What Is Home Owners Insurance?
Homeowners insurance is an insurance policy that covers losses and damages to an individual’s home, including furnishings and other assets located in the house. It is an insurance policy that provides liability coverage against accidents in the home or on the property.
Choosing a home insurance company is arguably one of the most important financial decisions you would have to make as a homeowner. It not only covers your house and belongings, but it also insulates you from legal bills and lawsuit judgments against you for incidents covered by the policy. It is estimated that 97% of homeowners insurance losses are as a result of property damage
Finding an affordable but encompassing home insurance policy is worthwhile but also stressful. You have to navigate the murky waters to finds that home insurance policy that befits you. The importance of choosing an appropriate home insurance policy is better cognized when we consider the fact that home insurance costs have continually been on the rise. The National Association of Insurance Commissioners states that home insurance rates are up almost 47% in the last ten years alone.
Though the average cost of home insurance is in an upward trend, there are still various strategies you can use to lower your home insurance costs. These strategies are listed below.
How To Choose The Right Home Owners Insurance
1. Location Is A Big Deal
Depending on where you live, the average cost of home insurance can range between $400 and $3,000 per year. These costs are affected by the insurance risks peculiar to each state. States which are prone to natural disasters have the highest home insurance rates. Conversely, states (or countries) that have tranquil weather have low home insurance premiums. As such, when purchasing a home in Oklahoma and Kansas which is bedevilled by tornadoes, for example, bear in mind that you may be laying three times as much the going rate in states such as Pennsylvania or Vermont.
2. Research The Cost Before Buying
The maximum look before you leap applies in this case. Prospective homeowners should price in the cost of home insurance while shopping for houses. Factors such as the age of the home and the materials used in building, wiring and plumbing determine insurance costs determine its risk for fire, termites, rotting and other dangers. Houses made of wooden frames housing are more vulnerable than brick houses — and thus more expensive to insure. The area in which the house is located also plays a huge factor in determining insurance cost, as stated previously.
3. Age Is A Number That Counts
Age is a number that counts for or against your home when applying for homeowners insurance. Older homes are more likely to be priced higher because of their structural wear and tear, which increases the risk of damage. Older homes are more likely to have issues with plumbing, wiring and general maintenance.
4. Run A Litmus Test On Your Insurer
Before signing the dots, it is important you run some checks on your insurer. The financial strength of the insurance company is an important factor while shopping for a good home insurance policy. Financial strength is a sure way of evaluating if an insurer meets that standard and has the capacity to pay claims when the occasion arises. Another litmus test you can run on your insurer is assessing the feedback they get from their present clients. If you choose a home insurance company that’s known for making its customers happy, you would definitely feel more secure and confident dealing with them. Sites such as Consumer Reports survey members about their experiences with homeowners insurance.
5. Avoid 'Dangerous' Attractions
When buying houses, as much as possible try to avoid the ones that have dangerous attractions. Features such as swimming pools, tree houses, trampolines, skateboard and bike ramps, are viewed as high risk because of their potential of causing injury or death, which results in lawsuits against the owner. By avoiding them, you position yourself for cheaper home insurance rates.
6. Market Value Is Not Insurance Value
Most homeowners tend to mistake the value of their homes for its insurance value. The market value of a home is based on its worth when selling or buying it. On the other hand, the insurance value of a home is the amount of coverage needed to rebuild the home if it’s destroyed by a catastrophe such as a tornado. The insurance value of a home could be more or less than your home’s real estate market value.
7. Bundle Your Home Insurance With Others
To get good offers, you can bundle your homeowner’s insurance with your other insurance policies. Having your insurance policies such as auto insurance or boat insurance drawn up by the same company is one of the best discounts you can grab, often between 5% to 25%.
The key to getting a good deal on your homeowners’ insurance is tailoring your insurance to your own needs and looking for an insurance company that can cater to them. Everyone has unique needs, so what works for one person may probably not work for you.
Secure Your Home For Lower Rates
This is a no-brainer, but most homeowners don’t realize this. The more secured your house is, the lower premiums you would pay on your home insurance. Insurance companies love low-risk venture because it allows them keep your premium payments- after all they are in the business to incur profit. The amount of the discount varies depending on the precautions taken, your insurance company and state where the property is located.
Several insurance companies give discounts if your home is secured. It doesn’t have to have tight security like Alcatraz, but make sure that you out the basics in place in the event of a fire or theft. Some steps to safeguard your home against damage and theft include:
Installing smoke detectors, home sprinklers, and a fire alarm system that alerts the local fire department. Others include installing a burglar alarm that alerts the local police, fixing deadbolts on exterior doors or using smart or connected home technology that alerts you when a break-in is occurring.
Safety Insurance offers a 16% fire alarm discount; Nationwide provides discounts of gated communities, protected homes, residence cards and key-lock devices; and Farmers Insurance offers a discount if members of the household have not smoked for the last two years.
If you reside in areas prone to natural disasters, such offers are not off limits to you. You can make your home more resistant to windstorms and other natural disasters by adding storm shutters, reinforcing your roof or buying more substantial roofing materials to save on your premiums.
A measure of caution should be applied here. Not every type of home security system qualifies for a discount. So before you spend money on a new system, confirm with your insurance agent.