Home Insurance: Your FAQ Answered

Home insurance is complicated, but the following home insurance FAQ answers a number of the key questions that new homeowners will have. Consumers are looking for two things when shopping for insurance: high coverage and the lowest possible rates. Getting your questions answered is key to assuring you achieve both of these goals.

Why Do I Need Home Insurance?

Home insurance protects your home and your property in unforeseen circumstances. This includes inclement weather, burglary and lawsuits. Without insurance, you will be left covering the costs of all losses. Home insurance also protects you from personal liability lawsuits resulting from negligence on your part. If your dog bites the mail man, your neighbor slips on your icy steps or your contractor falls off a ladder you lent him, you may be liable.

What Coverage Is Available?

Primary coverage offered include property, living expenses, personal liability and medical payments. Property insurance covers your home and everything in it. Living expenses cover the time you may have to spend away from your home in the case of a claim. For example, the cost to rent a place to live while your home is rebuilt after a fire. Personal liability covers you from lawsuit in case of negligence. Medical payments insurance may cover medical expenses which occur when someone is injured on your property.

What Coverage Do I need?

You need enough coverage to protect your home and assets in a worst-case scenario. Determine how much you could afford to lose in this situation. The less you can afford to lose, the more insurance you may need. It is also possible your mortgage lender will require a certain amount of homeowners insurance to protect their interest in your home.

What Determines My Cost?

The cost of your policy will be affected by a number of factors in your home as well as your personal financial history. The type of home you live in, such as brick or stucco, will affect your price. Certain types of homes are more costly to rebuild and repair than others. The age of your home will largely affect your policy. New homes are more attractive to insurance companies because they are typically built to withstand more weather and other disasters. Old homes are often a risk for fire, flood or break in due to sub-par building standards at the time they were built. Your municipality will also affect your home insurance cost. Living in a safe area with a responsive fire and police department will make your premium cheaper. Your credit score will also affect your insurance costs.

What Deductible Is Appropriate?

Deductibles in home insurance apply only to your property claims. You will have to pay this out of pocket in the case of a claim up until a certain amount - your deductible. For example, if you elect a $250 deductible, you will pay to replace or repair losses up to $250, then your insurance will kick in. There may be a per occurrence deductible and a policy deductible. If you can afford to elect a higher deductible, your insurance premium will be lower.


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