What to Consider Before Choosing A Home Insurance

Home insurance are almost as mandatory as car insurances. If you have a mortgage and paying some bank that owns your home and loan, then you must have a home insurance. Banks make it mandatory to have a home insurance not just to protect you as home owner but also to protect them as investors. Until your home is paid off, you don’t really own it as you’ll quickly discover if you default. The bank that has loaned you money own the home and has a right to demand that you have an insurance covering their investments. Fair enough.

 

But, home insurance is not just in the banks favor. It is also for your protection. Many of us know one or two people who might have to rebuild their house because of fire, flooding, or other damages and the insurance had to take care of them. When something bad happens to your house, the insurance company steps in to make sure that you can recover your house and property and if not, that you adequately provided for so you’re not homeless.

 

So, when considering a home insurance company to work with, it’ll be prudent of us to find the best insurance company that will take care of any issues that might arise with our homes in the future. As you consider what insurance company to work with, here are three things to keep in mind.

 

1.How much is your house worth?

Depending on how much your house is worth, not just to you but on market value  by appraisal (not based on what you owe the bank but based on what your house can sell for if you were to sell), you can decide to get an expensive coverage or something moderate. If you house is terribly expensive, you’d need special insurance companies that cover jumbo loans or mega priced houses as they are the only ones that can cover your house for what it’s worth.

 

Some of the more commercial insurance companies that most people use do not extend coverage pass a certain value of your house and in this case, you might need a private insurance company. But regardless of how much your house costs, make sure you get coverage that will take care of the cost of your house and even more should you ever need to file a claim or get money back for damages incurred to you house.

2.Do you live in a flood zone?

You can imagine that houses that are in areas that can flood cost more to insure as the insurance company knows that they might constantly pay out for flood damage to your house. So, if you live in an area that is prone to flooding such as a beachfront property or just any waterfront property, keep in mind that you will need a company that can cover you for all flood damages without an issue.

 

There have been stories where people were denied claims because the insurance company claimed that the flood or other disasters were natural disasters not covered under your policy so make sure that whatever policy you have covers all your needs including storms, flooding, excessive rainfalls any other thing that can bring rain.

3.Do you have a second home or other coverage

If you have a second home, the insurance company might take this into consideration. They typically want to insure your primary home completely and if you have a secondary home, the coverage might differ depending on what you do with it, as well as where it’s located. For instance, if you frequently rent out your second home for payment, your insurance payment might be higher for that home as the company might want to cover you for any accidents incurred by your guests while staying at your rented home. There have been too many horror stories of guest suing their host homes for negligence after they got hurt. Imagine getting sued by a guest who rented your home because they fell and slipped in the bathroom – that could make you bankrupt but if your insurance covers your guests, you’ll find yourself less out of pocket.

If your secondary home is barley used and is exclusively used by you, your insurance rate will be lowered since risks are lowered for the insurance carrier and they can pass this savings to you. So, depending on what your home functions at, your insurance rate will differ but most importantly, you want to make sure your insurance company is able to offer you savings based on the primary use of your house.