Why Should You Get A Homeowner Insurance?
No question, owning a home is far more than just being able to live in a place. It's like having your own little fortress: you can grow old there, raise your kids there, and even have some friends move in if you want them to. But even the most guarded of properties will find itself victim to unexpected events that are out of the homeowner's control: fires, floods, vandalism. This is when homeowners insurance takes center stage and offers protection against unforeseen disasters with coverage for the inside and outside of a home as well as property loss or damage. If you live in California and your home is worth more than $500,000, you may need to get a home owner insurance policy with a total loss benefit.
Anyone can see that protecting the possessions they care about is necessary. Thus, homeowners insurance should be considered as an investment in something that will provide different types of value over the lifetime of the policyholder. However, what is it that should guide you in choosing a policy?
The answer is rather simple: the rate. When comparing insurance companies for homeowners insurance, it's important to look more at your situation and not just the amount of money you'll be paying at the end of a year. There's no point in paying more than necessary for your needs; however, even with that in mind there are certain things to consider along with your financial situation. How long have you been in that location? How much coverage do you really need and is there a cheaper way to afford it? For example, if you're married or have an additional family member living with you, you should consider increasing the liability coverage.
In order to obtain the best homeowners insurance rate, there are several things you should do beforehand. First find out whether your home is covered for flood damage or not. Some policies offer optional plans that can increase your financial protection in case of weather-related disasters. If your house is located near a destructive area such as a fault line or a fire zone, then it's best to ask for increased structural hazards protection. The following are the best options for homeowners insurance:
Homeowner's insurance
If your property is located in an urban area, then you should consider getting a homeowner's insurance policy. These policies are available for different price ranges from as low as $20 to $25 per month. Insurance companies offer larger coverage with much higher rates. If you're looking for a less expensive solution to afford, then you can look at a rental property policy with the same coverage as your residential property. This type of insurance will cost you around $500 per year.
Business owner's insurance
If you own a small business, the business owner's policy will offer you the best protection. This insurance can be expensive but it's worth every penny. The coverage level is usually at least $2 to $5 million, and it doesn't necessarily have to be for one policyholder. You can take out multiple policies and pool them together to create a larger insurance package at little cost.
Boat owner's insurance
This type of homeowners insurance is necessary if you have a custom boat or an RV. Your boat won't burn down or get stuck in shallow water so this type of homeowners insurance isn't necessary for all boats. You should consider getting a boat owner's policy if you have a custom model or if you're willing to take the financial risk.
Mobile home owner's insurance
This type of homeowners insurance is available for people who own mobile homes or are living in an RV. Most insurance companies will provide special rates for these types of properties. The coverage is usually $1 million to $2 million; however, you can increase the amount to cover other types of accidents.
Bodily injury and property damage liability coverage are usually included in all types of homeowner's insurance policies. Private mortgage insurance is required for those who take out a home loan or refinance an existing mortgage with more than 20% equity. Most homeowner's insurance policies cover the following types of property:
Personal property coverage
Personal property coverage is usually provided on two types of items: personal effects coverage and personal articles floater coverage. Personal effects coverage provides a claim payment for the loss of electronic equipment, jewelry, as well as clothes and shoes. Personal articles floater coverage covers furniture, furnishings, computers, business equipment, and other valuables that are kept either at home or in your garage. The amount of coverage is usually at least $2,000 to $5,000; however, you can increase the coverage for different items other than jewelry.
Coverage for other types of structures
This type of homeowners insurance covers any structure or room that is detached from the main house. These items include a patio, a pool, a hot tub or spa and an attached garage.
Coverage for additional living expenses
This type of homeowners insurance can be very useful in case an event occurs that will require you to move out of your home temporarily because it's uninhabitable or unsafe to live in. This coverage usually lasts for up to two years and it covers expenses like hotels, storage units and restaurants.
Property coverage
This type of homeowners insurance is for the protection of a structure, but also the property that's inside it. This type of coverage is important because it covers the cost of replacing things like furniture and clothes. You can increase this amount depending on your needs. It's important to note that some insurance companies will only offer replacement cost coverage for certain items.
Additional living expenses
This type of homeowners insurance covers any additional living expenses you might have to pay if you're away from your home due to damage or even a loss in value in case you have to move out. This can apply to any family members who live with you as well.
Personal liability coverage
This type of homeowners insurance covers your legal liability in case you're sued for negligence. A good example is if a child gets into your medicine cabinet and cuts his finger with a razor. This type of insurance will cover the costs of the hospital visit, even if it's not required by law.
Custom tailored coverage
If you own a multimillion-dollar home or business, then it's best to work with an agent who can custom tailor your policy or create an "umbrella" policy. This type of homeowner's insurance provides more than $1 million in additional liability coverage in case someone files a claim against you for negligence.
Conclusion
Some of the best benefits of homeowners insurance are added peace of mind, protection through financial means and not having to worry about it. However, if you fail to properly structure your policy, then you might end up paying too much for it in the long run. The following are some tips to help you properly establish your homeowners insurance policy:
1. Work with an agent who is knowledgeable about different types of homeowner's policies and knows the local laws. When working with an agent who does not know these laws or is unprofessional, then you might end up paying too much for your insurance coverage.
2. Decide on the amount of coverage that's right for you based on your risk tolerance and budget before going to insure anything meaningful.