Homeowners insurance, also referred to as home insurance or property insurance, provides coverage for your private home and compensates you in the event of a loss. If your home is burglarized or is partially or totally destroyed by a cause that is covered by your policy, homeowners insurance will help you replace your belongings, repair your home, or even rebuild.
Homeowners insurance also provides liability coverage which protects you, the homeowner, in the event that someone is injured on your property or you are deemed responsible for personal injury or property damage through negligence.
The amount of compensation you receive in a claim, or that the claimant receives from your insurance company when filing a liability claim against you, depends on the limits set for your policy. An independent agent in the Trusted Choice® network can help you to determine the amount of coverage that makes the most sense for your home and your risk tolerance.
Homeowners insurance provides coverage for a range of risks that you may face as a homeowner that otherwise can be financially challenging to cover out of pocket. These include:
When you buy home insurance, you’re buying a safety net for your home. If your home is damaged or destroyed, it can cost thousands of dollars – even hundreds thousands of dollars – to repair or rebuild.
Without home insurance, that money has to come out of your pocket. But if you’re insured, you can file a claim to pay for the damage and help rebuild your dreams. Your homeowners insurance will also cover theft of your personal belongings, includng when you take them with you in your car or while you travel.
In the event you suffer a loss, whether from burglary, fire or a severe storm, call your insurance agent or insurance company to begin the claims process. An adjuster will work with you to assess the damage and determine your compensation.
The benefits you receive will depend upon several factors, including:
Your state may or may not require homeowners insurance, but your mortgage lender typically will require coverage in order to provide a home loan. Even if you own your home outright and you are not required to buy homeowners insurance, it’s still a good idea to protect your investment with an insurance policy. That way you can get the financial compensation you need to repair or rebuild after a loss. Not only that, but your home coverage can help to protect you financially in the event of a liability claim that leads to a lawsuit.
Homeowners insurance is important for a variety of reasons:
You should purchase homeowners insurance before you contact a mortgage company for a loan. Most mortgage companies will require you to have homeowners insurance in place prior to giving you a home loan; but don’t wait until the last minute to start thinking about insurance.
It’s important to shop around for the right policy for your needs. There are many factors that determine the right insurance coverage. A Trusted Choice member agent in your area can help you compare policies and quotes to find the best coverage for your needs.
The value of your home and the amount of coverage you buy will largely dictate the amount you will pay for your premiums. But there are other factors that can affect your premium as well, including things like the crime rate in your area, and how many claims you have filed in the past. Another important factor is the state you live in, as average costs can vary significantly from state to state.
Because there are so many factors that affect the cost of homeowners insurance, a typical annual premium can range anywhere from $400 to $1500, or more for a high value home. If you choose additional coverage, you may pay a higher premium, but you will also have better protection.
It’s always important to comparison shop for the best homeowners insurance rates and the best value. An independent agent in the Trusted Choice network can compare prices from several different insurance companies to find the right policy for you at the right price.
Your insurance premiums are not tax deductible except under special circumstances. You do receive other tax benefits as a homeowner, but they are not related to homeowners insurance.
If you’re a landlord or a homeowner who uses part of your home for business purposes, you may be able to deduct a portion of your homeowners insurance. A tax advisor is your best resource in determining what you can and cannot deduct on your taxes.
Homeowners insurance is not included in your mortgage payment, unless it is escrowed. Today, creating an escrow account that covers your mortgage payments, your home insurance and even your property taxes is common practice.
Additionally, your mortgage insurance is typically included in your mortgage payment. This is paid if your loan exceeds 80 percent of your home’s value. Mortgage insurance does not insure your home. It insures the bank if you default on your loan.
Homeowners often ask "Can my homeowners insurance drop me?" Yes, your insurance company can drop you, but it’s important to know that being dropped (considered a non-renewal) is different from being canceled.
When you are dropped by your insurance provider, your insurance policy is not renewed at its expiration date and you must pursue another provider. You will be informed if your policy is going to be dropped so you have adequate time to shop for new coverage.
Your homeowners insurance can be canceled at any time as long as you are notified that it will be occurring. During the first 60 days, the insurance company can cancel for a variety of reasons. After 60 days, the reason for cancellation must be due to a specific circumstance such as non-payment, misrepresentation or increase in risk. You’ll typically receive a cancellation notice 10 to 30 days in advance of cancellation, depending on the reason your insurer cites.
Make sure your homeowners insurance covers the following areas:
For additional protection and peace of mind, consider buying an umbrella liability policy, which can add another $1 million or more in liability coverage. An umbrella policy is an excellent way for anyone to increase liability protection, but it's an especially good idea for anyone with more valuable than average assets to protect, or particular liability concerns.
You can always pay the insurance company directly for your homeowners policy, but you have other options. You can ask your mortgage company about escrow, which allows you to pay your homeowners insurance payment along with your mortgage payment. The insurance payment is placed into an escrow account where it is held by the mortgage company until the annual premium is met. At that point, the mortgage company pays the homeowners insurance annual premium to the insurance company.
This allows you to break your insurance premiums into smaller payments and you only work with one company. Escrow may not be available for everyone, though, so check with your lender.
When you start your search for homeowners insurance, it’s important to assess your needs to determine the right amount of coverage. It can be tempting to choose a policy based on price alone, but you probably won’t get the right amount of protection using that method. Protecting your investment doesn’t mean breaking the bank. You can get a range of quotes and options from an independent Trusted Choice member agent.
When you work with an independent agent, you’ll never have to wonder if you should have looked at more policies from different companies. You will have the opportunity to compare several options from top companies and find the best policy and value for your needs, all while letting your agent do the legwork.
Contact a local independent agent today for personalized homeowners insurance quotes.