3 Things You Need to Know About Your Homeowner’s Insurance

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3 Things to Know About Homeowner's InsuranceBuying a new home is most likely one of the biggest financial investments you will ever make. This being said, one of the most important things you’ll learn about during the home buying process is homeowner’s insurance, also known as “hazard” insurance.

The purpose of homeowner’s insurance is to protect your assets, simply put. These policies will cover the structure of your home and your personal property from damage or theft, along with your personal legal liability for what happens on your property, such as injuries.

So let’s drive right in to to 3 things you need to know about your homeowner’s insurance!

#1 – Know your coverage options!

There are two basic coverage options available: Market Value Coverage and Guaranteed Replacement Coverage.

Market Value Coverage will pay you the current cost of your home. This policy is the less expensive option, since it will only cover the value of your home based on the market conditions during the time of loss.

If you are the “better safe than sorry” type, you might want to spend the extra few bucks and purchase the Guaranteed Replacement Coverage. You can rest assured and stress free with this coverage, since it will cover the actual cost of rebuilding your home.

#2 – Know what your policy covers!

Although policies may differ from one another, your normal homeowner’s insurance policy will cover fire, theft, and vandalism. The common grey area for homeowners is whether or not their policy will cover flooding.

Even though your policy may cover certain types of storms, that does not mean it will cover flooding and water damage. Homeowner’s in Florida are often required to purchase a separate flood insurance policy, especially if the location of your home is prone to flooding. Tornadoes will often be covered by standard policies, but other natural unexpected disasters may not be covered.

You’re going to want to get cozy with your insurance agent to make sure you are getting the minimum coverage your mortgage lender requires, and that what you want covered is covered.

#3 – You can decide what you want covered, and what you don’t!

Most homeowners will have hazard insurance because lenders require it. Further, depending on the lender’s requirements, many homeowner’s have to carry a minimum threshold of coverage for the life of the loan, which is generally relative to the value of the structure.

That doesn’t mean you can’t do your own homework to see which insurance policy is best for you and your anticipated needs, including your budget. Don’t leave the decisions up to your lender or your insurance agent.

To make the burden of paying this insurance a little easier, the lender will escrow your insurance premium payments monthly. That means it is bundled in your monthly insurance payment. The lender then works with the insurance company to make the payments when they are due on your behalf.

So long as you don’t need to adjust anything major in your policy, paying your hazard insurance pretty much becomes hands-off for you so long as you have a mortgage.

Bonus tip: good behavior usually pays off

Insurance companies will often provide discounts to customers who have proven to be responsible payers of their policy and premiums. They will also reward you for being prepared for bas things. Preparations you can make include upgrading your door locks to deadbolt locks, installing alarm systems for security and fires, and upgrading your home’s windows to impact-resistant strength.

Also, it may pay to get with your insurance agent yearly – usually about month before the expiration date on your hazard policy – to see if he can shop around for a better rate, better coverage, or both.

Lastly, if you don’t have an insurance agent, look into bundling your hazard insurance with your car insurance carrier to take advantage of discounts. While we think it pays to have an agent, this is also a great option.

If you would like to see a list of preferred homeowner’s insurance agents we use, please let us know by email us at hello@cpld.co!

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