Anyone in the market for a new home should have an idea of what you should know before getting homeowners insurance. Not every policy is the same. If homeowners don’t choose the right specifications and limits in a policy, they could end up unhappy down the line due to uncovered damage or out-of-pocket costs. Let’s take a look at some of the basics when it comes to buying homeowners insurance.
Types of Coverage
There are different types of homeowners insurance coverage. Each is different. Knowing what each type entails is key to ensuring customers choose the right one for their needs. Basic Form coverage is the simplest, or bare bones, form. Many agents won’t even offer this type because it only covers the most straightforward of events. Broad Form insurance covers the basics, plus a bit more complex issues. This type also insures the homeowner’s personal belongings.
Special Form is the most common type of homeowners insurance. This is an overarching policy type that covers structural home damage and loss of personal belongings due to a wide variety of causes, with exceptions for certain things. For those who want the maximum bang for their buck, Comprehensive Form insurance is the kind to consider. This type of homeowners insurance covers everything with very few exceptions. Policy holders can even choose their own specific limits.
How Much Coverage Is Needed
This brings us to the consideration of insurance limits. According to US News, when it comes to what you should know before getting homeowners insurance, it’s important to consider coverage limits. Having better coverage means having to pay less out of pocket in the event of a disaster or mishap. Rates will depend upon the value of the property and personal items owned. An insurance agent can help advise on this matter. In addition, some lenders require borrowers to carry a certain amount of coverage based on the amount of their loan.
What Is Covered
As noted, not every policy covers every possibility. There are exclusions with almost every type of insurance, so it’s important to have a thorough understanding of the policy and ask questions before purchasing homeowners insurance. Some geographic areas require coverage that exceeds ordinary policy needs. Consumers should keep this in mind when shopping for insurance. Qualified agents will be able to provide guidance on these issues. Riders that add extra protection to a policy are usually well worth the investment in unique circumstances.
Types of Reimbursement
Insurance buyers should also be aware of the types of reimbursement that are usually offered in the event of a catastrophe or natural disaster. Payment is made by an insurance company in a few different ways when you make a claim. They may offer cash value coverage. This is simply reimbursement for the financial value of the items lost, with a deduction included for appreciation. Replacement cost coverage is the replacement of your possessions or property without deducting for appreciation. Be careful with this, as it only covers up to the limits of a policy. Individuals may still have to pay money out of pocket. The most expensive, yet comprehensive, reimbursement is guaranteed or extended coverage. This type pays for replacement of items without limits.
Related Resource: 10 Great Ways to Save on Homeowners Insurance
Keep this information in mind when purchasing insurance for your home. Understanding what you should know before getting homeowners insurance can save you money and frustration in the long run.