Home insurance is most often required of home owners, but it is also practically necessary. Lenders expect homeowners to insure the value of their home as part of the process to obtain financing. Since homeowner loans are based on secured property, which protects the lender, the lender wants to feel secure in the event the home is damaged or has insurance related issues.
A common approach to home insurance buying is to compare quotes and consider only the lowest premium rates. Certainly, finding a low rate home insurance product is important, but so is protecting the most valued asset most people own in their lifetime. The challenge is that many insurance providers work with buyers to cut corners in order to offer lower rate plans. Cutting corners can include coverage reduction or less protection than is necessary.
There are several aspects to a thorough home insurance plan. These include comprehensive dwelling protection, personal valuable protection, external building protection, and injury and liability protection. Comprehensive building protection should cover the replacement cost of the home structure. This is where some insurance providers cut corners. The replacement cost of a home could be significantly more than the home’s purchase price as it is affected by present day labor and materials costs to rebuild. Insurance that has too low of a replacement cost estimate may result in not enough protection to replace the house as it was.
Home insurance usually includes personal items protection as well. This is often estimated based on the number of rooms in the house and a standard rate per room. However, people that maintain more expensive items in home might need more adequate personal items protection.
Properties that include greenhouses, sheds, or other external buildings must also incorporate protection that covers that external structure. Additionally, personal injury and liability protection are common elements of home insurance plans. Many lenders and legal jurisdictions require a certain level of liability coverage to cover the costs if someone is injured falling downstairs or in some other manner within the home.
Again, the important thing for home buyers or homeowners is to remember than cheaper is not always better. Thorough protection is peace of mind and having a peace of mind should be worth a few extra dollars in monthly premiums. Be cautious about working with a provider who uses coverage reduction as a way to cut costs to a bare minimum.