What You Need to Know About Homeowners Insurance

Buying a new home is an exciting phase in your life. It's also an expensive investment—if not the most expensive one you'll ever make. Before you jump into picking new kitchen cabinets, there are other things you have to do first, and one of them is getting insurance on your home. Because it's a heavy investment, you need to protect that investment through homeowners insurance. Sometimes, home insurance is a requirement more than a choice.

It's also worthy to note that a lender is allowed to buy the insurance policy and charge you for the cost. That means the mortgage lender could buy an expensive insurance that might not even have that much coverage. This could wind up being much more expensive than buying your insurance on your own. 

What does homeowners insurance cover?

Of course, a standard policy must cover the physical structure of a house. However, it can cover more than that, such as:

  • Dwelling coverage: This could be a garage or a porch that is considered part of the house.
  • Other structures: This includes detached structures, such as a shed or a fence.
  • Personal property: Depending on the policy, you could get compensated for damaged or stolen personal belongings.
  • Additional living expenses: After an unfortunate incident in your home, like a fire, you might have to live in another place until your home is repaired. Homeowners insurance can help cover these additional expenses. 

The simplest, most basic type of insurance isn't used that much anymore. Most mortgage companies argue that it doesn't offer enough coverage since it only covers specific events, such as fire or smoke, explosions, vandalism, and theft, among other claims. Broader insurances are being used more to also include such circumstances as fallen objects, freezing of household cooling or heating systems, personal belongings, and more. 

Here are more things to look into:

What kind of insurance 

When you buy anything, you want to buy what is right for you. Insurance is no different, so your purchase of insurance needs to be based on something tangible. That something is actually four things: the structure of your house, your belongings, your liability to others, and your living expenses if you're forced out. The insurance you choose should cover these key areas. 

It's important to note here that if your house is fully paid off, home insurance is not mandatory. But most people, especially young adults or first-time home buyers, need a mortgage. In almost all states and in Canada, a mortgage lender will most likely want to make sure you have proof of insurance first, because they need to ensure that their financial investment in your home is also protected. This is a good time to reach out to the insurance brokers at Netsurance.ca, who provide online solutions where you can get a free quote on homes, condos, businesses, among others. You will be provided with instant quotes, online payment options, secure digital signatures, minimal time to get insured, and electronic policy documents.

Understanding the claim policy

Don't agree to or sign anything until you understand it. Two policies can sound exactly the same, but differ in the delivery when it's time to make a claim. For instance, do you receive your entire claim upfront, or just a part of it? Does the company pay you for all the things you've lost, or only the things that you will replace? How long do you have to wait? These are some of the questions you can ask to have a clearer picture.

Knowing what you have

It's a lot easier to know what you have before it's gone, so make a documented inventory of all your belongings. Don't forget to include what's in your attic and basement. Make sure that you have at least one copy of this inventory to be kept in safe storage outside of the home. 

Taking note of inflation rates

This is especially important with a homeowners policy. It may have cost you $100,000 to construct your home a decade ago, but it might cost $120,000 to replace it today. Many companies have an inflation guard, which covers the increasing cost of rebuilding. 

Protecting yourself, your family, and your home isn't up for negotiation. Anytime you make a big investment, your priority should be to protect it. There's only so much you can do to protect your home, and despite your best efforts, major damages can happen. Homeowners insurance can't prevent incidents from happening, but it helps you to pick up the pieces and start anew when damage occurs in your house.

1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 4.00 out of 5)

Leave a Reply

Your email address will not be published. Required fields are marked *

Notify me of followup comments via e-mail.