House insurance is a big expense, but it is also very important to your financial well-being. A well-chosen policy will give you peace of mind and financial protection.
Getting started
You can’t buy a house without purchasing house insurance, and there is good reason for that. If you took out a home loan without insurance, you would have to pay off the loan no matter what. For example, if your house burned down, you would still need to continue to make your monthly payment for the remainder of your thirty year loan. If you have insurance, they will pay you the value your house is insured for, so that you can start over.
Choosing a good Insurance Company
While you are looking around for a lender for your new home, check out their policy on insurance. Some banks will only let you insure with certain companies. Others will let you choose the insurance company. So shop around! Make sure you aren’t paying too much for your insurance just to get a good lending rate.
Keep your coverage up to date
When you buy your home, it will be insured for however much you paid for it. But as time goes by its value will change, upwards with any luck. Remain aware of the value of your home. Make sure you increase your coverage to keep up. If your home is underinsured and disaster strikes, you will be only be reimbursed up to the coverage amount.
Understand your policy
There is probably nothing worse than thinking you’re covered, and then finding out the hard way that you’re not! There are usually exclusions in your policy that are probably clearly spelled out. If you have read your policy, you’ll know what’s covered and what is not. Don’t wait until after the event to find out that your thatch roof wasn’t covered for fire. Of that you aren’t covered if you use your house for business purposes. Reading your policy doesn’t take long, and your insurance company will be able to explain the details. After all, they are the experts!
Make claims that count
You may think that you should make a claim every time anything comes up that is covered. But insurance is really meant to protect you from extreme circumstances and emergencies. If you make many small claims, your insurance company is going to consider you a poor risk, and probably raise your premiums. So save your claims for the big stuff.
Don’t forget to insure your household contents
Just because the walls and roof are insured, doesn’t mean that anything in them is. You will have to purchase insurance for you household contents separately from your home insurance. Obviously, it is a good idea to protect your house and everything in it. If there is a fire, you could lose everything. And theft is all too common these days. So don’t skimp on your household contents insurance.
House insurance doesn’t have to be as complicated as rocket science. With a little effort you find good coverage and understand it. Being informed is the best way to protect yourself, and your property.
