Homeowners Insurance FAQ
Homeowners insurance FAQ, or frequently asked questions, remain similar regardless of which state you reside in. This information will help get you started in your search for homeowners insurance. However, this is non-state specific and general information on homeowners insurance.
Once you have done the research, feel free to use the search tools made available on this page to continue your search for other answers to questions on homeowners insurance. Before purchasing, it is always prudent to check with your state to find out specific requirements to decide what your homeowner needs require.
Homeowners Insurance FAQ #1:
What Does My Policy Cover?
A homeowners insurance policy will be broken into two parts, property and liability coverage. Each is just as important, but each protects in different ways. Property coverage includes these components:
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The home or residence.
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Personal property (belongings inside the household or other structures on the lot).
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Detached properties or structures on the lot.
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Loss of use for property and personal belongings.
Liability coverage provides protection against worst case scenarios. This is broken down into two categories:
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Personal liability: payments for claims or lawsuits brought against you as a result of an accident on your premises.
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Medical payments: payments for medical care required to accidents that occur on your property (excluding yourself and members of your family that reside with you).
Homeowners Insurance FAQ #2:
What Affects The Price Of Homeowners Insurance?
Many factors play into the price of your homeowners insurance premium. Here are a few to consider before purchasing your home:
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Location of the Residence: If you live on the West Coast, your premiums will most likely be higher than someone in the Midwest in an area that is not prone to earthquakes or devastating fires. Not only does it matter geographically, it makes a difference what neighborhood you are located in. If you live in an area prone to home vandalism claims, your premium will also reflect that risk.
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Home Construction: The type of material your home was constructed with will affect the premium. Is vinyl siding going to hold up as well as brick?
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Claims History: If your previous homeowners insurance reported that you placed multiple claims, it can affect your premium. Just as auto insurance companies use claims history to predict future claims, the homeowner insurance industry does the same.
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Local Fire Protection: If the nearest fire hydrant or water availability is two miles away, you will, unfortunately, pay more for fire protection.
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Credit Score: Keep in mind that only certain states allow the use of credit as a factor for insurance premiums. However, if your state is one of them, your credit score can either positively or negatively impact your insurance premium.
Homeowners Insurance FAQ #3:
How Do I Save Money On My Homeowners Policy?
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Protect your home! Installing deadbolts and security systems will save you 15-25% on your insurance, as well as bring peace of mind.
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Try it before you buy it. Before purchasing your new home, get a quote on homeowners insurance to make sure it is within your price range.
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Combine insurance policies for convenience and to save money. When you have your auto and homeowners with one company, you often times get a discount of 5-10% on both policies!
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Raise your deductible to the maximum amount you would be able to pay out of pocket if a claim occurs. This will in turn lower your monthly premium.
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Insure your home for the replacement value rather than the market value.
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Do you belong to an alumni or another professional organization? Often times those groups offer discounted insurance deals.
There are really a lot of options and opportunities to lower your costs. Most people don’t take the time to ask, or make the effort to follow through on them.
Homeowners Insurance FAQ #4:
How Should You Insure Jewelry?
Let’s start by defining the two ways to insure property:
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Replacement Value: This is defined as the amount needed to repair the home with similar materials without deducting depreciation.
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Actual Cash Value (ACV): This is defined as replacement cost minus depreciation. In other words, ACV includes depreciation of items.
Typically, you’ll want to insure your house at replacement value and your belongings at ACV. With jewelry and other expensive items that you keep in your household, make sure first that you list them specifically on your policy so they will get replaced if something happened. Also, if you have certain expensive items that you do not want to be affected by depreciation, make sure to ask your insurance agent to get those covered at replacement value.
Homeowners Insurance FAQ #5:
Does My Policy Cover Flooding?
Most policies do not include flooding under covered acts of nature. While most policies do cover water damage, it usually has to be from pipe leakage or other events like a refrigerator hose leak. If you are in an area that carries the risk of flooding, speak to your insurance agent. They can purchase supplemental insurance through the National Flood Insurance Program.
Homeowners Insurance FAQ #6:
What Is The Difference Between An All Risks Policy
And A Named Perils Policy?
An all risks policy will cover all events except what is specifically excluded in the policy. A named perils policy covers only the events that are specifically listed on the policy. Typically you’ll see that the property section will be a named perils policy and liability will be an all risks.
Homeowners Insurance FAQ #7:
Can I Own A Home Without Insurance?
Legally you are not required by the state to carry homeowners insurance on your house, unlike auto insurance. However, if you have financed your home through a banking institution they will most likely require you to carry some type of homeowners insurance.
Further, even once you have paid off your mortgage it is still sensible to continue to protect your investment: your home.
Start Using The Answers To
Homeowners Insurance FAQ Now!
Now that you have the answers to the questions you have been searching for from our homeowners insurance FAQ, start your search for a cheaper policy! Use our free search tools at the top of the page to find better homeowners insurance today!