If you’re going to be a homeowner, you need homeowners insurance. In fact, many mortgage lenders won’t let you finance a home without it. Homeowners insurance covers minimal to significant problems that protect your investment. Having insurance also allows you to avoid paying out of pocket for repairs. That said, if you’re shopping for a mortgage, you’ll want to look for the best homeowners insurance coverage available.
Here are ten things to consider when deciding on homeowners insurance coverage:
- Storms: In many areas, insurance carriers will cover any damage associated with severe weather (including hurricanes and tornadoes). If you live in a high-risk area, you’ll likely need to purchase additional coverage to prevent against potential problems.
- Fire: Does the homeowners insurance cover potential damage that could occur in a fire? While this might not be top of mind for new homeowners, it’s something to consider.
- Theft or vandalism: Does the insurance account for potential theft or vandalism that could occur outside and/or inside of the home?
- Liability coverage: Liability coverage is important. Should someone become injured while on your property and sue, liability coverage will protect you (and your investment).
- Shelter costs: If you’re displaced from the home after a storm, your policy will pay for alternative accommodations while you wait for your home to be repaired.
- Belongings not in the home: If a valuable item is stolen from your car— like a laptop or cell phone—auto insurance won’t cover the incident. However, your home insurance can.
- Water damage: Many policies extend coverage to protect against water that comes from “above” (such as a burst pipe or rainwater). However, many policies do not cover ground flooding or a backed-up sewer. To cover water from “below,” you’ll need to secure a separate policy.
- Jewelry: While some policies will cover jewelry, be sure to check the maximum amount of coverage. If your policy only extends $3,000 coverage but your property houses $20,000 worth of jewelry, get additional coverage.
- Accidents: A home insurance policy may cover accidents that happen inside your home, such as damage to your big-screen TV, a cleaning bill to remove a red wine stain from your carpet and other repairs or replacements.
- Locks: Lost your keys? Not to worry. Some home policies will cover the cost of replacing the locks in your home.
While you don’t want to pay for more homeowners insurance than you need, you definitely don’t want to be left in the cold with too little coverage. It’s important to have insurance to protect you from basic perils like water damage, flooding, fire and natural disasters. Consider purchasing additional riders to meet your needs. Before you buy, talk to a professional to get expert advice about the level of coverage you require.
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