Home insurance is likely not the first thing you thought of when you started shopping for a home loan, but the two are related. Whether you are going to become a first-time homebuyer or have owned your home for decades, the following home insurance facts can help you get the right policy:
Home Insurance Can Have Varying Coverage Levels
Perhaps the best way to start any list of interesting insurance facts is to point out that home insurance policies can provide vastly different levels of protection. This makes it important to understand what coverage is offered by different plans and make your choice based on how much coverage you need and what you are willing to pay.
Some Losses Are Excluded from Coverage
Standard home insurance policies typically don’t cover floods or earthquakes. This means you will need to purchase separate policies to get coverage for those specific disasters. Your home loan lender may require you to purchase insurance through the National Flood Insurance Program in case you live in a flood-prone area.
Personal Property Coverage Can Be Inadequate
When it comes to protecting your assets and the contents of your home, one thing you need to know is that standard policies usually put dollar limits on valuables. This means that if you own expensive items like jewelry, furs, fine art, and antiques, you will likely need to buy a “floater” to provide extra coverage. That’s why it’s important that you keep an updated list of all your assets and their value. Make sure to also periodically check in with your insurance agent to ensure that all your valuables are covered adequately.
Shopping Around Is Important
Now, all this talk about standard home insurance policies and coverage may make you think that if you own a regular home, one policy will be just as good as another. But, the fact remains that home insurance companies use different criteria when calculating the risk they will be taking on. This results in varied premiums. That’s why it’s important that you shop around for a home insurance plan. Make sure to compare not just the premium amount but also the coverage offered.
