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Homeowner
Insurance for Beginners
Buying a home still remains one of the biggest
decisions for Americans. There are many financial decisions
involved with the purchase of a home – one of them is
home owner’s insurance. For the first time buyer the
process is more complicated and daunting. You are faced with
several questions such as:
• What should be the coverage?
• What kind of exclusions or limitations apply?
• What constitutes a good policy – in terms
of both - coverage and price?
• Can I get a discount?
Coverage
Most policies offer three kinds of protection: structure,
personal and liability. A homeowner’s policy protects
the structure for damage due to:
• Fire or lightning
• Windstorm or hail
• Explosions
• Riot or civil commotion
• Aircraft
• Vehicles
• Smoke
• Theft or vandalism (sometimes called malicious mischief)
• Falling objects
• Weight of ice, snow or sleet
• Freezing of a plumbing, heating, air conditioning
or other
such household system
Ensure the exclusions in your policy such
as flood damage which may require the purchase of a separate
policy. You can also add endorsements to your policy for certain
exclusions. An important thing to remember is to insure the
entire home, not simply the amount remaining on the mortgage.
Homeowners insurance also covers family possessions and personal
property. Ideally you should make an inventory of all belongings
- record the serial numbers, dates and costs of purchases.
Ensure to store such information at a fireproof safe or away
from the premises.
You should insure the total value of possessions at half of
what the home is insured for. However, there are limits for
certain items and the repayment amount may be insufficient
to the replacement the property. Under such circumstances,
it is advised that you purchase additional coverage.
Homeowners insurance also provides compensation for liability
claims and medical expenses incurred by others on your property.
Re-evaluate
Don’t just forget about you home insurance once you
have it. Re-evaluate your existing coverage and your needs
at periodical intervals. This is to ensure that you have the
right kind of coverage and if you need to add or reduce your
coverage based on the changes in your life. Remember don’t
go cheap on your home insurance – it is the most prized
possession you own. Consider your replacement costs of your
home and possessions.
Discounts
If you want to reduce your premium, consider a higher deductible.
This is the amount you are required to pay incase of a claim.
Also mention you have a home security system set up. You will
receive a discount for such safety features.
You may qualify for further discounts if:
• If your home is near a fire department
or hydrant,
• Own a newer home,
• The home is built out of fire-resistant materials,
• You have home and auto insurance from the same company.
Shop around
Finally, always get quotes from several insurance companies.
Different homeowner insurance companies offer different plans,
coverage and prices.
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