The real estate sector is blossoming once again thanks to the post-covid economic upswing. First-time homebuyers are making important decisions regarding their properties. If you are one of them then you must have come across terms such as homeowners insurance.
Homeowners insurance is a prerequisite to apply for a mortgage loan. The insurance can be provided by the lending bank or you can pick a plan of your choice by comparing the different options available. Payments of the homeowner’s insurance are generally included in the monthly mortgage payment.
You will find a brief explanation of homeowners insurance in this article:
Homeowners Insurance Basic Working
In case of an accident on the insured property, the owner will file a claim with the insurance company. The insurance company will then estimate the cost of damage and inform the owner about the deductible. The excess amount is paid by the insurance company.
A deductible is an out-of-pocket cost paid by the insured, it makes up a certain percentage of the total cost. It depends upon the policy agreement between you and your insurance company. The lower the percentage of deductible the more will be the insurance premium on your policy.
Liability limit is the amount of coverage offered by the insurance policy. The standard limit is around $100000 but the owner can opt for a higher limit. The liability limit specifies the percentage of coverage amount issued for each expense incurred due to the accident. The expenses include the cost of damage repair of property, the cost of repair/replacement of personal belongings, and the cost of living somewhere else while repairs take place.
The insurance will not cover damage due to natural disasters or damages due to war such as earthquakes and floods. You will need to get earthquake or flood-specific coverage for that.
What is the difference between Homeowners Insurance and Home Protection Plan/Home Warranty?
Homeowners insurance and home protection plans/ home warranty are two completely different things. Home protection plan provides warranty for home systems and appliances.
Homeowners insurance will cover four kinds of incidents, the damage to the exterior of the property, the damage to the interior, the loss/ or damage of assets inside the property, and any kind of injury occurring in the premises. On the other hand, the home protection plans provide coverage for the repairs and replacement of appliances or machinery in the home.
The home warranty has a specific tenure after which it expires. It will cover the replacement or repair that occurs from normal wear and tear. It will also cover issues due to poor maintenance by the user. Homeowners’ insurance does not cover these.
How you should make your decision
Homeowners insurance is an important aspect of your property deal. You need to make sure that you go through all the options available on the market before you finalize a policy. You can get homeowners insurance quotes from insurance agencies. Insurance agencies are offering tailor-made solutions for your needs. They will also help you save on insurance costs and their agents will get you the best possible deal.