Understanding Home owners Insurance
During your Option Period or Due Diligence Period, you are going to shop for Home Owners insurance. Like many other things, you will have many options to choose from. You are very wise to shop around and to look at both large national insurance companies as well as regional insurance companies. It is critical though to ensure that whatever company you choose is covered by the state guaranty association and guaranty fund for your state. If the insurance company becomes unable to pay claims then the guaranty fund and guaranty association will pay your claim as long as they are included. We suggest that your research the impact on your price if you were to bundle all of your insurance needs with one carrier.
What does homeowners insurance cover?
Home owners insurance covers two main types of loss: damage to property and belongings and personal liability. Most standard policies also cover loss of use, meaning the insurance company will pay for the homeowner to stay elsewhere while the home is being repaired. Home owners insurance is a form of property insurance that covers losses and damages to an individual’s house and assets in the home. The policy usually covers interior designs damage, exterior damage, loss or damage of personal assets, and injury that arises while on the property.
Typically, homeowner’s insurance covers damage from fires, lightning strikes, windstorms,s, and hail. Home owners’ insurance generally covers the structure and the contents of the structure up to a pre-determined policy coverage amount.
Generally, you will pay 14-15 months of insurance premiums when you close on your home and then you will continue to pay monthly premiums for your insurance to your mortgage company as part of your monthly payment (PITI). Your mortgage provider will hold these funds until your next annual bill is due and then pay it on your behalf. Paying the premiums in monthly installments helps a home owner’s budget and ensures the funds are available when the bills are due.
If you need to file a claim you will be required to pay a deductible. This deductible is usually expressed as a percentage of the home’s insured value.
What does home owners insurance NOT cover?
Typical home owners’ insurance does not cover rising water or flooding. Many policies also do not cover earthquake damage. Also of note, a typical home owner’s insurance policy does not cover foundation cracking or settling of the house unless caused by broken pipes.
Also generally excluded are items that generally result from deferred maintenance such as rotting wood, termites, rust, and mold.
You should note that products offered vary greatly between insurance carriers and you should do significant research into the offering of each insurance carrier before making your decision.
A quick note on flood insurance.
Work with your lender and realtor to determine where your property falls on FEMA’s flood plain map. If your property does not fall in a required zone then the cost of flood insurance is usually nominal. Note that you are not able to purchase flood insurance if there is a named storm in the Gulf of Mexico so plan ahead. We highly recommend it!
Let Coastal Living Realty Group Help You!
If the thought of buying a home stresses you out, I encourage you to speak to a real estate professional or take a first-time home buyers class just to learn more. Both are no-cost options to learn more about how home ownership might truly be within your reach. You will be glad you did!
