By the end of 2020, the number of homeowners in the US increased by 2.1 million. That means there are more people experiencing the wonders of owning property for the first time.
But there are so many things you need to consider (and pay for!) when you buy a home that you might forget about. You need to figure out bills, recycling, maintenance, and how to buy homeowners insurance.
And if you’ve never bought it before, you might feel clueless about which insurance policy is best for your new home and how much to pay.
Don’t worry, this quick and simple step-by-step guide will explain everything. Let’s begin!
Step 1: Choose a Type of Policy
Did you know there are eight types of homeowners insurance policies to choose from? Yes, eight! All policies protect your home and its contents from different “perils” i.e. theft or fire to different extents.
This is a brief explanation of all types of policies:
- HO-1 – covers homes and belongings at cash value
- HO-2 – covers homes at replacement cost and belongings at cash value
- HO-3 – most common type of coverage
- HO-4 – renters insurance covering belongings at replacement cost
- HO-5 – covers homes and belongings at replacement cost
- HO-6 – condo insurance that includes shared spaces
- HO-7 – mobile homes insurance
- HO-8 – older homes that are more likely to need insurance
If you own a regular house that isn’t a condo or a mobile home, the best homeowners insurance policies for you are likely HO-3 and HO-5. They should cover your house and belongings for all risks, but always read your policy t know for sure.
For those who live in flood and/or earthquake zones, you will need separate insurance. It varies from state to state, and you can check out this guide if you need state-specific info.
Step 2: Decide What to Include
When you purchase homeowners insurance, you also need to figure out exactly what you are covering and how much.
For example, to cover your belongings at “replacement cost”, your insurance company needs to know how much your belongings are worth. You might need to pay a premium for expensive art or jewelry.
You could also include living expenses if a “peril” displaces you from your home, and personal liability in case of injury.
Step 3: Shop Around for the Best Deal
The last step in learning how to buy homeowners insurance is to find the best deal and buy it!
Every state has its own homeowner’s insurance companies, and there are national ones, too. The database on the National Association of Insurance Commissioners is a great place to start your research.
The average cost of homeowners insurance is $1,249 per year, so don’t spend much more than this figure. Shop around for a new policy before your annual renewal date to make sure you’re getting the best deal.
That’s How to Buy Homeowners Insurance in Three Simple Steps
Figuring out how to buy homeowners insurance can be daunting if you’ve never done it before. You want to protect your property and investment, so you don’t want to make any mistakes.
And if you follow this guide, you can rest easy knowing you’ve protected your house and your belongings.
When buying a home, there are so many unexpected costs and monthly bills you need to consider. You need to have excellent financial skills! Lucky for you, our website has tons of saving tips and tricks to help you out, so be sure to read more!