Buying a home makes perfect financial sense, but it’s a big step and perhaps one of the largest financial investments of your lifetime. Any financial investment carries some risk, but there are precautions homeowners can take to reduce this risk and safeguard their investment.
By purchasing homeowners insurance, you can protect your financial investment. There is no legal requirement for purchasing homeowners insurance, although it may be required by your lender. A home insurance policy protects your home against theft and other causes of loss like fire or natural disasters.
How much does home insurance cost?
Home insurance rates vary across the nation depending on several criteria. Pricing is based on factors specific to a ZIP code, such as the number of claims filed nearby, crime rates, property expenses, and risk factors like the frequency of natural disasters. Your annual premiums may even vary depending on your particular location.
The good news is, that you may be able to save on homeowners insurance with home insurance discounts. Homeowners can save on homeowners insurance through discounts they qualify for, such as bundling discounts (combining your home and auto insurance policy), or If you have protective devices such as smoke alarms or an impact-resistance roof, you may qualify for even more discounts. Check with the insurance company to see which discounts are available.
Can I save money by increasing the deductible on my home insurance policy?
It is possible to save if you carry a higher deductible on your homeowners insurance, you should keep in mind that the deductible is the amount you will have to come up with in the event of a claim. You may pay less for insurance now, but will you have enough cash on hand to cover a high deductible in the event of an emergency? The answer will depend on your unique financial situation.
Should I buy a replacement cost or actual cash value (ACV) policy?
You have two options for homeowners insurance in how your losses will be paid, replacement cost or actual cash value (ACV). ACV coverage might not be sufficient to replace your valuable items at their current market value. To cover the replacement cost, you might be able to add a rider to your insurance for an extra charge to your insurance premium. Replacement cost coverage will allow you to be able to replace your belongings with new ones of the same quality.
Does homeowners insurance offer liability protection?
Your home insurance does include liability coverage. This insurance is crucial because you can be held liable if someone is inadvertently hurt or their property is damaged while on your premises. The liability insurance will help pay the cost of any settlements, court costs, legal fees, and other expenses. Home liability insurance does not cover certain things such as willful harm to another person or willful destruction of another person’s property while they are a guest in your house.
As always, if you are thinking of buying a new home, let us give you a quality home inspection so you can have peace of mind. We hope you enjoy your new home for many years to come!
