Buying your first home is a thrilling experience. Along with the benefits of home ownership come new responsibilities, including finding a homeowner’s insurance provider. Most mortgage providers require borrowers to take out homeowner’s insurance before they can start lending.
What does homeowner’s insurance cover? What services and qualities should a home insurance agency provide? In this post, we’ll outline the basics of homeowner’s insurance and how to evaluate potential insurers.
What Homeowner’s Insurance Covers
A standard homeowner’s insurance policy pays for losses and injuries sustained in covered accidents or incidents at your home. It includes harm to exterior and interior fixtures from loss, damage, or theft. Homeowner’s insurance covers possessions and personal liability for injuries.
Homeowner’s insurance providers may offer compensation for living expenses if you’re forced to temporarily relocate. They may also offer coverage if you’re liable for injuries or losses in events away from your home.
A few incidents are not covered by standard homeowner’s insurance. Most insurers exclude damage arising from floods, earthquakes, pest infestation, power outages, mold growth, war, or terrorism. Many policies also exclude big-ticket possessions like jewelry or rare artwork.
Coverage Levels
There are three tiers of compensation coverage that homeowner’s insurance provides:
Actual Cash Value (ACV)
ACV policies calculate the cost of your home and possessions after making deductions for depreciation and wear and tear.
Replacement Cost
Replacement cost policies include the same calculations as ACV but do not deduct depreciation or wear and tear from the covered amount.
Extended Replacement Cost
The most comprehensive coverage, extended replacement cost policies cover the total for repair and replacement even if the claim exceeds policy limits. There’s typically a cap of 20% to 25% on costs above these limits.
What to Look For in a Homeowner’s Insurance Carrier
Here are some tips for finding a homeowner’s insurance provider:
- Check your state’s department of insurance ratings on providers
- Look up their credit scores at top credit agencies like Moody’s or AM Best
- Find out whether the companies outsource claims processing to outside contractors
- Read customer reviews of the companies online
After lining up potential providers, make sure to get multiple homeowner’s insurance quotes. Look for more than the most affordable price, though. Cheap premiums usually mean less coverage, so they’re not always cost-effective. Compare the levels of coverage, limits, and exclusions across several contenders. Seek a balance of coverage depth and value.
There’s a lot of joy in homeownership. Lining up sufficient homeowner’s insurance can enhance that pride and responsibility. Take a few extra steps to find the carrier that is best for you, your home, and your budget.
Warrior Insurance & Services Group: Partners in Home Insurance
If you’re on the cusp of becoming a first-time homeowner, Warrior Insurance & Services Group can serve as your partners in safeguarding your home. We’ve helped hundreds of Colorado families protect their investments with comprehensive, budget-friendly home insurance policies. To get a free quote, contact us online.