Apr 6, 2021

Buying Home Insurance

 If you have a mortgage, the lender will require you to have home insurance to protect their interests.  In essence, when you buy insurance the lender becomes a co-insured.  Home insurance is even more important if your home is paid off.   Many people have done business with the same insurance company for years so when rates go up, we all just end up paying it.  However, when your current provider announces a rate increase, maybe it is a good time to shop the policy with various companies to get the best rate and terms. 

One of the games that some insurance companies play these days is insisting on a deductible that is one percent of value.  So, if your home is worth $350,000 that would be $3,500 out of your pocket before they pay any claim.  It is better to have $1,000 deductible.  You may pay a little more for it, but at least you cap your out of pocket expense in the event you do need to file a claim. 

And, then there is always the fine print.  You may think you have coverage when in fact you don't.  Things like flood and earthquake insurance require riders to get coverage.  In addition, antiques and jewelry of special value would also require riders to be insured.  Ask lots of questions when speaking to the insurance agent to make sure you have the coverage that you need.

Finally, make sure you have enough insurance to cover a total loss of your structure and that means building replacement cost not just a flat amount of money that may not be enough.  Right now the cost of building materials has skyrocketed so you may need more insurance coverage.  The last thing you want in case of a total disaster is haggling with your insurance provider.