If you’re considering purchasing a home in the near future, there’s plenty of things you’ll learn throughout the process. One of the subjects will be homeowners insurance, something that all banks or finance companies holding a mortgage require. Even if you paid cash for your home, having an insurance policy to cover your investment is always smart. And here’s exactly homeowners insurance covers among other important information you’ll be glad to know.
Does Homeowners insurance cover that?
There are typically three different types of homeowners insurance coverage including actual cash value, replacement cost, and extended replacement cost value. Actual cash value policies cover the cost of the house and your belongings after depreciation is factored in in the event of theft, vandalism, covered weather events, and fire, but not in the event of flooding, poor home care, or earthquakes. Replacement cost policies reimburse you for the loss of your home and belongings based on the cost to replace them without depreciation considered. Extended replacement cost value replaces your home and belongings and considers inflation
What isn’t covered by homeowners insurance?
Almost as important as understanding what your policy covers in knowing what it doesn’t. Usually, homeowners insurance policies do not cover damage incurred by acts of God. These situations include natural disasters like flooding from a hurricane or an earthquake, and acts of war. Policies usually list the very specific occasions in which homeowners cannot depend on coverage in the policy documents. It pays to read those documents carefully.
Saving money on insurance
With homeowners insurance, you get what you pay for. But there are some cost cutting tips that you can consider when shopping for a policy. Consider installing a security system, insurance companies like those. Consider a higher deductible. Request a quote from a company with whom you have other insurance policies and you might score a multi-policy discount. And regularly review your policies to ensure you’re getting the best price for your coverage.
Spotting the best homeowners insurance companies
You’ll definitely want to look for an insurance provider with a long track record in the business. It’s also nice to experience a friendly face on the other side of the desk, or a warm voice on the other side of the phone. Be sure to choose a provider that’s willing to patiently explain everything you need to know. It will be worth it in the long run if you find yourself needing to make a claim.