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How to Buy Homeowners Insurance

First-time buyers usually find buying a home so overwhelming that they don’t give enough thought to the process of getting homeowner’s insurance, yet if anything should affect your home it’s the homeowner’s insurance policy that will either save you or be your doom. So before signing the documents look through these four tips for some guidance to get affordable home insurance. Contact at least three companies to compare coverage. Most mortgage lenders will require you have homeowners insurance and even additional insurance like flood insurance. Since you are not required to buy from any specific company, be sure to compare customer reviews, coverage and prices, and get the right amount and type of coverage. Instead of shopping for a rock-bottom price, shop for value. Also ensure that your company of choice has great customer reviews since you’ll basically be dealing with them only when there’s disaster. Ensure you're getting proper coverage. Don’t pay for more than you need. The level of coverage you get is the most essential part of your homeowners insurance. Some of the most common levels of coverage are as follows: HO-2 – a broad policy that protects you against 16 named hazards contained in the policy. HO-3 – is broader than the HO-2 and protects you from every hazard except those the policy specifically excludes. HO-5 – this premium policy protects newer homes that are well maintained and covers every hazard minus those the policy specifically excludes. HO-6 – this policy is for condominiums/co-ops and includes coverage for the improvement to the owner’s unit, liability coverage and personal property coverage. The association usually facilitates insurance for the actual structure. HO-7 – is for mobile homes but similar to the HO-3 policy. HO-8 – this policy covers only actual cash value, has similar coverage to the HO-2 policy but is just for older homes. Understand the details of your policy. Getting the right policy level isn’t enough. Before even making a decision, you should understand the following homeowner’s insurance terms. Deductible – before your insurance kicks in, you must pay an amount of money known as the deductible. A higher deductible means a lower annual premium. Liability Coverage – if anyone got hurt on your property, usually as a result of negligence, this is what covers their legal or medical bills. Personal Property – refers to tangible property such as clothing, electronics and furniture (things sometimes known as the contents of your home). Premium – this is the monthly or annual price you pay for insurance. Replacement Cost – this insurance pays the entire cost of replacing your personal property or dwelling up to a maximum dollar amount. You’d want to ensure the maximum amount is high enough though most standard policies offer replacement cost. Actual Cash Value – this policy offers you the current value (including depreciation), in cash, for your dwelling or property. This gets you replacement cost coverage for contents that are yours though, just as with the HO-8 policy, you can have dwelling coverage in actual cash value. As you consider your homeowners insurance policy, ensure you know how all these terms work together. Make inquiries and ensure it’s the right amount of coverage you’ve got, and at the right price.
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