Home insurance is often required by mortgage lenders for homeowners who are borrowing money to purchase their home. Experts say that home insurance is a good buy, yet many homeowners do not understand the benefits of an insurance that covers the house and the properties inside it. These homeowners also tend to forget that they have home insurance, and therefore miss out on the opportunity to compare quotes and reduce their premiums.
Understanding Your Home Insurance Policy
Also called homeowner’s insurance or HOI, home insurance is a protection policy that covers the homeowner, his or her spouse, children, and other members of the household under the age 21 against fire and personal liability due to negligence. The policy also includes damage to another person or his or her property, and provides legal defense up to the limit.
The cost of home insurance is fixed for a period of time. This means that the cost should not increase during that period unless a major event affected your home or potential liability. When your home is located in an area where the crime rate is high, or when access to fire protection is not good enough, you can to expect to pay higher insurance premiums.
There are many types of home insurance, and they vary in terms of coverage and price. Comparing quotes allows you to find the best coverage at the lowest price. When shopping for home insurance, though, you will have to consider not just the price, but also your exposure to risks, and the amount of assets you own.
Tips to Save Money on Your Home Insurance
You can save a lot on your home insurance if you will only pay for what you need. Get rid of extra coverage on items that have greatly depreciated. Do not include the value of the land under your house in deciding how much insurance to buy. The land is not at risk from the perils covered in your home insurance policy.
It will also help to make improvements to your home by updating your electrical, heating, and plumbing systems. Installing security devices such as fire alarms, dead-bolt locks, and smoke detectors in your home can lower your insurance premium by 5 to 20 percent. Before buying any of these, however, ask the insurance company about the types of devices they recommend, how much they cost, and how much you can save on premiums.
Set your deductibles as high as possible. Deductibles are the amount you have to pay toward a loss before the insurer starts to pay a claim, as stated in the policy. The higher your deductible is, the more money you can save on premiums. Most insurance providers suggest a deductible of at least $500. If you will double the amount, you can cut the cost of your insurance by as much as 25 percent.
When looking for a home insurance with the best value, the price is not the only factor to consider. A home insurance can be one of the most important investments you will make, especially if you have a great deal of possessions to protect. At sites like HomeownersInsurance.com, you can compare quotes from the top home insurance providers in the country. You are assured of getting quality coverage at competitive rates for your area.
Adam Vaught mainly writes for insurance and personal finance blogs. He is an insurance consultant and enjoys passing on his knowledge through writing.