Home Insurance Simplified: What You Need to Know

Home insurance is an important part of every home, and something that is absolutely necessary. You’ll have to purchase insurance before moving into your new home as most lenders won’t give you the keys without it. While there is a lot of information out there, we’re going to give you the rundown of the basics so you’re as prepared as possible. Let’s get started.

What is Home Insurance

Home insurance is essentially a protection plan for you, your home, and people who are on your property. It protects homeowners against expenses that are associated with damage to your home, such as loss from fires, trespassers or strong weather conditions. It can also protect you, the homeowner, from legal expenses if someone were to injure themselves on your property.

There are varying policies that can cover an array of things, like having insurance to cover water damage in case you are in a flood zone, so it is important to go over those options with your home insurance provider. It is also important to keep in mind that if you are planning to update your home down the line, or otherwise increase its value, you need to increase your protection to cover those changes.

Insurance Options:

There are many options for different types of coverage when it comes to insurance, but the most common ones available are comprehensive, broad and personal liability. Here’s a quick overview:

      Comprehensive:

• • Comprehensive insurance will cover your home and its contents from all risks as outlined in your policy.

      Broad:

• • Broad insurance is similar to comprehensive, however it covers the bigger ticket items like the building, while the coverage for the contents is reduced. Here, you’ll have certain “perils” (contents) that will be covered under your insurance policy.

      Personal liability:

• • Personal liability will protect you against being liable for injury that may occur on your property, such as someone slipping on an icy walkway.

Whichever insurance package you choose will come with a list of standard options that are included, but it is equally important to be aware of the exclusions – the things that are not covered under your policy. Be sure to read over all of the policies, inclusions and exclusions when shopping for your insurance package.

There are also policies called “riders” that can be added to your insurance package. These create a provision to your current policy by adding benefits or amending your policy in some way. Typically, they give additional coverage where the standard package may be lacking, such as the case mentioned earlier if you are in a flood zone and need protection in the case of water damage. However, they can also be used to limit coverage in some areas where you may not need the protection provided in the standard package. It’s a good idea to talk to your insurance provider to outline what options you need to include when purchasing home insurance.

You Can Compare Rates & Packages

Different insurance providers offer different packages and rates to their customers. Take the time to shop around to find the best fit (and the best deal) for your needs. Maybe one provider offers a set package that doesn’t include protection against water damage, where you’ll need to pay a premium to have it included, while the other already includes that in their standard package that is similar in price. A good tip is to compare the packages side by side, looking at what is included in each and the difference in price. This will help you narrow down which aspects are most important to you, and make the decision process a little bit easier.

Some insurance providers will also offer discounts or savings for bundling your home and car insurance, so be sure to ask each provider if that is something that they offer.

Payment Options

There are typically two payment options when it comes to home insurance: Monthly or annual payments, which can be automatically withdrawn from your account or you can choose to pay them directly. Most people opt for the monthly payments, as paying a big lump sum once a year can be a bit of a stressor. However, there are benefits to paying in one installment, once a year. Your provider may give you a discount if you go this route, and after the one-time payment, you can go 11 months without having to worry about a payment coming out of your bank account each month. Just be sure to plan for it and put some money aside to cover you when the payment comes due.

Some providers may also offer quarterly payments or a different set of installments, which may be a better option for your situation. Make sure to talk to them about their payment options.

Home insurance is an extremely important aspect of your home buying process, as it keeps you and your family protected should something happen. Be sure to do your research and choose an insurance provider that is going to be the best fit for your needs.