Purchasing Homeowner’s Insurance

by Brian Bagnall

If you use a lender to finance your home, you will be required to have homeowner’s insurance. You must provide the lender with proof of this insurance policy before the date of closing. While the lender does want to ensure protection of the home investment, it is in your best interest to purchase homeowner’s insurance as well. Homeowner’s insurance covers many aspects of the home that could be expensive if you are required to pay out of pocket.

Protection Types
Homeowner’s insurance protects the home against several things.
1. Casualty. Most commonly insurance protects against fire damage. In the event that your home is destroyed due to a fire, your policy will cover the home. Other hazards are protected with a homeowner’s insurance as well. It is your responsibility to find out what your home is insured against, as well as what it is not insured against.

2. Liability. There is a chance, no matter how minute, that someone could become injured in your home. You can protect yourself from lawsuits in such an unfortunate situation by obtaining liability coverage.

3. Personal Property. When you purchase casualty insurance, it only covers the house structure. Personal property insurance covers the items inside the home. Make sure you are aware of the coverage amount as well as the limits of coverage. Some policies only replace the depreciated value of personal property rather than its replacement cost.

Tips For Saving
It goes without saying that you want to reduce your monthly mortgage cost as much as possible. Saving money on your homeowner’s insurance is one of the ways you can do this. The first rule of thumb for saving money on insurance for your home is to shop around. Get quotes from several different insurers to get a feel for what’s available to you. Choose a company with a good reputation, especially in paying claims in a timely manner.

Increasing the deductible on your insurance is one of the ways you can decrease your premium. Of course, the exact amount you save will depend on your insurance company. Generally speaking, the higher your deductible, the lower your premium. This is because a higher deductible lowers the amount the insurer has to pay toward your loss.

You might receive a discount if you have your homeowner’s insurance and automobile insurance through the same company. If you already have one or the other, inquire about the additional policy.

Find out the kinds of security and safety improvements you can make for reductions. Some insurers give discounts for burglar alarms and smoke detectors. You might get even more of a discount if you have a system that immediately alerts the police. If you don’t already have such a system find out how much you would save on homeowner’s insurance versus the price of the system to make sure it’s worth the investment.

While homeowner’s insurance is a requirement for buyers that go through a lender, you don’t have to break the bank for the premiums. Ask your insurer about ways to decrease the cost.