The Basics of Home Insurance for First-time Homeowners
Home insurance is available in a variety of options, from very narrow “named perils” policies to full “open perils” versions that cover essentially everything under the roof. Spend any time in this marketplace and you will quickly discover how many competing claims, clauses and contracts arrive at your doorstep on a daily basis. If you are a first-time homeowner looking for vetted and reliable information, it can be difficult to know where to turn. Thankfully a little information goes a long way in this industry, and all you need is a primer to point the way.
Home insurance, or homeowner’s insurance, is designed to provide some measure of protection for the things you own. Today’s home insurance policies tend to range from very specific to quite broad, and they may or may not include such features as injury and natural disaster coverage. Getting into this market and finding good homeowners insurance quotes requires that you understand the different types of coverage and what they represent.
Basic property damage coverage is the most common type of home insurance, and with good reason. The home itself is generally more valuable than anything in it, and you want first and foremost to protect the structure from major damage. How much the policy is worth tends to be based on the value of your home, though lists of possessions can significantly swing that value one way or another. The home’s condition and its location play a role in determining the rates you get as well – homes in high-crime neighborhoods represent a greater risk for the insurance companies, and they charge accordingly.
More comprehensive policies also cover injury to guests or employees that may occur inside your home or on the property. We live in a litigious culture, and these days it’s not unusual to see general contractors and even trusted guests sue for major injuries incurred in your home. Personal liability coverage may ease the burden on your psyche by providing for considerable medical moneys should such an injury occur.
Many homeowners mistakenly believe their home insurance will cover so-called “acts of God” such as earthquakes and flooding, but often this is not the case. Risks associated with events such as these tend to be geographically based, and certain regions may carry high premiums for this kind of damage. If your home isn’t covered and you want additional peace of mind, it may be worth looking into separate coverage for major natural catastrophes.
Countless other factors may enter the decision-making process as well, from the amount of money left on your mortgage to your credit score. If you are in doubt about the kind of premiums you can expect to pay, try asking your bank or financial counselor what kind of values you should assign these different priorities. When it comes time to buy, be sure and get estimates from multiple carriers before you make this decision. You’ll be glad you did some comparison shopping first. For more information, check out our home insurance articles.