Your home is the most important and the most expensive purchases you’ll ever make, so it stands to reason that you’d want to protect it against loss. Homeowner’s insurance offers this protection. If you’re a first-time home buyer, insurance could seem tricky or intimidating. Here are some tips on how to buy homeowner’s insurance.
Why You Need Homeowner’s Insurance
Homeowners who have a mortgage are required by the lender to have home insurance so they can protect their investment in the case of a loss. However, homeowner’s insurance is important even if you don’t have a mortgage. Whether your home is damaged by vandals, a severe storm, or completely destroyed by a fire, you’re going to want to know that you have insurance to help pay for repairs or replacement.
How Much Will it Cost?
Although insurance companies can generally provide you with the average homeowner's insurance per year rate, the cost of homeowner insurance can vary by the following factors.
- Appraised value of home: how much it would cost to replace your home in case of loss.
- Claim history: past claims can cause higher premiums.
- Location: several factors, for example, close proximity to fire departments lower premiums, bad neighborhoods raise them.
- Age of home: new homes are generally cheaper to insure.
- Additional factors: specific dog breeds or a swimming pool can increase your insurance premiums.
The average homeowner's insurance per year cost, according to the Federal Reserve Bureau, is anywhere from $300 to $1,000 per year.
How Do You Get Started?
One of the most important things to do before you buy homeowner's insurance is shop around. There are dozens of insurance companies out there, and they’ll all promise they have the best homeowner insurance rates. Compare quotes so you get the best deal because you want a policy that’s affordable. Once you’ve determined which companies offer the most affordable insurance rates, compare the price for the type of coverage you’re getting.
Here are the basic types of coverage you’ll need to have:
- Liability: protects you in case of a lawsuit or injury or accidents to others
- Dwelling: covers your home against all-covered dangers
- Personal property: helps repair or replace the contents of your home
- Additional buildings: covers sheds, detached garages, or other buildings on your property
- Additional living expenses: pays for living expenses if you can’t live in your home while it’s being repaired or replaced
How to Make Sure You Have the Best Policy
It's important to find the most economical homeowner insurance policy with the broadest coverage possible for the rate you can afford. Here are things to look for in home insurance.
- Cost
- Customer service
- Good claims history
- Adequate coverage for the size and condition of your home
- Affordable deductible
If you’re lucky, you’ll never need to make a claim on your home insurance, but you want a company that will be there to help and pay the claim as quickly as possible if the need arises.
