Most homeowners have little choice about whether or not they should buy homeowners insurance. It’s typically a requirement of mortgage lenders, who are zealous to safeguard their investments. Even for homeowners who own their property outright and aren’t obligated to insure it, it’s prudent to obtain coverage that can mitigate the risk of property loss, whether due to fire, burglary, or natural disaster.
Where homeowners do have some autonomy is in the specific insurance carrier they choose. As you consider your homeowners insurance needs, here are some points that may need clarifying.
What to Consider When Choosing Homeowners Insurance
- You’ll need to decide how much coverage to buy. Generally speaking, the more coverage you purchase, the less you’ll have to pay out of your own pocket should your property become damaged in some way. Of course, buying more coverage also means you’ll pay a larger amount on your monthly premiums. Always check with your lender, who may require you to pay for a minimum amount of coverage.
- Think about deductibles, too. The deductible is the amount of money you’ll have to pay out of your pocket before the insurance policy kicks in. Always make sure you compare deductibles and choose the one you’re comfortable with. Again, a lower deductible will typically cost you more in terms of your monthly payments.
- Weigh replacement cost vs. cash value. You may also have an option to insure your home for replacement cost vs. cash value. Replacement cost refers to how much it would cost to either replace or repair damaged property, with materials of similar quality, without factoring in depreciation. Generally speaking, you’ll want to insure your home for at least 80 percent of its replacement value. Cash value, meanwhile, refers to the amount of money it would take to replace/repair property after you deduct depreciation.
- It pays to shop around. Your lender may recommend an insurance carrier, but you are not obligated to use that carrier. Review several policies from different companies, comparing both monthly payment amounts and deductibles.
- Your insurance agent can often give you a discount. There are a number of possibilities for getting your rate lowered—for instance, insuring your home and your vehicle through the same carrier; installing a security system; or getting the roof replaced. It never hurts to ask your agent about some of these options.
- Know your policy. A lot of homeowners have a “set it and forget it” mindset when it comes to homeowners insurance. It’s wise to actually take the time to review your policy and develop a clearer understanding of what is and isn’t covered. That way, should you sustain any property damage, there won’t be any confusion about your coverage and the level of protection it affords you.
Questions About Coverage?
It’s well worth taking the time to ensure the correct coverage for your home. Doing so can save you money now, and hassle down the road. McLaurin Law is happy to advise on homeowners insurance needs, and we invite you to contact us at your convenience.
Do you have the right level of #homeowners #insurance? Here are some key considerations.