Your home isn’t just a place to live. It’s an investment, and not just for you. It’s also an investment for the lender. Your lender isn’t going to let you sign your loan papers without getting some insurance. This isn’t the lender’s first time at the signing table. He’s been around the block a few times and knows that insurance is necessary in case something happens.
While you might think insurance is a drag, it is actually an important part of the home-owning process. Without it, you would lose everything if a fire breaks out or if a huge storm destroys your home. The right insurance can even protect you from a burglary or a flood.
Instead of being a drag, insurance provides a peace of mind that everyone needs when they own something as expensive as a home.
When you sign up for home insurance, you’re going to have to choose the type of coverage you want. You can speak to an agent one-on- one or you can sign up online. Either way, you’re going to need to understand some insurance terms.
All policies include three important terms, which are property, dwelling, and contents.
Property refers to the cost of the property. It’s another word for the amount of money that you paid for your house. The dwelling insurance rate is the amount of money needed to replace your home in full. Do not be alarmed if this number is less than you paid for you home. You have to consider the land that you purchased with the home as well. You won’t need to replace it if your home is destroyed. For example, you might buy the land and a home for $250,000. The land may cost $125,000 and the home may cost $125,000. You would only need to cover $125,000 since the land won’t be destroyed in a disaster. You can rebuild on the land without any problems.
Finally, the contents rate is the money needed to replace the possessions inside of the home. It’s a good idea to make a recording of your contents so you can prove that you lost certain items in a disaster. This is especially true if you have some expensive items.
Contents insurance doesn’t cover everything. For instance, most policies only cover up to $1,000 of jewelry so you’ll need to get some riders if you own expensive items. This will give you some extra coverage for those family heirlooms that have been passed from one generation to the next or that expensive wedding ring that you saved for. You don’t want to have to start from scratch after a disaster and riders will protect you if something bad happens.
You also need to consider where you live when taking out your home insurance policy. You might live in a flood or earthquake zone, so you’ll need flood or earthquake policies. Don’t wait for a disaster to strike to find out you’re under-insured.
Browse through our resources and get a quote on insurance coverage. Coverage rates are constantly changing, so even if you have received high quotes in the past, we can likely help you get a quote that you can afford today. With discounts and competitive rates, we make it much easier to get home insurance.