In a housing market as inflated and competitive as it is at the moment, home-buyers have a lot on their hands before they can even close on their purchase. One of the most important items is their homeowner's insurance policy that will cover not only the home itself, but also the homeowner if they are held liable for an injury or property damage. A homeowners policy has four basic coverages and can have dozens of named coverages that depend on what a specific company offers. There are the three main property coverages listed as A, B, and C on the policy and are subject to the deductible while the liability coverage will be listed as coverage E and no deductible applies.
Coverage A is the coverage for the dwelling itself. Homeowners must keep in mind this is the estimated cost to rebuild the home, not the necessarily the market value of the entire property and it must be at least enough to cover the amount of the mortgage. Coverage B is coverage for other structures on the property such as detached garages, sheds, barns, fences, etc. Normally, this coverage is 10% of coverage A, but that can be increased if needed. Coverage C is going to cover all of your personal property not only within the home, but anywhere in the world. If your luggage is stolen in Europe and you had $10,000 worth of items or if smoke from a kitchen fire ruins all of your furniture, it will be covered under coverage C. Coverage C is generally 50% of coverage A but can be increased by endorsement as well. The last main coverage is coverage E, liability. Personal liability covers negligence that results in an injury or property damage to a third party. This coverage is for damage to other people only, and will never be paid out to the policy holder themselves. The coverage E limit starts at $100,000, but we generally recommend at least $300,000 as the difference in premium is miniscule compared to the amount of extra coverage.
Pricing for the policy is based on several different factors. Buyers will want to give their agent as much detail as possible to ensure the maximum amount of applied discounts. Be sure to let them know the age of the roof, HVAC, and electrical systems as well as whether or not you have a burglar alarm, fire alarm, or security system. Some other significant discounts include combining your home and auto, preferred building materials, level of education, and quoting the policy in advance of the effective date. Here at HCQ, a few of our carriers offer large discount specifically for first responders, medical professionals, and teachers.
While there are tons of ways to save, there are also some features of a home that could end up costing you way more than you would have ever imagined. A few things that can make premiums skyrocket include: the responding fire department being more than 5 miles away, fire hydrants being more than 1000 ft. away, wood burning stoves or alternative energy sources on site, pools that are not fenced, past claims, and even the breed of your dog.
There is a lot to unpack when it comes to customizing a homeowner's policy. Whatever you decide, it is important that you understand the basics of the policy and what your options are in the event of a loss. Our agents at Hadley, Cook, and Quillen are happy to sit down with anyone and explain in detail what is covered, where it is covered, and how much coverage there is.
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