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When you buy a home, it's not just your mortgage and property taxes you'll need to pay for every month. Homeowners insurance is one of the expenses of homeownership you'll also need to deal with. Here, we'll talk about how to get homeowners insurance.
Homeowners insurance is insurance that protects you from certain types of property damage. It covers your personal property that's damaged during a fire or weather event. It also protects you in case someone gets injured on your property and decides to sue.
Here's how to find the right homeowners insurance policy for you.
It's important to learn what the limits to your coverage are so you know what you're signing up for. The terms of each policy vary by insurance carrier, but it's good to get a general sense of what to expect.
For example, homeowners insurance won't cover all damage to your home, and it generally won't cover repairs that are the result of wear and tear. Do some research online or ask an insurance agent if you're working with one.
You'll need to give an insurance provider information about your property when you apply for homeowners insurance. Specifically, an insurance agent may ask about:
Also be prepared to answer questions about home features that could impact your rates, like swimming pools and hot tubs.
The purpose of homeowners insurance is to protect you from financial losses, so you'll need to make sure you have enough coverage. Homeowners insurance generally breaks down into these types of coverage:
Your homeowners insurance premium is the fee you'll pay for your insurance policy. Your deductible is the amount you'll pay when you make a claim before your insurance kicks in.
If you have a $1,000 claim with a $500 deductible, you'll pay $500 (your deductible) and then your insurer will cover the rest of the claim.
Generally, the more expensive your premium, the lower your deductible, and vice versa. So you'll need to decide what makes the most sense for your situation.
Here's an example where it could pay to choose a plan with a higher deductible and lower premium:
Each homeowners insurance company sets its own rates. Just like it's important to compare mortgage rates, you should also compare offers for homeowners insurance. You can call insurance companies or use an insurance agent to get quotes for you.
When reading each insurance quote, pay attention to:
Once you land on the right insurance policy, you'll need to sign some paperwork to put your coverage into place.
Usually, you'll have to pay for your first year of homeowners insurance premiums up front. From there, your insurer may offer other payment options -- like quarterly or monthly payments.
There are things you can do to save money on homeowners insurance, like:
Certain aspects of your home, like its location, may drive up the cost of homeowners insurance, and those can't be helped.
Yes -- you probably do. Generally, you must have homeowners insurance to close on a mortgage. Technically, you may be able to dump your homeowners policy once your mortgage is paid off. But that's not recommended.
If your home is damaged or someone gets hurt on your property -- and you don't have insurance -- you won't have financial protection. So it's a good idea to have homeowners insurance for as long as you own your home.
Homeowners insurance is an unavoidable expense of buying a home, so don't let its cost throw you off guard. Rather, account for the cost of a home insurance policy before you buy so you don't get in over your head. A good bet is to use a mortgage calculator to estimate your monthly costs based on the loan amount you expect to borrow and the length of your repayment period. That way, you'll get a breakdown of your expenses. And you can make sure they work for your budget before you buy a home. The last thing you want to do is take on too much house and fall behind on other living expenses.
To buy homeowners insurance, you'll need to:
You should spend the amount it takes to make sure you have enough coverage for your home and your property. The average homeowners insurance policy costs about $1,200 a year. But your insurance costs may be higher depending on the size of your home, its location, and its features. Make sure, at the very least, that your policy's dwelling coverage will pay enough to rebuild your home if needed.
Here are a few ways to save money on homeowners insurance:
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