For many people, owning a home represents success, stability, and comfort. There is nothing like having a private space, a place you can call your own. But if you want to own a home, whether through purchase or inheritance, then you also need to buy homeowner’s insurance.
Homeowner’s insurance protects you from property loss and damage. While you might need to deal with a homeowner’s claims adjuster, the protection is necessary for you and your family’s peace of mind. There are many insurance options out there, and the wrong choice can cost you hundreds of dollars every year.
Being smart with decisions can go a long way in ensuring your home’s protection and your comfort.
1. Do some research
Before buying a house, you need to do some research and calculate its projected insurance costs. Dozens of factors such as the age of plumbing and electrical systems, as well as the construction materials used to build the structure, affect the premiums you have to pay.
For instance, having flame-resistant roofing material, or an all-concrete structure can lower your premiums, especially if you live in a dry area susceptible to seasonal wildfires. On the other hand, an all-masonry home in an earthquake-prone area will have a higher cost of insurance.
If you want to minimize your insurance premiums, make sure the construction materials are optimal for the particular conditions of the area.
2. Check the location
Construction materials are not the only factor used in calculating your insurance premiums. The location of your home can significantly affect the availability of coverage and the cost of insurance. Some places are more expensive to insure than others. But why?
Each area has a particular set of conditions and risks. If you want to live by the sea, you are more likely to experience hurricanes and storm surges. Homes in the heartland have to contend with tornadoes or wildfires. Some areas experience earthquakes regularly. Homeowners in risky areas pay more for insurance.
Your proximity to essential services can also affect your premiums. If you live near a police or fire station, your home can cost less to insure. Conversely, households in secluded areas might face higher premiums.
3. Know your home’s real value
Many homes are underinsured, meaning the insurance policy does not cover the actual value of replacing the home. Instead, many policies reflect the market value of the house or the price someone would pay for buying the home. If you find yourself filing a claim during a market downturn, you might find it challenging to cover the cost of replacing your home.
Due to inflation, the cost of construction gradually rises every year. Your market value is not an accurate estimate of the amount it takes to rebuild a home. If you have recently renovated or remodeled your property, you should update your insurance coverage to reflect the improvements you have made to your home. While your insurance premiums might increase, you will get more money in a claim.
These three steps will help you find the best insurance policy for your home without breaking the bank. Banks always find ways to minimize your claims, so it pays to educate yourself and collect evidence when you need to file a claim.