If you're purchasing a home, you're going to need to carry homeowners insurance. If you're taking out a mortgage loan, most lenders make homeowners insurance a requirement, but even if you won't have a mortgage, homeowners insurance is important to have. It is a good idea to take your time when purchasing homeowners insurance to ensure that you have the right policy. Continue reading to learn more about purchasing your homeowners insurance policy:
Consider the Size of Your Policy
Many people become confused when trying to figure out how large of a homeowners insurance policy they need. Don't make the mistake of buying a policy based on the price you're paying for the house—doing so can lead to paying for more insurance than you need. Your insurance policy needs to provide enough coverage to rebuild your home and replace your belongings in the event of a total loss. The cost to rebuild a house is typically a lot lower than its value, since the land does not need to be purchased.
Know That Homeowners Insurance Does Not Cover Most Flooding Events
It is important to know that homeowners insurance does not typically provide coverage in the event that your home is flooded due to weather or a natural disaster. If a pipe bursts in your home and floods an area, your insurance will likely cover it, but flooding due to heavy rain, a flash flood, or other type of weather events is usually not covered. If you live in a flood-prone area, you will need to purchase additional flood insurance that is backed by the federal government.
Choose Your Deductible Wisely
Just like many other types of insurance, homeowners insurance policies require a person to meet a deductible before the insurance company will begin paying for anything. Thus, when you buy your homeowners insurance policy, it is in your best interest to choose your deductible wisely. The higher the deductible, the lower your monthly premiums will be. If you choose a high deductible, it is a good idea to keep the deductible amount in a savings account in case of emergency.
Take the Time to Shop Around
Insurance companies don't have to follow a strict formula when setting their prices, so premiums for homeowners insurance can vary greatly from one insurance company to another. Always take the time to shop around for homeowners insurance, and request quotes from several different companies. Just make sure that you're comparing the same type of policy.
For additional information, contact a company like Family Insurance Centers.