Introduction to Home Insurance
When I first bought my house, I wish someone would have taught me about the different types of insurance I should consider. At that time, I simply followed the natural flow—someone referred me to another person, and I bought insurance from them, crossing my fingers and hoping it worked out. In today’s video, we’re going to go through the top five things you need to know about house insurance.
Understanding the Cost of Home Insurance
Hey guys, this is Mark Flockhart. If you’re new here, this channel is all about home, auto, and various types of insurance and how to get the best rates. According to the National Association of Insurance Commissioners, the average cost of home insurance is $1,192 per year. Keep in mind that prices vary depending on your location. States like Kansas, Florida, Texas, and Louisiana have some of the highest insurance premiums, ranging from $1,500 to nearly $2,000 per year.
Location and Its Impact on Premiums
The location of your home plays a huge factor in determining your insurance premiums. For instance, if you’re living in a city, your premiums could be lower due to faster emergency response times. However, in rural areas, premiums might be higher because of longer response times, especially when dealing with fire claims. The age of the house also plays a role; older homes are considered riskier, resulting in higher premiums.
The Importance of Your Deductible
Your deductible plays a very large part in your home insurance policy. The most common deductible is $1,000. There are two types of deductibles: an all-perils deductible, which covers a variety of damages such as fire or theft, and a wind and hail deductible that typically covers damage to the roof. It’s important to know that your deductible for wind and hail damage might be higher than your all-perils deductible. It’s also a good idea to raise your deductible to lower your premium if you’re comfortable with a higher out-of-pocket cost in case of a claim.
Understanding Coverage Options
There are several types of coverage included in a typical home insurance policy:
- Coverage A: This covers your dwelling and the cost to rebuild your home.
- Coverage B: Covers other structures like sheds, fences, or pools not attached to the house.
- Coverage C: Covers your personal property, like furniture and electronics.
- Coverage D: Covers loss of use, meaning the living expenses you incur if you have to move out temporarily due to repairs.
- Coverage E: Personal liability protection for damages you may cause, both inside and outside the house.
- Coverage F: Medical payments for guests who get injured in your home.
Choosing the Right Coverage for You
To calculate your home insurance needs, start by determining the square footage of your home and multiplying it by $150 to $160 per square foot for dwelling coverage. The coverage for other structures is typically 10% of the dwelling coverage. For personal property, it’s often best to leave this coverage high, as it doesn’t significantly affect the cost. Additionally, make sure you have enough coverage for loss of use and personal liability, which protects you in case of a lawsuit.
Do Your Own Research
Before purchasing insurance, do your own research. You don’t have to spend hours, but taking a few minutes to understand your coverage needs and getting quotes from different providers can help ensure you’re getting the best deal. Also, don’t just accept referrals from your realtor or mortgage lender without doing some research into the insurance provider.
Bundling Your Home and Auto Insurance
A common mistake people make is not bundling their home and auto insurance policies. Bundling can save you 20-30% on both home and auto insurance. If you already like your auto insurance agent, consider using them for your home insurance as well. Having a trusted agent who will stand by you in case of a claim can be more valuable than saving a few extra bucks.
Important Discounts to Keep in Mind
Finally, there are several discounts you should be aware of that can help lower your premiums:
- First-time homebuyer discount
- Roof updates and electrical/plumbing updates
- Paperless billing or paying in full
- Affinity group discounts (e.g., membership in credit unions or RV clubs)
- Good credit history
- Non-smoking household
- Having a security system or fire alarms
- Smart home devices
- Hail-resistant roofs
Conclusion
If you’re buying a home and don’t already have a trusted insurance agent, take the time to shop around and research your options. This could save you hundreds of dollars a year in premiums while ensuring you’re properly covered. If you want more tips, check the description below for more resources.
