bank. Most banks require that you carry a maximum deductible of $1500 to ensure that if something were to happen you would be able to afford to get it fixed. As with any other type of insurance, the higher the deductible the lower the premium; the lower the deductible the higher the premium.
There is additional coverage that you may choose to purchase if you feel you are at high risk but they are typically not required. Coverage’s like flood insurance will cover any costs associated with flooding that was a result of outside sources such as a river, stream or heavy rains. Earthquake insurance is another optional feature that is good to have for those who live in areas like California where earthquakes happen often but not in other areas where it is rare to experience a damage-causing earthquake.
This guest post was written by Kelly Farabaugh for HomeInsurance.com. Kelly is a freelance writer with a penchant for insurance policies. She enjoys sharing tips and insights on various personal finance blogs.