Homeowners Insurance – What You Need to Know Before You Buy
Most mortgage companies require that you have homeowners insurance. Homeowners insurance also offers liability protection for accidents that occur on your property.
There are several standardized homeowners policies, most of which are very similar. They differ in coverage, but most cover the same things: dwelling coverage, personal property, loss of use, and liability.
Cost
Homeowners insurance Newark DE, protects your property from damage and loss; most mortgage lenders require it before lending you money to purchase a home. It also covers structures not attached to your house, like sheds, fences, and outdoor grills.
Many factors affect how much you’ll pay for your policy. The most significant is your location since regions prone to natural disasters or higher crime rates carry more risk for insurers. You’ll more if your home is older because it may have outdated building materials or plumbing, electrical, and home systems at higher risk for damage or fires.
Hover over your state on the map or view our table below to see average annual and monthly premiums for standard homeowners policies with specific dwelling coverage limits. You can explore additional rating factors for your particular policy, too. These include:
Coverage
Homeowners insurance offers financial protection in case of damage or loss to your home and personal belongings. It compensates for these losses minus the policy deductible and can cover temporary housing, legal fees, and property repairs. Generally, it also protects you against liability for harm to others on your property. Homeowners insurance does not typically cover natural disasters like earthquakes or floods, but separate policies are available.
Most homeowners’ policies cover the dwelling and attached structures, personal property, loss of use, medical payments, and sewer backup. Some include umbrella liability coverage. Standardized policy forms, designated HO-1 through HO-8, offer different coverage levels.
A HO-5 policy is the most comprehensive and covers most perils. Other policies cover named perils only, such as an HO-3 policy, while others exclude certain events, such as off-premises theft. Insurance companies also sell a variety of add-ons, such as pet coverage, which usually is an additional cost.
Exclusions
Homeowners insurance policies come in many forms but have some common elements. Most importantly, the policy covers the cost of repairing or rebuilding your home and your possessions.
The policies also include a deductible, which you must pay before the insurance company will pay for any claims. The deductible should reflect your budget and ability to cover losses without too much financial hardship.
Most homeowners exclude flood and earthquake damage unless you have a special endorsement or separate policy. These events are so expensive that it would be unfair for all homeowners to pay for them through their premiums. Other exclusions may include damage caused by neglect, such as a rotten roof or damage from routine wear and tear. Living in a house causes natural wear and tear that can cause floors to scuff, paint to chip, and hinges to break. Homeowners insurance typically excludes these types of damages, although some policies offer a wear and tear add-on for an additional cost.
Getting a Quote
Homeowners insurance is one of the most popular types of property insurance. It covers the cost of repairing or rebuilding a house and personal belongings and protects homeowners from liability in the event of an accident on their property. Most mortgage lenders require a homeowner’s as part of the loan agreement. Homeowners can buy a standard policy or cover specific items with separate riders.
Typically, the dwelling coverage limit should be high enough to replace your home at current labor and materials costs in case of a total loss. Homeowners can also buy additional coverage for freestanding garages, sheds, and outdoor equipment like swimming pools. Other coverage options include personal property, additional living expenses, and sewer backup protection.
Consumers can compare home insurers by visiting their state insurance department website. This site will provide rating information for companies and any consumer complaints filed against them. Other helpful resources include the best practices document and consumer shopping tools on the NAIC website.