The top-ranked Realtor reminds homeowners it’s crucial to get the best home insurance for each property. It provides sufficient coverage to cushion homeowners financially when perils or mishaps occur. And the best policy also keeps homeowners from spending big on unreasonable insurance premiums.
The problem is many homeowners don’t fully understand home insurance. As a result, they either get insufficient or unnecessary coverage. And both may lead to unnecessary costs.
That’s why you should know more about home insurance policies before getting one today. You may also talk with the best Realtor for advice that suits your unique situation.
What is Home Insurance and How it Works
In a nutshell, home insurance is financial support that covers particular perils which cause damage to your home. That includes damage to your home’s exterior, interior, and belongings in the property. Some home insurance may cover expenses for injuries too.
For instance, a fire accident has damaged a part of your kitchen. Your home insurance can cover repair expenses to the damaged structure and furniture in the area. It may also cover the repair or replacement of kitchen appliances when applicable.
The thing is that your insurance policy must cover particular perils or incidents for it to take effect. You must also pay the premium rates regularly to avoid the termination of your insurance policy.
Following the example above, your insurance policy must include fire accidents in its list of perils to cover the damages in your kitchen.
Consult the top-ranked Realtor for a better explanation of how home insurance policies work.
Overview of Home Insurance Coverage
As mentioned above, your home insurance must have sufficient coverage to take effect in a particular event. That’s why know the perils included in an insurance policy before getting the package. Here are common perils that homeowners’ insurance packages carry:
- Vandalism and malicious mischief
- Fire accidents
- Falling objects
- Wear and tear of appliances
- Car crash
- Power surges
- Volcanic eruption
Insurance providers list the perils included and not included in each package. That’s the time you may select a package that suits your needs.
An insurance policy suits you if it includes perils that are likely to occur on your property. For example, you don’t need volcanic eruption coverage if you are far from a volcano.
However, you may need to add more perils if necessary. For instance, you need flood insurance if you are in a waterfront area.
Common Home Insurance Types
These are the three types of house insurance policies today:
1. HO-5 Policy
This policy is the most comprehensive package as it covers almost all perils. However, it is usually available only for houses in superior condition and properties in low-risk places.
2. HO-3 Policy
Ho-3 is the most popular insurance policy. It provides sufficient coverage for almost all perils aside from floods and earthquakes.
3. HO-2 and HO-1 Policies
These policies include only a small number of perils. They are the most affordable, but you would likely experience mishaps these policies won’t cover.
Ask the top-ranked Realtor about which of these types fit your situation.
Understanding Liability Limits
Always remember that house insurance policies impose a limited coverage amount. Most packages only allow homeowners to get up to $100,000 of coverage.
The thing is that you may increase the liability limits by paying more for the premium. So, be sure that additional cost is worth paying for in your situation.
Home Insurance is a Requirement for Mortgage Loan Applications
The next thing to remember is that most lenders require borrowers to carry a house insurance policy when applying for mortgage loans. It’s because lenders want to ensure you can keep the property in good condition, so they can sell it if you default on the loan. Having home insurance means you will get financial support for repairs if necessary.
Moreover, lenders want to ensure that you are paying the home insurance premium for the same reason. So, they may ask you to attach your insurance premium payment to your mortgage payment. The lender will put the insurance premium in an escrow account to pay the insurance provider.
Talk with the Top Ranked Realtor when Getting a Home Insurance Policy
You sure will stumble on the necessity of securing home insurance when you own a house. And you have to make an educated decision to get the best policy for you. Remember that you need sufficient coverage without spending too much premium costs.
That’s why you should contact the top-ranked Realtor for some guidance.