For most homebuyers, the purchase of a home will be the biggest investment that they’ll make in a lifetime. This means that homeowner’s insurance is one of the most valuable and broadest kinds of risk coverage that can be purchased. Homeowner’s insurance can cover everything in your home and everything that’s important to you.
Sometimes, navigating the world of insurance can be overwhelming. That’s why Howard Hanna Insurance is here to answer some of the most frequently asked questions that we receive regarding this key type of insurance.
Question: Do I really need homeowner’s insurance?
By law, you are not required to have homeowner’s insurance. However, if you decide to finance your home through a mortgage lender, including Hanna Financial, you’ll be required to have it. Your insurance is protection against the many property and liability risks you can face as an owner. If you are not buying homeowner’s insurance, you are “self-insuring.” Besides, the unexpected sometimes happens, and the peace of mind that’s provided by having insurance is second to none.
In addition to having homeowner’s insurance, umbrella coverage is an important policy to have as a homeowner. Umbrella coverage gives additional liability protection and helps you to protect your assets. A home is the largest asset most people will ever own. Every homeowner should have at least a $1 million umbrella policy to provide liability coverage beyond the limits of their automobile and homeowner’s insurance policies…even if you have less than $1 million in assets. In the event you are sued, you could be forced to pay a legal judgment from your current assets and possibly future earnings. The policy can also pay for defense costs, which can quickly add up even if you win your case. It’s an inexpensive way to protect your finances from devastating lawsuits.
Question: What does my homeowner’s insurance policy cover?
Policy, form and coverage can vary among carriers and from state to state, but the vast majority of insurance policies cover two very important areas: property and liability.
At a minimum, your policy will typically cover the following damages:
- Damage from an aircraft
- Falling objects
- Fire or lightning
- Freezing of a plumbing, heating, air conditioning or other such household system
- Theft or vandalism
- Damage caused to your property by vehicles
- Weight of ice, snow, or sleet
- Windstorm or hail
Question: What are the factors that can affect my premium?
- Location, location, location
- The amount of coverage that you need
- Fire safeguards
- Condition, materials, maintenance, and home age
- Your credit score
- Deductible amount
- Other insurance policies with the same insurance company such as automobile, umbrella, life, etc.
Question: What are the parts of a homeowner’s insurance policy?
- Declarations – This portion is an overview including information like the name(s) of the insured, address, dollar amount of coverage, property description and property cost.
- Definitions – This portion explains meanings intended for terms used within the policy. The definitions are critical to understanding the degree of your policy coverage.
- Coverages – This portion explains the extent of the liability and property coverage for the policy.
- Exclusions – This portion explains what is not covered by your policy.
- Endorsements – A policy amendment that changes the standard coverage under your insurance policy. Sometimes endorsements are negotiable based on your specific property needs. For instance, personal property replacement cost and backup of sewers and drains are common endorsements that help to round out your protection.
Question: How do I choose a deductible for my policy?
Under most circumstances, your deductible for your homeowner’s insurance should be as high as you can comfortably afford. The higher your deductible, the lower the cost of your premium. Many times, raising a deductible can reduce your homeowner’s insurance premium. That being said, it’s best to balance short-term cost with long-term policy cost, coming to a compromise that makes sense based on both your needs and budget.
Question: Should I consider an appraisal for precious items such as jewelry?
Typically, a policy will list specific monetary limits for personal property. If these limits seem low to you when you review your policy, it may make sense to get additional coverage for specific items. The purpose of homeowner’s insurance is to cover general personal possessions, not valuable collections such as artwork or family heirloom jewelry.
Question: What can I do to make my home safer and save money?
Since the condition of the home is a large factor in insurance costs, there may be ways for you to save money by making your home safer. For instance, adding storm shutters to make the house more windstorm-resistant or updating an electrical system to reduce the risk of fire damage may go a long way. Even simple things like installing an alarm system, more smoke detectors, or putting in more dead-bolt locks may not only help to make your home safer, but also lower your insurance cost. Bundling all of your insurance coverage with a single carrier can also save money with multiple policy discounts, and it is easier and more convenient to have all of your insurance in one place.
If you would like more information or have additional questions, please feel free to contact Howard Hanna Insurance Services at email@example.com.