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What to know about Homeowners Insurance

Buying a new home is an exciting experience and with a little more preparation, can be even more enjoyable. Before you start looking be sure you put homeowners insurance at the top of your list. Most lenders will not provide a mortgage without it, and while the cost of insurance is small compared to other home buying expenses, some homes cost more to insure than others.

Items That Affect The Cost of a Homeowners Policy

• Square footage of the home, plus expensive separate structures like a detached casita or garage.
• Current construction expenses.
• The condition of the home, Fire Hazards such as overgrown trees, and cracked walkways.
• The condition of the plumbing, electrical and heating systems. Poorly maintained or old systems can wear out and become hazardous promoting fire or water damage.
• Credit history. Many insurers offer lower rates to those who have demonstrated the ability to handle their finances responsibly.

What your Homeowners Policy will cover

• The average policy will cover damage from Theft, Fire, Sudden Water Loss (flooding is a separate policy), Windstorm, Hail, Riots, Explosion and other sudden and unexpected losses.
• Replacement of your personal property.
• Additional living expenses if you are vacated while the home is under repair.
• Liability (up to policy limits, plus your Umbrella coverage if you have it) coverage if you, or members of your family, or pets hurt other people or their property.

Once you have found your home, it is advisable to ask the seller for a loss history report on their home. This “Clue” or A-Plus report will disclose any insurance claims filed over the past five years. Some insurers (at no cost) can provide an “experience letter” which will give the same information as the Loss Report for the period of time they insured the home. Depending on the severity of the loss and whether the issue was corrected, could determine if the home qualifies for a preferred or standard premium.

Homeowners insurance cost can be lowered by considering higher deductibles. The higher the deductible, the lower the premium. Don’t be misguided by “cheap prices” which often sacrifice coverage. Make sure your policy gives you the proper coverage to replace your home and belongings or protect your assets in the event of a catastrophic situation.

Expert advice by:
Greg Geryak
Farmers Insuance
http://www.gregjgeryak.com/

Posted on March 1, 2004