Home Insurance FAQs
A: Many insurance companies offer better rates on homes that are more modern and present fewer hazards. Insurance companies look at the property in question and calculate the possibility of a payout. A house with modern electrical and heating systems are low risk, and an insurance company will charge less for a modernized home than one that is older whose systems have not yet been upgraded. Some insurance companies also give discounts for theft prevention techniques, such as upgraded security systems or a dead bolt lock on the door.
A: Homeowners insurance is very similar to auto insurance on this point. Most companies claim to give some leniency for the first claim but reserve the right to raise the rate if they deem it necessary. If an insured individual files more than one claim during a certain period, that individual’s rates will most likely increase for the next insurance cycle. If there are rate increases, an insured individual should not feel obligated to stay with any particular insurance company; it is often times best to switch insurance companies from time to time.
A: Because flood damage is so infrequent, the majority of homeowners insurance policies do not cover it. Federal law requires people living in certain areas of the country that are subject to catastrophic floods to hold some type of flood insurance. These required flood insurance areas are labeled as federal flooding areas. It is a good idea to look into flood insurance in order to protect your external property (the house itself) and internal property (your possessions), both of which could be significantly damaged, destroyed, or lost during a flood. Flood insurance is relatively inexpensive for the possible payout that it could provide.
A: Unlike auto insurance, homeowners insurance is not required to own a home. Most financial institutions will require some type of insurance while you are paying off a loan, especially if there are common natural disasters (flooding, earthquakes, tornados, etc.) in the area where the property and the home are located. Although it is not required to hold homeowners insurance, after the loan has been paid off, it is generally a good idea to keep the insurance to help protect the property as an investment.
Q: What type of insurance do I need for a condo or a co-op?
A: There are two types of insurance that are required when renting a condo or a co-op. The first is a master policy, which is generally created and provided by the condo or co-op board. This policy consists of shared parts of the property, such as walkways, roof, boiler room, etc. The second policy is your own insurance policy. This should cover structural improvements or problems caused by fire, theft, or other disasters. The policy should also cover all property or possessions within the condo or co-op and should also include liability in case a guest or tenet is injured on your property.