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Home Owner's Insurance


After you buy a house one of the bills you can look forward to paying for the foreseeable future is homeowner's insurance. There's no law that requires you to get it but mortgage lenders do require you to get homeowners insurance before they'll agree to finance your home purchase. In other words, if you need a mortgage to purchase a house this is more or less mandatory. That's because home insurance protects the mortgage lender’s investment if the house is damaged or destroyed in a covered event. If times get tough you can skimp on the gardener, the grocer or clothes but this is one bill you'll need to keep paying so you'll want to make sure you get as good a deal as possible right from the start. Homeowners insurance isn't one size fits all and every company is different so shop around. To make it as quick and painless as possible, having the following information ready will help this go fast.

Basic Information


Before you call there's some basic Information the insurance company will need to give you an accurate quote.

  1. How many people live in your house?

  2. Is this your primary, seasonal or secondary house?

  3. Year built?

  4. What's the square footage of the house?

  5. Number of bathrooms?

  6. Number of stories?

  7. Are there any detached structures like a shed or garage? An in-the-ground pool might be considered a detached structure as well.

  8. Does the house have wood stoves or fireplaces?

  9. What kind of roof materials were used? (metal, slate, asphalt shingles, solar tiles, rubber slate, clay, concrete)

  10. What materials are used for the exterior walls? (wood, vinyl, metal, stone, brick, stucco, concrete, glass)

Personal Property

Home insurance doesn’t only cover the structure and systems in the house. It will also cover your personal property if it's damaged, destroyed or stolen so the price of your premium is also associated with the amount of personal property covered. Make a list of all the items you want insured. Literally everything! From the sheets, appliances, silverware, TV, golf clubs, etc.. Anything you'd need to replace. Don't just make mental notes either. Take photos, videos, and notes on condition and monetary values so if you need to you can give your insurance company a detailed list of what needs to be covered.

Also, make sure to ask what the price difference would be for covering actual cash value (ACV) or replacement cost value (RCV). ACV pays what your property is worth today, considering age and condition. RCV replaces your items with new property of the same type, kind and quality without deducting for deprecation.

Next, find out if there's a maximum recoverable value per item. You may have $20,000 of personal property coverage but you may only be covered up to a set amount per item. Usually $1500 so if an item that’s $5,000 is destroyed you won't be covered for the full amount or anywhere near it. Ask if you need additional coverage.


Discounts

Insurance carriers offer different discounts on different things. Ask them for a list of what they provide discounts on. Maybe they'll offer discounts on things you hadn't thought of. However, here's a list of common discounts. Be sure to mention any that apply to you.

  1. Bundling - Do you have health, life, auto, or boat insurance? You may get a discount for having more than one policy with a company.

  2. Have you been with the same insurance carrier for a while? Ask for a loyalty discount

  3. New Home - A new home will have a new electric system, plumbing, furnace, water heater, and everything else so fires, water damage and claims are less likely.

  4. Fire resistant construction (Floors roof and walls that are non combustible)

  5. Burglar alarm (Local monitoring) - These systems sound an alarm to alert homeowners of emergencies. However, these systems do not contact authorities.

  6. Burglar alarm (Central Monitoring) - These systems alert both homeowners and the proper authorities in the case of true emergencies.

  7. Fire alarm (Local monitoring like smoke detectors) - These systems sound an alarm to alert homeowners of emergencies. However, these systems do not contact authorities.

  8. Fire Alarm (Central Monitoring) - These systems alert both homeowners and the proper authorities in the case of true emergencies.

  9. Fire suppression system like sprinklers

  10. Is the house located close to a fire hydrant or is there one on your property?

  11. How close to a fire station are you?

  12. Are you paying for your house in full?

  13. Does the carrier offer a discount for setting up automatic payments or paying for the entire year?

  14. Has the electric system been upgraded?

  15. Has the plumbing system been upgraded

  16. Do you have a water leak detection system alarm?

  17. Water leak detection system shut off

  18. Do you have a hail resistant roof?

  19. Ask how long you need to go claim free to get a discount. However don’t avoid making a claim just to get this discount.

  20. Do your doors have a deadbolt? It will decrease the likelihood of theft.

  21. Do you live in a gated community? It will decrease the likelihood of theft.

  22. Are you an active member of the military?

  23. Some other occupations also get a discount like first responders and educators.

  24. Are you married?


Risk factors that raise your insurance premium

  1. Tree houses

  2. Pools, pool slides and diving boards

  3. Wood burning stoves and fireplaces

  4. Being in a high crime neighborhood

  5. There's no good credit discount but you'll pay more if your credit score is lower. A fair credit score will raise your rates 36%. A poor score 114%

  6. If you or someone you live with smokes it increases the chance of a fire.


Additional Coverage

You may need add on coverage for anything that isn't covered in a standard policy such as:

  1. A home business - You may need additional liability insurance if someone is injured and additional property damage protection.

  2. Things like jewelry, camera equipment, bikes, art, and musical instruments may exceed the maximum recoverable value per item and warrant additional coverage.

  3. Windstorm coverage In areas that are prone to hurricanes.

  4. Cosmetic damage done by hail. Hail damage will probably be covered by a standard policy but cosmetic damage might not be.

  5. Additional Living Expenses (ALE) Coverage - If your home is destroyed it will pay living expenses like staying in hotels and eating in restaurants.

  6. Service Line Coverage - Covers utility line run on your property such as:

  • Water pipes

  • Steam pipes

  • Sewer pipes

  • Drain pipes

  • Power lines

  • Fiber optics

  • Cable lines

  • Internet lines

  • Natural gas pipes

  • Sprinkler pipe

Flood Insurance

Natural flooding is only covered by the National Flood Insurance Program (NFIP) which is run by the Federal Emergency Management Agency (FEMA). So if you live in a coastal area or near lakes, rivers or other bodies of water and want coverage that's where you need to go. Make sure to do plenty of research to find out if you're in a flood zone and what kind of protection you may need.

You may be able to check off many items in the discount list but unfortunately there are limits to how big a discount you can receive. Most companies cap it at around 25%.

Liability Insurance


Most standard policies will cover you for up to $100,000 against lawsuits for property damage or bodily harm you, your family members or pets cause. It will also cover court costs and damages awarded. You should, however, have enough liability insurance to cover all your assets so ask about additional liability cover of $300,000 to $500,000. If you need more than that you can consider purchasing a separate Umbrella Policy if you work from home, have a higher net worth, have high value objects or need the coverage for another reason.

Common causes for liability are

  • Dog bites - on or perhaps off your property

  • Falling trees - If a tree or branch from your property falls and hits someone or something like your neighbors house car or pool collapsing it and flooding their basement .

  • Workers injured on your property - If someone is injured while working on your house you could be responsible.

  • Home accidents - If someone injures themselves on your property you could be responsible. Even if they’re trespassing

  • Intoxicated guests leaving your house and injuring someone or their property



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