Updated Nov 1, 2022
Homeowners insurance helps protect your investment and is often a requirement of mortgage lenders. From fires and natural disasters to burglaries, you never know when something might happen to your property, and it’s crucial to be covered if and when an incident occurs.
Here’s what you need to know about shopping for homeowners insurance.
After paying your monthly or yearly premium, homeowners insurance covers property and structural damage that results from fires, natural disasters, and some other situations out of your control. Beyond structural and property damage, your insurance will cover:
Taking home inventory is another important step in making sure your plan offers enough coverage to replace your belongings. Most insurance agents will use a cost estimator to determine replacement estimates in the event that something happens to your home.
You can go beyond your policy’s standard coverage by adding an insurance rider—an add-on provision that provides additional benefits to the policyholder at an additional cost. Riders can cover additional valuable items such as fine art and jewelry that may not necessarily be covered under personal property. They may also be added to cover heating and ventilation systems or other high-value household appliances that can be expensive to repair or replace.
Most homeowners insurance policies will not cover flood or earthquake damage—policies for these will need to be purchased separately if you live in a high-risk area where they are mandated or if you wish to purchase insurance on your own to protect against these events.
On average, homeowners insurance will cost $1,000–$3,000 each year. If you have a mortgage, homeowners insurance is almost always required by your lender. In many cases, the monthly insurance cost will be added onto your mortgage payment and paid through the lender. The price of your homeowners insurance will vary depending on:
Insurance providers may offer to share different rate quotes with you based on the amount of your deductible—the amount that you personally would pay out of pocket prior to the insurance company footing the bill. You can save money by choosing a homeowners insurance with a higher deductible, though many lending companies won’t allow a deductible higher than $1,000.
Additionally, you may qualify for a better rate if you have a higher credit score. Insurance companies will likely pull your credit report to verify your credit score. More affordable rates are often available to those with higher credit scores.
If you’re already paying for car insurance, you may be able to get discounted rates if you purchase your homeowners insurance through the same company. The savings per insurance premium can be as much as 5%–15%. Other discounts are sometimes available based on age, length of coverage with the insurance provider, or if you have safety features such as an alarm system or smoke detectors in the home.
Price shouldn’t be the only factor you consider when selecting the best homeowners insurance policy. Most important is the amount and type of coverage.
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