What does homeowners insurance cover? Do you need it? How much does it cost? Does the value of your home affect your premium? These are some of the most common questions about homeowners insurance, and we’ll help answer them in this guide to everything you need to know about homeowners insurance and how to get it.
Home insurance basics
Homeowners insurance, or simply home insurance, covers loss and damage to your house, as well as the assets inside. In most cases, homeowners insurance will cover your possessions up to a certain dollar amount. When you purchase homeowners insurance, you'll typically have a deductible that you must pay out of pocket before the insurer will pay for anything. The deductible could be an amount that's a percentage of the property value or something set in dollars. For example, if you have a $1 million property with a $500 deductible for losses due to fire and theft, then any losses would be covered up to $500.
What kind of protection do you require?
Most standard homeowners insurance policies include coverage for losses from theft and vandalism, but the scope of the coverage varies by company. For example, some companies may not cover losses caused by floods or earthquakes while others will provide a complete package of home insurance including earthquake protection. You may also be able to purchase separate coverage for these additional perils. Talk to your agent about the type of protection you need before making a decision on which company's policy to buy.
Picking an agency
Bear in mind that, as with car insurance, insurance providers will also take your claims history into account when determining your premium. They’ll want to know how many claims you’ve made in the past five years and what the dollar amount of those claims were. Any claim where you were found liable or at fault may cost you more than if they happened while you weren’t at fault. The number of years you’ve had a policy without any claims also impacts your premiums. If you have been insured for 10 years without any accidents or mishaps, expect to pay a lower rate than someone who has only been insured for one year.
How much should you anticipate spending?
The average cost of homeowners insurance is $1,249 per year, or $104.08 per month, according to the National Association of Insurance Commissioners (NAIC). But there are many factors that can affect your rates. The location and age of your home will factor into how much you’ll pay for a policy. A high-risk area with older homes may charge more than a low-risk area with newer homes.
Where can you learn more about homeowners insurance?
Homeowners insurance is financial protection that you purchase from an insurance company to protect your home, its contents, and personal liability. If your home is damaged by a natural disaster such as a hurricane or tornado, or if it catches fire due to an accident, this coverage will provide money for the necessary repairs. If someone slips on your porch because of snow and falls into the bushes below, causing injuries to themselves, this coverage may help pay for their medical bills.
A basic understanding of homeowners insurance will allow you to know what level of coverage best suits your needs.
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