A Homeowner’s insurance is a necessary investment that helps protect your home and belongings against theft or any kinds of damages. Mortgage companies emphasize the need of having insurance coverage for the full or fair value of a property. Essentially, the mortgage companies wouldn’t finance a residential real estate transaction unless borrowers present them with the proof of insurance coverage for their property.
These days, even tenants are expected to maintain renter’s insurance coverage. Regardless of whether you are planning on renting or buying a home, having your home covered under an appropriate insurance plan would be a smart move.
If you are looking for houses for sale in Lincoln, reach out to our team at Location Lincoln.
In this article, we will provide insights into everything you need to tell your clients about the homeowner’s insurance.
Homeowner’s policy
A Homeowner’s insurance policy can be customized in accordance with your needs. However, the homeowner’s insurance policy comes with certain standard elements – the costs of which the insurer is required to cover.
Damages to house and belongings
We are talking about damages to the interiors or exteriors of the house. The insurance company is required to compensate the insured for any damages caused by lightning, fire, vandalism, or any disasters that are covered by the insurance to help repair or rebuild the house, as needed.
The above costs fall under the category of standard elements; however, in case of a destruction or damage caused by floods, earthquakes, or poor home maintenance, you would need to upgrade your plan (choose a separate rider). Along with the house, it would be great to have other structures (freestanding garages, sheds) on the property to be covered under a separate rider. For any losses, such as jewelry, you can get off-premises coverage. Regardless of where you lose the jewelry, you’d be covered, though there would be a specific limit to the coverage offered.
For high-priced possession, such as jewelry, art of antiques, it would be ideal to have them on an itemized schedule, which would require paying extra for purchasing a separate rider for these. If there are a lot of them, you could have them covered under a separate policy.
Liability coverage
In case of a lawsuit filed against you, liability coverage would serve as a protection. Liability coverage will protect your pets as well. For instance, if a neighbor of yours gets bitten by your dog, your insurance company would provide for the medical expenses.
Additional living expenses
You’d need this rarely. However, this coverage would help you when your home is under repair or renovation, if at all you’re forced out of your home. With the additional living expenses insurance coverage, you can reimburse yourself for hotel room, rent, meals, or any other costs that you might incur while your home is under repair. But, most policies impose certain limits as per the plan you have purchased. These daily limits can be expanded by paying extra.
Three levels of homeowner’s insurance coverage
As discussed earlier, insurance plans vary. You would be covered depending on the insurance plan that you choose. Below are the three levels of coverage:
-
Actual cash value
Covers the cost of the house and belongings; applicable after deducting depreciation.
-
Replacement cost
Covers the actual cash value of the house and belongings; no depreciation deduction.
-
Guaranteed replacement cost
Covers the costs to repair or rebuild your home, regardless of the limit of your policy. Extended replacements help to cover more than what the insured paid for – the ceiling being 20% to 25% higher than the original limit.
According to some advisors, homeowners should go with guaranteed replacement as it will help cover more than the value of their homes – like rebuilding the home.
Here are some tips to help you with cutting the costs on your insurance coverage.
Never recommended that you buy cheap insurance; however, it would not hurt to cut down on insurance premiums.
-
Invest in a security system
Installing a burglar alarm that is monitored by a central station or a local police station will go a long way in lowering the homeowner’s annual premiums – by 5%. The homeowner would need to present a bill or a contract as a proof of central monitoring to the insurer for discounts.
Smoke alarms installed in older homes can save over 10% in annual premiums. Besides, installing CO detectors, sprinkler systems, or dead-bolt locks are recommended.
- Increase your deductible
Raising your deductible will help to lower the annual premiums.
-
Multiple policy discounts
There are insurance companies offering a discount of over 10% to customers maintaining other insurance contracts with them. So, getting a quote for other types of insurance from your home’s insurance company could help save some money.
Getting a fair deal on your insurance
Before you choose your insurance carrier, compare state-wide costs and insurers.
If you are looking for a real estate agent in Lincoln, reach out to our team at Location Lincoln.
