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How to Choose the Right Homeowners Insurance

How to Choose the Right Homeowners Insurance

Finding the right homeowners insurance may seem like a daunting process. There are many insurance companies available, and they each offer a wide range of options. Yet, it is a necessary task for anyone seeking to buy a home. You have to compare homeowners insurance deals because mortgage lenders require it in order to take out a mortgage for a home purchase.

House and home insurance is necessary, but that is not the only reason to purchase it. It is also potentially beneficial in several ways. For example, insurance for a home often covers the costs associated with repairing various types of damage

To select a homeowners insurance policy, you may want to consider factors like your location and personal desires. That is why home insurance policies often offer a lot of customization. Here are some things to consider when you are selecting a home insurance policy.

Homeowners Insurance Coverage Categories

Before you get home insurance quote information, it’s important to have a basic understanding of the types of coverage available to you. “What does homeowners insurance cover?” should be the first question you ask. 

The answer usually falls into one of these four categories:

  • Personal property coverage reimburses you when items inside your home are damaged. Those items may include things like appliances, furniture, or books.
  • Liability insurance is one of the most important homeowners insurance coverage types. It partially or fully covers legal or medical bills when someone visits your home and is injured or has their own personal property destroyed.
  • Home structural coverage provides compensation to help make repairs when your home itself is damaged under circumstances covered within the policy. For example, it may partially or fully pay for repairs to walls, windows, or flooring. It may also cover installation of a new roof.
  • Coverage for other structures is similar to home structural coverage. The difference is it covers some or all the cost to repair non-home structures on your property. That type of coverage is useful if you have a structure like a barn, garage, or shed.

Those are homeowners insurance coverages explained. Now that you understand them, you may want a policy that includes all four. However, you may not need all four, depending on your property type. 

If your budget is tight, you also may not be able to afford all four. You may need to select cheap homeowners insurance with less coverage for now, but you can always add more coverage at a later time.

Home Insurance Event-Based Coverage

The next important thing to know about home insurance companies is they usually base their coverage on types of events. For example, your policy may cover you for damages related to theft but not a flood, unless you specifically have flood insurance. 

Each policy and each company are different. However, HO-3 policies are quite common. They are policies that cover damages incurred during some or all the following circumstances:

  • Burglary
  • Riots or vandalism
  • Smoke or fire
  • Explosions
  • Lightning strikes or power surges
  • Weather damage (such as from high winds or hail)

A cheap home insurance quote is usually for a basic level of coverage. A cheap policy may not provide compensation for all occurrences on the list above. 

However, you have the option to request additional coverage for a higher fee, provided doing so is within your budget. If you live in an area where certain events are more common, such as bad weather, purchasing additional coverage is typically beneficial.

Making a Homeowners Insurance Claim

When your home or property is damaged in a way that is covered by your home insurance, you’ll need to file a claim for reimbursement. There are two homeowners insurance coverage types that dictate how you receive that reimbursement. 

The first is called replacement value coverage. It covers the total cost to replace whatever was destroyed, such as your roof. The second type is called actual cash value coverage. It determines an amount to pay to you based on the value of the materials destroyed at the time of destruction. 

Consider your roof as an example. It had one value the day it was initially installed. However, that value began to depreciate after that date, as the roof was exposed to weather, animals, and other environmental factors. If you have an actual cash value policy, only that depreciated value is covered.

When you are ready to get a home insurance quote, you may find yourself tempted to select the company offering cheap homeowners insurance. However, the homeowners insurance quote that is the cheapest may not always be right for you. 

It may be more worth your while to consider purchasing a policy through a well-established company that operates throughout the United States. That way, you can get expert advice and excellent customer support. You can also find enough information when looking for company reviews or statistics online to make a comfortable choice. 

Here are some of the most widely-used insurance companies to consider:

  • Progressive home insurance serves customers all over the United States. One of the biggest benefits of Progressive homeowners insurance is you can get a discount when you also purchase other types of insurance through Progressive. For example, you can sign up for an auto and home insurance bundle.
  • Geico homeowners insurance offers bundle options like Progressive. It also provides the ability to customize your insurance, such as by purchasing coverage for earthquake damage if you live in an area where earthquakes are common.
  • State Farm is one of the largest companies offering home insurance in the United States. The company also offers other types of insurance perks, such as health insurance for pets.
  • USAA offers home insurance policies specifically for active duty military members, veterans, and their family members. Its policies include full replacement value coverage and extra coverage for military uniform replacement.
  • Final Home Insurance Policy Selection Tips

Now that you understand the basics of homeowners insurance coverage, you may be ready to choose a policy. However, there are some final tips to consider. 

For example, you likely want to shop around when selecting insurance. Do not settle on the first company you find. Also, consider the deductibles and premiums. Those are the minimums you must pay out-of-pocket before coverage kicks in and the monthly fees you have to pay, respectively.
Do not forget to ask your lender for a list of minimum insurance requirements. Certain lenders or regions require you to have specific types of coverage. For example, earthquakes and forest fires are common in California, so many California lenders require those coverage types.