Stick to the Basics.
When purchasing property insurance review factors that cut cost and make sure to keep these basics in mind: how much do you wish to spend, know the property’s claim history, understand what is covered in the policy including special circumstances and recognize that location matters. No matter how fast the deadline for closing on a home sale or refinancing is approaching, take the time to secure the appropriate property insurance to protect your investment. It is important to note that the condition of the home impacts premiums. Claims due to faulty wiring or plumbing in older homes may dramatically spike the insurance premiums. Newer homes with updated electrical installations will be more cost-effective and easier to insure. In the end failing to make the right decision regarding homeowner’s insurance can literally make or break you. So, before signing on the dotted line, here are four tips to guide you in choosing the right property insurance that best fits your needs.
One: Determine Your Budget.
Once you’ve determined your budget, it is important that you insure your home for what its replacement value is and not what you paid for it. If possible, escrow your insurance payments with your mortgage payments. Lenders prefer this option because it lets them know your insurance premiums are being paid, and their investment is well protected. Raising your deductible from five-hundred dollars to one-thousand dollars may save you as much as twenty-five percent on your premium, which can be paid monthly or annually, however, make sure that you can come up with the deductible, or amount you must pay out of pocket in cash before your insurance kicks in, if necessary. Most policies protect you against fire, lightning strikes, wind or hail damage. Losses from vandalism and theft are also typically covered to varying degrees. The experts at the LoPriore Insurance Agency recommend that your insurance coverage reflects what it costs to bring materials to the site and rebuild the home if it's damaged or destroyed. Realize that the home will most likely cost more to rebuild due to inflation. It is also important to be aware that the insurance company will not be insuring the land, therefore if you purchase a home on a large piece of property the amount of your policy will oftentimes be much less than what you paid for the home.
Two: Realize that Location Matters.
When shopping for a home, keep in mind that the geographical location of your property will make a huge difference in cost of insurance. The home location can cut as much as five to fifteen percent off of your property insurance premium costs. A home near a fire hydrant, for example, can cost less to insure. A home in a community with a professional fire department instead of volunteers will also cost less to insure. On the other end of the spectrum if a home is situated in a vulnerable area such as a tornado alley, flood zone, earthquake fault zone, wildfire zone, landslide area, or an area with a high crime rate it will most definitely prompt insurers to charge higher premiums for obvious reasons.
Three: Know the Properties Claim History.
It is important that you ask the seller to provide you with a current copy of the home's insurance claim history report. The report may tip you off to potential problems you might not be able to see such as previous fire, tornado, water damage or other catastrophic events which may make insurance more expensive on the home or in some cases, make it difficult to get insurance on the home at all. At present, there are two companies that keep databases used by the insurance industry. One is ChoicePoint, which has the largest database known as the Comprehensive Loss Underwriting Exchange or CLUE and the other is the Insurance Services Office Inc. which maintains the Automated Property Loss Underwriting System or A-Plus. These reports are important because they outline previous fires, flooding and other claims that may have been made involving the home you intend to purchase and insure.
Four: Make Sure to Understand What Your Policy Does and Does Not Cover.
Homeowners insurance typically covers the primary structure of your home, additional property structures such as a deck and tangible property such as furniture, electronics, clothing and other personal items. It also provides liability protection against lawsuits for injury or property damage to others on your property and living expenses in the event your home is damaged and you are temporarily displaced from your living space for an interim period. These coverages often have various limits in standard policies, but can be adjusted by paying more. You'll need to think about levels appropriate for you given your location. Realize that damage caused by poor maintenance, mold or pest infestation such as termites are usually not covered by property insurance.
Conclusion: Contact at Least Three Insurance Companies to Compare Coverage.
Your mortgage lender will require that you have homeowner’s insurance and you may even be required to purchase additional insurance such as flood insurance and earthquake damage insurance if you are in an area prone to such disasters so make sure to weigh the cost with the risk of investment. You are also under no obligation to buy from any particular insurance company so make sure to compare coverage, price and customer reviews before committing to an insurer. Shop for value, not lowest price and most importantly make sure you get the right type and amount of coverage to fit your needs. Note that insuring your home and car with the same company can oftentimes save you up to fifteen percent and having a high credit score may likely lower the cost of your property insurance premiums. Finally, because you will mainly deal with insurance companies in times of disaster, make sure the company you choose has great customer service reviews. The right insurance company has a solid track record for paying claims. Visit online home insurance rating sites to thoroughly research a potential company’s customer ratings, you will be glad you did in the end.