How To Buy Homeowners Insurance in 2023
When a person buys a home, they do a lot of research, spend a lot of time, and put a lot of effort into the process. Buying homeowners insurance, on the other hand, is often almost an afterthought.
But homeowners insurance should be given more thought because picking the right policy can keep you from going broke after a big disaster.
This guide will show you step by step what you need to know about homeowners insurance before you go shopping. We’ll also help you figure out if you need homeowners insurance and, if so, how much you should buy. You’ll find out what a basic policy does and doesn’t cover, what add-ons are available, and what coverages you might want to think about.
Lastly, you’ll learn how to choose the best homeowners insurance company and a policy that fits your needs and budget.
What is insurance for a home?
A home insurance policy pays to fix or replace your home and its belongings if they are damaged by fire, smoke, water, theft, vandalism, a storm, or another event listed in the policy. The word for these is “perils.”
Standard policies usually also cover the repair or replacement of heating and cooling systems and their parts, such as a furnace or water heater, if they are damaged by an event that is covered by the policy.
Personal property that is damaged, stolen, or destroyed in a home is also covered by homeowners insurance. Lastly, homeowners insurance pays for someone else’s medical and legal bills if they get hurt on your property and no one in your family is hurt.
Do I need insurance for my home?
You probably need homeowners insurance if you own a home. In fact, if you want to get a mortgage or loan to pay for your home, the bank or mortgage lender will probably need it. That’s because your lender will want to make sure their money is safe in case of a flood, fire, hurricane, or other disaster.
If you paid cash for your home or paid off your mortgage, you technically don’t need homeowners insurance. However, it’s still a good idea to get it so you don’t have to worry about money if something happens to your home or belongings.
The same thing is true whether you buy a co-op, a condo, or a mobile home. If you need to borrow money to buy the house, your lender will probably ask for a policy, no matter what kind of house it is. Condominium or private community associations may also require homeowners insurance to cover common property and facilities like a shared roof, common walls, a tennis court, or a swimming pool.
Insurance for your home is a good idea. Even if your mortgage is paid off, you paid cash, or you inherited a home without a mortgage, you still need to pay property taxes. Most people don’t have enough money to rebuild or make major repairs to their home if it is destroyed or badly damaged. A homeowners policy is much cheaper than paying for repairs out of your own pocket.
Most standard policies also help pay to replace your furniture, clothes, and other belongings after a fire, storm, or other disaster.
What does insurance for a home cover?
Homeowners insurance pays for damage or loss to your home, your belongings, and even people who get hurt on your property. Here is a list of the standard coverage that comes with a homeowners insurance policy:
Damage to your home caused by fire, smoke, theft, vandalism, or bad weather is covered by dwelling coverage. Most insurance covers damage from lightning, wind, and hail, but you will need to buy separate insurance for floods and earthquakes. Your garage, barn, or shed, which are not attached to your home, are also covered.
Your personal property, like furniture, appliances, clothes, and electronics, are covered by personal property coverage. If you lose or damage something, you can get the full replacement value or the cash value of the item after it has lost value. For valuable things like art and jewelry, you might have to pay higher premiums or buy extra coverage.
If someone gets hurt on your property, personal liability coverage can help protect you. If you are sued, your policy can help pay for your legal fees and costs. If they get hurt, it can also pay for things like X-rays, ambulance rides, and stays in the hospital.
Living expenses coverage will help pay for your costs if you have to live somewhere else because of a covered event. This could be because of a fire, tornado, or other immediate or impending dangers that make it unsafe for you to be in your neighborhood.
In addition to the standard coverage listed above, most homeowners insurance companies offer add-ons or extra insurance to meet specific needs. These can include:
Flood insurance and earthquake insurance are two different policies that cover damage caused by each event. Even though not all insurance companies offer flood or earthquake insurance, depending on where you live, you might have to buy one of these policies. On its website, FEMA has an interactive flood map that can help you figure out how likely a flood is in your area.