Spring and summer is home buyer season. Unless you pay cash for your home your mortgage company will require you carry homeowner insurance. Your coverage is determined by what it costs to rebuild the home not what you’re paying for it. The larger the home, the more coverage you need to pay for rebuilding in the event of a loss. In this economy we see some buyers getting a good price on homes but still needing to insure for almost what they paid for the property. In other cases the price of the property is very high due to inventory shortages, the school district or the exclusivity of the area. In this case the coverage may be way less than the cost of the home. Coverage needs to be determined for replacement of the home not the price of the property. An agent can help determine the right coverage for your home.
Not all policies are created equal either. California homeowner insurance policies come in different shapes and sized depending on the property. A homeowner may need broad coverage or superior coverage while others need a different type of policy for a condominium or a mobile home.
A California homeowner insurance policy does not include coverage against damage caused by earthquakes. This can be purchased separately through your agent. There are various options out there and should be discussed to see what fits your needs and budget.
Another point often overlooked are the limitations within a policy, especially for personal property. Every property policy limits such items as jewelry, fine arts, cash or silverware. Be sure to read the personal property section of your policy carefully, these sub-limits are clearly outlined. If you do have specialty items to insure you can cover them under a personal articles floater policy or even add them directly to your your homeowner policy for an extra charge. Costs vary depending on the type of item you want to insure and the value of the items.
Things to remember when buying homeowner insurance:
- Make sure you insure the home to a proper value. Under insuring your home could reduce a claim payment leaving you to make up the difference. There are specific replacement cost clauses in property policies.
- Ask your agent what discounts are available to you. Some may include alarm discounts, sprinkler system discounts or multi-policy discounts. Save money buy bundling your policies with the same company.
- Understand what is covered. Just because you have an insurance policy doesn’t mean everything is covered. Maintenance issues at your home are not covered by your insurance policy.
Learn the facts about purchasing a homeowner insurance policy. Not all policies are created equal. Moving into your new home can be exciting and big step in your life. Don’t leave your biggest investment under insured!