Get the right homeowners insurance policy by asking these important homeowners insurance questions to your agent.
Purchasing a new home is like a dream come true. But you need to make sure that you have homeowners insurance before you clear things out with your mortgage lender.
But only getting a homeowners insurance, is not it. You need to make sure that you are getting a perfect policy for your home at a reasonable rate.
Getting the right homeowners policy is only possible if you ask the right questions. We will help you to understand the homeowners insurance questions you need to ask and we’ll also provide you with the answers to help you choose the right policy suited to your needs.
So let’s get started!
Homeowners Insurance Questions You Need to Ask Your Agent
Here are some Homeowners Insurance questions with their answers to help you get the right coverage.
1. Is Homeowners Insurance Required By Law?
The clear answer is – NO.
A homeowners insurance is not required by law. But banks and mortgage lenders require that you have homeowners insurance until your loan is paid off.
Also, you will be at risk if you don’t have a homeowners insurance. What will you do if your home or your belongings in your home gets damaged due to some reason?
This is why you should always have homeowners even when it’s not required by law.
2. Why Do I Need Homeowners Insurance?
You need a homeowners policy because disasters don’t inform before coming and they also don’t discriminate. Houses are expensive and you should always protect them to stay away from any financial crisis if your home gets destroyed.
3. What Is Covered Under A Standard Homeowners Insurance Policy?
Mostly, a standard homeowners policy consists of 4 main types of coverage.
- Dwelling coverage – This coverage is designed to cover the physical structure of your home.
- Personal Property Coverage – Your personal possessions inside your home are protected by this coverage.
- Liability Coverage – If someone gets injured in your home, this coverage covers the cost of medical treatment for any bodily injury sustained by that person.
- Additional expenses Coverage – This coverage covers the cost of any additional living expenses that may come up if you get displaced from your home. For eg. – Cost of staying in a hotel, transportation, and other such costs.
This is what is covered in a standard homeowners policy. Some insurance companies also offer additional coverage that you can add to your standard policy.
4. Who Decides The Value Of My Property?
Generally, states have laws that decide how losses will be calculated. This may vary from state to state. So the same insurance company will use one method to calculate the loss in one state and some other method to calculate the loss is some other state. Here are some common methods.
- Actual Cash Value – This refers to the replacement cost of the item minus the depreciation in its value. For example, if you bought a TV set for $500 and after 5 years, it gets damaged, then you will be paid the depreciated value, not the value at which you bought that TV set. So suppose its value depreciated by 50% in 5 years before getting damaged, then you will be paid $250 for that.
- Replacement Coverage – This coverage will pay you the full replacement value without deducting it for any depreciation, but it has a certain limit on the maximum amount. Suppose the same TV set gets damaged after 5 years, then you will be paid the amount at which that particular TV set is selling today. If it’s still selling for $500, then you will get the full 500 dollars. And if it’s selling today at $250, you will get 250 dollars.
- Extended Replacement Value – As the name suggests, this coverage provides additional protection up to a certain limit. This comes in handy when there is a sudden price increase, such as an increase in construction costs.
5. Are Disasters Covered Under Homeowners Insurance?
Yes. Several and most common disasters are covered in your homeowners’ policy. Examples include fire, windstorm, hail, lightning, smoke, explosion, theft, vandalism, riot, and vehicle collision.
If you talk about major natural disasters like floods and earthquakes, then they are commonly excluded. They are sold as a separate flood insurance and earthquake insurance policy.
Some other disasters are also not covered like power failure, war, and nuclear explosion.
6. Am I Fully Covered If Someone Gets Injured In My Home?
Your homeowners insurance liability coverage section will show you the maximum amount that your insurance company will pay in legal bills if you get sued by the injured person.
If a visitor gets injured by falling or slipping, make sure you have enough coverage to pay for the medical or legal bills.
Get in touch with your agent to get the right amount of coverage.
7. How Much Homeowners Insurance Coverage Do I Need?
This is one of the most common homeowners insurance questions people have in mind.
Generally, you should think how much would it cost to rebuild your home if it gets destroyed and then decide about your coverage limits.
This sometimes evaluates to the current market price of your home but it also may go up.
If you have an old house or if construction is costly in your area, consider insuring your house over market price.
8. Does It Cost Less To Insure A New Home Instead Of An Old One?
Construction techniques and safety features have improved today due to advancements in technology.
Due to this, newly constructed homes cost less to insure compared to old homes.
But don’t get disappointed if you have an old home. If you make your old home compliant with the current building codes or if you renovate your home, you can lower your insurance premiums.
9. How Can I Lower Homeowners Insurance Cost?
This is also one of the key homeowners insurance questions.
And why not? You are totally right if you are thinking to save money.
The most common way to lower your homeowners insurance cost is by choosing a higher deductible. Choose a deductible as high as you can afford before the insurance comes to play.
It’s simple – The higher the deductible, the lower the premium.
Some other ways to lower the premiums are also available such as bundling home insurance with your car insurance or asking for discounts if you are eligible to get some.
10. What Are Some Homeowners Insurance Discounts?
Many insurance companies offer low-cost homeowners insurance to their 1st-time customers.
You can also take some steps in order to reduce your homeowners insurance cost like adding security systems to your home like an anti-theft alarm.
If you are a non-smoker or a retiree, it also attracts some discounts.
11. How To Make Homeowners Insurance Claim Process Easier?
One of the easiest ways to make your claim process smooth is by providing a solid home inventory to your insurance company.
A good documentation always makes things easier. This is also true for insurance. If you have documented the list of your personal property, you will save a considerable amount of time in the claim settlement process.
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