Who should get homeowner insurance and why should I get it?
If you own a home and have a mortgage, the bank will ask you to have homeowner insurance. But even if you don't have a mortgage, it's smart to buy homeowner insurance to protect your investment.
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| Who should get homeowner insurance and why should I get it? |
How much homeowner insurance do you need for your house? To figure this out, get in touch with your insurance agent. They will help you figure out the right amount of coverage you should have.
Who needs homeowner insurance and why should I buy it?
The insurance coverage depends on the replacement cost of your home, which is a calculated value based on your home's specific details.
You'll need to provide information about your home, such as:
1. How big is your house (square footage)?
2. What type of roof does it have?
3. Have you made any recent improvements, like adding a new deck or room?
4. Do you need coverage for any additional buildings or structures on your property that are not attached to the main house?
Your homeowner policy usually covers these additional buildings and structures on your property, but it doesn't include another residence like a rental unit or a mother-in-law apartment.
Take a look at your policy to see the coverage amounts and limits. And if you're unsure about anything, don't hesitate to ask your agent for clarification. They're there to help you!
Is your home financed or do you have a mortgage on it?
If you have a mortgage, your bank will want you to have enough insurance to protect their investment in your home. They might also ask you to include them as the lien holder on the insurance policy.
If you don't have insurance when you first get the mortgage, the bank may get their own insurance to make sure they are protected if anything happens to your home.
It's crucial to have insurance coverage all the time. If you lose your coverage, you should find new insurance as soon as possible. Otherwise, the mortgage company will buy insurance for you, and it can be expensive.
There are two types of coverage you should know about: replacement cost and actual cash value coverage.
- - Replacement cost coverage is the most common one. It pays for replacing or fixing your property. The insurance company will give you the money for the actual cash value first. Then, after you repair or replace your property, they will pay you the difference.
- - Actual cash value coverage gives you the amount needed to replace or repair your property, but they subtract the amount it has depreciated.
For example, if you bought a TV for $1,000 five years ago, and it gets damaged in a fire, your policy will give you the amount the TV is worth now, not what you originally paid for it.
Regardless of the type of coverage you choose, it's essential to keep track of your property's value. You can do this by making a list of your belongings, like a home inventory checklist.
You can find a checklist on the website www.naic.org. Keep this list in a safe place, such as a fire-proof safe or a backup hard drive, so that you can use it if you ever need to make an insurance claim.
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