There’s always a lot to think about when you’re getting ready to move into a new home.
You’ve got to start unpacking your essentials, inspect the plumbing and electrical work, arrange furniture, get your bills in order, call the internet provider; it can get a little overwhelming if you’re doing everything at once. One thing people forget to prioritize is getting homeowners insurance.
Should something happen to your home or any of the possessions in it, your homeowners insurance plan could be the thing that saves you or leaves you hanging. Before you blindly choose a plan, there are some things that you should know.
Today, we’re going to tell you the 5 things that you need to understand before you purchase homeowners insurance. You don’t want to end up with a plan that isn’t right for you, so read on and let us guide you.
1. Find the Right Policy For You
There are numerous homeowners insurance policies that you need to be made aware of before you choose one. You’ll have to consider various factors when making this decision, like what kind of neighborhood you live in and the climate in your region.
You’ll probably look at two main insurance policies. One is the HO-3 policy or “perils” coverage, which will protect you against all disasters that are noted in the terms. If the perils that ruin your possessions aren’t noted in the terms, then you can’t make a claim for them. It’s as simple as that.
The other popular policy for homeowners is H-05, which is an “open perils” plan. This is a more expensive plan that offers you broader protection against disaster. People usually go for this plan if they’ve got a lot of valuables in the house that could be subject to damage or theft.
Basically, between H-03 and H-05, you’re looking at a basic plan and a premium plan. To find the right policy for your home and possessions, consider the worth of your stuff vs. the monthly cost of the plan.
2. Not All Damage or Belongings Will Be Covered
When you choose a plan, you’ll also have a choice of how much coverage you’ll receive when you make a claim. You can set the following limits:
- Cash value coverage will repay you for the lost or damaged property, up to the policy limits. If there’s a serious disaster, you probably won’t get enough help to rebuild a home or replace expensive property, so it’s the cheapest option.
- Replacement cost coverage is standard with H-05 policies. It allows you to fully replace the property that you’ve lost in the disaster, up to the policy limits.
- Extended replacement cost coverage is the most expensive coverage. If there’s a major disaster and your home is destroyed, it would pay to restore your home to the condition it was prior to the disaster. It’ll even do so if it’s above the policy limit.
Most policies cover a good deal of damages, but there are some things that you can’t make a claim for. It would usually state, in the terms, that the damage is sudden and unavoidable, which is why things like flood insurance are usually purchased separately.
When you live in high-risk areas that are prone to tornadoes, wildfires, or hurricanes, you might also have to pay a separate deductible.
Likewise, not all expensive belongings are fully covered. Your electronics and jewelry will typically only be covered up to $2,000, so if your $30,000 watch gets stolen, you’re out of luck.
3. Your Actions Matter
When you look at the ultimate guide to homeowners insurance, you’ll see that the homeowner is responsible for a lot. You’ll have to perform regular maintenance to ensure that your home is vulnerable to theft or unsafe in the event of a natural disaster.
Things like overhanging trees, old roof tiles, backed up eavestroughs, and anywhere leaks might occur should be taken care of. The insurance company could even deny your claim if they deem that you’ve been neglecting your home.
While the care you put into your home reflects how your claims play out, so too does your credit history affect the monthly rate that you pay. If you’ve got poor credit, you’ll pay as much as double for your premiums as someone with good credit.
4. Don’t Always Make a Claim
Of course, you never want to have to use your insurance because that means something bad has happened. In fact, you should altogether refrain from making a claim unless it’s completely necessary because doing so may result in your rate going way up.
Stats show that when someone makes a claim, they’re more likely to make more claims down the road. For that reason, they increase the cost after one claim in order to adjust for this stat.
The bottom line is that you should avoid making small claims and reserve your homeowners insurance for the event of large-scale damage.
5. You’ll Have to Keep Records
When you get homeowners insurance, you’ll have to create an inventory list of all your belongings. Insurers can be stingy, so you need to have well-kept records of everything so when you make a claim, it’s a cut and dry process.
Make a spreadsheet of all the valuables in your home and their value. Include pictures and make note of the condition that they’re in as well.
You should also take pictures and videos of each room and the innards of every closet and drawer. This will help you remember everything when you start a claim.
Getting Homeowners Insurance Is Important
Now that you know a little bit about what homeowners insurance is like, you can make an educated decision on your plan and coverage.
Don’t delay getting homeowners insurance because when disaster strikes, you’ll be left wishing you were more proactive. Do some research on different insurers and compare different plans, then get the plan that makes the most sense for your needs. After that, you can rest easy knowing your belongings are covered.
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