Why Do You Need Home Insurance and How to Pick the Best

Written by Rosen

Home sweet home. Many of us grow up with the dream of being proud owners of a beautiful home. So isn’t it a pity that when it comes to the protection of our most valuable asset, we don’t give it much thought?

Thinking bad luck only strikes others isn’t a very wise approach. Moreover, in the event of misfortune, many are left stranded as they can’t afford to pay the repairs price out of their pockets.

However, if you still have any doubts, let’s dive deeper in…

Why Do You Need Home Insurance

Above all, for your peace of mind. Knowing that you are covered against losing your most expensive possession isn’t a small thing. Big portions of your hard-earned cash have gone towards paying for your home or are about to go anyway. So why take an unnecessary risk?

Home insurance isn’t mandatory like car insurance, for example. Despite that, if you plan to take out a mortgage, your bank will require you to have homeowner insurance for your new property.

This is a good precaution against an extremely unpleasant situation you may fall into – having to pay for the loan even though the house has been destroyed by fire, for example.

Still, apart from that, there are three primary reasons why people get homeowners insurance:

– Protection of your home and the attached or unattached buildings of your property

Even if your whole house and garage are demolished, or they are only slightly damaged and need some repairs, your homeowner insurance gets you covered.

–  Protection of personal belongings

The great thing is your home insurance covers not only the facade itself.  It protects everything inside it as well. Furthermore, most policies will cover your belongings even if they are destroyed or stolen out of your home. So you can leave your laptop in your car without thinking twice next time.

– Personal liability protection

Imagine the postman slipping on your stairs. At the same time, your dog decides to bite your neighbor… While he is watching how your falling pine tree is smashing his car. This can certainly be considered a bad day, right?

However, your homeowner insurance can take care of the mess and cover you against any severe liability consequences arising from such events.

What is Actually Covered and What is Not?

There are many types of homeowner insurance policies. In the USA, there are 8 types of homeowner insurance.  The most popular is the HO-3 special form which covers you against all events, except the ones that are specifically excluded from your insurer.

Typically, there are common events included and respectively excluded from the different types of home coverage.

The incidents your policy typically protects you from are:

– Fire, Lightning strikes
– Storms and hails
– Falling objects, trees, or their branches
– Vandalism
– Damage from vehicles/ objects falling from aircraft
– Outpouring of water (internal)
– Explosions
– Theft
– Impact from electrical current
– Frosting
– Subsidence of the building

The incidents which are usually not included in the coverage are:

– Floods
– Earthquakes
– Landslides
– Infestation
– War or Terrorism, Nuclear threat
– Unresolved maintenance issues (mold, wear, tear)
– Enforcement actions (by the Government)

It is a good idea to educate yourself about the most frequent accidents occurring in your living area. A significant amount of insurers are offering additional coverage options if the buyer is willing to pay extra.

There are entirely separate insurance policies for some incidents like floods and earthquakes as well.

Now, as you know the basics, let’s move to 3 quick tips on how to get the best home insurance for you.

1. Find out how much coverage you need


Make sure that you always go for the replacement value of your assets rather than the actual cash value. Although it’s more expensive, you are far better protected.

Actual cash value takes into account depreciation of your building and belongings and could leave you very unsatisfied with the amount you will get on your claim. For example, you can get $500 for your $1500 laptop because you bought it two years ago.

To make sure you have enough coverage it is best to calculate your replacement cost. Figure out what is the building cost per square foot in your area and then multiply it by the square footage of your home.

Compare that with your insurance coverage to see whether you are underinsured or perhaps overinsured. Websites like DwellingCost can serve the same purpose as well if you don’t want to use pen and paper. 

2. Where to buy home insurance


The first place the majority of individuals go to is comparison sites. Customers go there to find competitive quotes. You should always get offers from multiple websites as not all insurance companies are listed on every website, including some insurance industry leaders.

 Резултат с изображение за „flickr compare quotes insurance“
Image courtesy of Flickr

Insurance brokers are also an amazing way to shop around for the best offer. They will gladly help you choose a suitable policy for the right price from a liable company.

Your mortgage lender, as we mentioned, will offer you insurance at the same time you are taking out the loan. Don’t accept it right away and look for better alternatives if available.  Remember you can always ask your friends about the home insurance provider they’re using and whether they are happy with the service and pricing. 

3. Get a discount


The first way you can get a discount is by bundling your home insurance with other insurance products from the same company. The greatest discount you can typically get (up to 30%) is by bundling your homeowner insurance with your car insurance.

In the second place, making some home improvements can drastically lower the price of your premium. For example, in some states upgrading your roof to be impact resistant can save you anywhere between 20-35%.

In addition, other common cost-cutting improvements are adding a security system and replacing old plumbing. You can always ask your insurance provider for their discount policy and make improvements based on that.

Lastly, raising your deductible can make significant price changes as well. However, please double check if you can afford to pay a higher deductible in the case of an accident.

So There You Have It!

Your home is your shelter. Where your mind, body, and soul feel protected and secure. So don’t hesitate and protect your home. Choose the right home insurance that fits your lifestyle. Thus you will sleep tight no matter the dangers of the outside world.


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