You’ve just gotten the keys for your first home. You never thought you would get the chance to see the day. Before you get too excited though, there are some things that you need to think about.
We’re talking about homeowner’s insurance. You spent a lot of money on your home so you will want to have it covered in case something happens. We understand that since this is your first time buying insurance, you probably have a ton of questions.
Don’t worry because we will go over them all. Here are a few common homeowner’s insurance questions and their answers.
1. What Even is Homeowners Insurance?
To put it short, homeowners insurance is casualty and property insurance that covers you if someone breaks into your home and steals something or if certain natural disasters sweep through.
If you don’t have it then you’ll end up having to pay for any damages out of your own pocket but we’ll get into that a little later.
2. It Only Covers Some Disasters?
Yes, homeowners insurance doesn’t cover every single natural disaster out there. You’ll be safe if of theft, fire, lightning, hail, windstorms, an explosion, smoke, vandalism, vehicle collisions, and mold depending if it’s caused by neglect.
It won’t cover you for a flood, earthquakes, war, power failure, nuclear explosions, intentional damage, and neglect. If you’re worried about earthquakes or floods, you can get a separate insurance policy for them. In fact, if you live in an area prone to flooding, you must buy flood insurance before you can even get a mortgage.
3. Is Having It Required by Law?
Unlike cars, you’re not required by the law to have insurance to own a house. There are a few circumstances that will cause you to have to get it though. For example, if you finance your house, your lender will not want to lose money on their investment.
Don’t be surprised if they make you get homeowner’s insurance before moving forward. Again, if you live in an area that sees a lot of floods, you may be required to get flood insurance before you can get a mortgage.
4. Why Do I Even Need it?
As you’re no doubt aware, houses are expensive. If you buy one and then don’t get insurance, you won’t be able to get any compensation if say your home catches fire. This means you’ll be forced to rebuild your home and replace all your things out of pocket.
Not many people have that kind of money on hand so it’s better to be prepared now than sorry later when a criminal breaks in and steals your things.
5. Will it Replace My House?
If your home is wrecked by a disaster that is covered by your insurance you’ll be able to get enough coverage to start the building blocks toward fixing your home up. That being said, there are some coverage limits.
So if your home is covered for up to 250,000, you won’t be able to get any more than that toward fixing the home. You may get even less depending on the fine print in your policy.
6. What Kind of Policies are There and Which is Better?
There are two different types of policies for you to choose from. One is a replacement cost policy. Under this, you’ll get coverage depending on how much it will cost to rebuild or repair your home when it’s destroyed.
The second one is an actual cash policy. Your provider will account for any drop in the value of your home before giving you anything toward fixing it. Which one is better depends on how much you’re willing to spend and how much coverage you need.
If you go with a replacement homeowners policy then you’ll get more coverage for your home and the things inside it. Actual cash homeowners policies won’t give you enough money to cover the entire reconstruction of your home. They are cheaper though so there’s that.
7. How Much Homeowners Insurance Do I Need?
How much homeowners insurance you need varies from person to person. It’s mainly dependent on the total value of your home and all the things that you own. You want it to be enough where you can pay to rebuild and replace your stuff after all.
The best thing that you can do is to take an inventory of everything in your home and tally up how much it would cost to replace it all. That will give you a starting idea of how much you need to have.
8. Where Do I Start in the Event that I’ve Lost Everything?
This is where we’re going to go in a little more depth about that list we were talking about above. It’s the thing that’s going to help you the most in the event your house is destroyed or someone comes in and steals everything.
The first thing you’re going to want to take inventory of is the little things. This includes your shoes, furniture, drapes, dishes, etc.
After you’ve got all that down it’s time to start with the big appliances. If it’s possible, attach any of your receipts or serial numbers to the list. Make a copy of all of this and keep one with you in a secure location and give one to someone that you trust to hold on to it.
Answers to Homeowners Insurance Questions That You Should Know About
If you’ve just bought a new home, it’s a good idea to attach some homeowner’s insurance on to it. While it’s not required for you to get a mortgage on a house in most cases, it will cover you in the event your home becomes the victim of a fire or someone breaks in.
So, go ahead and call your insurance company today to ask them any burning homeowners insurance questions that we didn’t cover here. You’ll be glad that you did.
After you’ve insured your home, it’s time to furnish it. Visit our blog for a few home decoration tips and more.