One of the issues home buyers need to consider when they're purchasing a home is insurance. Homeowners insurance helps protect homeowners from financial liability due to damage from natural disasters and certain types of property damage. Knowing what to look for in a homeowners insurance policy, how much you can expect to pay for this insurance and what you can do to save can help you get the best deal possible.
Is Homeowners Insurance Required?
People who pay cash for their homes don't need to get insurance, but people who borrow money for their home may be required by the lender to get insurance. Homeowners who borrowed money for their home and who don't have insurance may be forced to pay for coverage through their lender. Often these lender-forced policies are far more expensive than policies available on the open market.
How Much Does Insurance Cost?
The amount you can expect to pay for insurance depends on a variety of factors including location, size of the home, value of the home, upgrades to the home and other risk factors. Policies in high-risk areas may be more expensive than policies in low risk areas. $1,000 to $2,000 per year is typical for standard single-family homes. Policies are paid for in one lump sump for the year.
One of the best ways to save on a policy is to pair your homeowners insurance with your car insurance. In addition, raising the deductible from $500 to $1,000 can save as much as 25 percent on a single policy. Shopping around is another good way to save, and in some cases, upgrades to the home's systems (like electrical, plumbing and roof) can also lead to savings.
What's Covered Under a Standard Policy?
A normal homeowners insurance policy will pay for damages to the house from fire, lightening strike, wind, theft and hail. If the house is a total loss, the policy will pay to either rebuild the home or pay for the cash value of the house. Policies that pay to rebuild the home are generally better because the value of the home may be less than the price to rebuild. Homeowner insurance policies also pay for certain lawsuits filed against the homeowner.
Meanwhile, many homebuyers are surprised by what is not covered under their homeowners insurance policy. Earthquakes, floods, sinkholes and mudflow are all not covered under a typical policy. Homeowners who live in a high-risk area must pay for separate insurance policies to cover this type of damage. Additionally, appliances and items in the home would instead be covered by a home warranty, rather than home insurance.
What Are the Options for Home Insurance?
If you're trying to buy a home and are looking for homeowners insurance, start by calling the company that provides your car insurance. If you don't have car insurance, calling an insurance broker in your area, be it Gallatin or elsewhere, is a good way to get a variety of quotes and options in one phone call. Insurance brokers work with a range of insurance companies to help their clients get the best deal.
For more information about getting a homeowners insurance policy, talk to your real estate agent. He or she can point you in the direction of a good company and may be able to recommend an insurance agent for your purposes.
The Ashton Real Estate Group of RE/MAX Advantage
The #1 Real Estate Team in Tennessee and #2 RE/MAX team in the World!