Home Insurance is a necessary part of buying a house. In almost all states, there are some minimum levels of home insurance to select from, called types, which can be purchased by an individual. An HO-3 statewide coverage provides personal liability protection and reimburses you for damage to specifically named belongings if a third party is injured on your property and you are sued by that third party. It is recommended that the buyer buy more than the minimum required by law so that if anything should happen to your stuff, you will not lose everything.
You may decide to get only the minimum insurance required by law if you are very sure of the value of your possessions. If you are insuring many possessions, it makes sense to get more than the minimum required coverage, particularly if those possessions are of substantial value. Some states require that a home insurance policy contain specific perils that could cover your possessions in the event of a fire or flood. If your possessions are not covered because of this requirement, then you are better off purchasing the additional coverage that would have been mentioned as an add-on to the basic home insurance policy. In addition, some states have imposed limits on the number of perils covered.
Contents coverage on homeowners insurance policies is designed to reimburse you for your personal belongings, such as jewelry, antiques, home office equipment and furniture, in the case of a home fire. You may want to check with your homeowner’s insurance agent to make sure that certain items that are critical to your well-being are covered. Some policies cover the cost of replacing these items. Others require you to replace them within a set time period after a fire. Still, others may help pay for you to use as a storage facility to store your belongings while they are being repaired or replaced.
Homeowners should also consider the deductibles that will be assessed against them when they take out a homeowner’s insurance policy. High deductibles may help keep your premiums from being so high. But you must remember that the deductible is the amount that you pay first before the coverage amount kicks in. So, you will need to budget your monthly premium payments accordingly.
The property that you own is also taken into account when insurers figure out the rates for your home insurance policy. The insurer will consider the appraised value of the home as the replacement cost. It could be higher or lower than the actual cash value, which was determined by your home appraisal. This difference between the actual cash value and replacement cost is what your insurer uses to set your rate.
And finally, consider how much you are willing to pay for your homeowner’s insurance. There are several limits that you can set for your deductible amounts and the amount of coverage that you want. You can also have limits for your total premiums, the replacement cost and the limits on the items that are covered. All these factors will influence your homeowner’s insurance coverage and how much you are ultimately paying for your policy.