Purchasing a new home involves many steps including finding your home, obtaining financing, scheduling inspections and signing the contract. Just when you think you have things wrapped up and under control, somebody asks about your homeowners insurance. If you're getting a mortgage, you'll be required to have homeowners insurance.
Homeowners insurance helps you protect what is probably your largest physical asset – your home. Insurance policies vary, depending on individual insurance companies and the customers’ specific needs. Standard policies often include limited amounts to replace the structure and certain personal belongings, as well as offering some liability coverage in case someone suffers an injury on your property.
If you used a lender to finance your home, you must comply with the lender's requirements for insuring your home. Most lenders require homebuyers to obtain at least a minimal amount of hazard insurance to repair damage caused by wind, hail, theft, fire and smoke. This helps protect both you and your lender against financial losses. Your lender can provide specific information regarding what types and amounts of insurance coverage are required for your home. While liability insurance may not be part of your lender’s requirements, in case of an injury, this type of insurance can protect you against lawsuits filed by individuals and other insurance companies.
When insuring a house you own without the help of lenders, consider how much insurance you need to protect yourself from large financial losses. In addition to standard policy inclusions, you may require additional insurance coverage for expensive collections or antique items. Known as riders, these additions to your basic policy allow you to select coverage options based on your specific belongings. You may also want to purchase additional insurance if you live in a high-risk area, such as those prone to floods, earthquakes and other natural disasters.
Choosing an insurance company may pose a dilemma, especially for new homeowners. While insurance companies may vary in some ways, they must all comply with certain government regulations. Talk to the company that insures your vehicles to find out what types of incentives the company offers to customers who insure multiple items, such as cars and homes, with the company. Ask your lender for recommendations if you aren’t familiar with local companies. Compare companies by discussing deductible amounts, premium costs and payment options, as well as the types of insurance and riders they offer.
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